Nine decades after Prohibition, Ontario still has a bizarre love-hate relationship with beer.
Some folks can’t live with it, some people can’t get enough of it. And some politicians can’t wait any longer for it.
Doug Ford embodies those contradictions: The premier doesn’t drink, but he’s in a desperate hurry to get beer into a corner store near you.
For Ford, it’s not so much a question of love or hate — just haste.
Are Ontarians clamouring for more beer — beyond the 450 supermarkets, 450 Beer Stores, 660 LCBO locations, and 210 agency outlets across the province? Why is Ford so determined to keep this campaign promise?
At what cost? For what benefit?
Ford’s own government lawyers are best placed to explain it to the premier, who should share the facts with the rest of Ontario. In fact, the province is legally bound by a 2015 contract between the government of the day and the original multinational owners of the Beer Store, a deal that broke their stranglehold on retail distribution.
Today, the same Crown lawyers who put that deal together for the Liberal government of the day are now trying to take it apart for Ford’s Tories. It’s akin to a legal team negotiating a pre-nup only to return for the divorce settlement — there are no surprises, just more money for lawyers.
Under that original deal, hundreds of big supermarkets would vie for licences, keeping distribution costs and prices low, while maximizing government revenues. And the Beer Store would raise its game without charging more — making $100 million in capital investments for its tired facilities, while abiding by a price freeze.
But if the brewers were to make those concessions and investments, they needed certainty — hence a 10-year contract. If any future government ripped up the deal, it would be liable for damages — not just the $100 million in sunk costs for upgrades, but lost revenues from the initial price freeze, plus higher distribution costs and any impact on existing facilities and liabilities.
Any lawyer would tell you there are easily hundreds of millions of dollars at stake.
Of course, a previous Liberal government cannot bind a future PC government, and any legislature has the power to rewrite old laws — indeed, Ford’s Tories have made a habit of ripping up private sector contracts and breaking public promises. But the language in this deal is different.
While Ford’s government can break the contract, it cannot legislate its way out of compensation. The usual escape clauses allowing the Crown to duck damages are specifically excluded.
Not to worry. The premier insists the province won’t be out of pocket because he knows how to smooth talk the big brewers into a deal that benefits both sides.
After all, he argues, selling more beer in more corner stores will automatically boost sales and profits. How could they lose?
Except that Ontario already has a low-cost distribution structure thanks to the utilitarian (if unappealing) retail model of the Beer Store, the more inviting (but equally efficient) retail environment of supermarkets, and the predictable (but reliable) LCBO. Ford’s plan to add thousands of convenience stores would increase costs, reduce margins and raise prices.
Quite apart from whether Ford can deliver on his promise, are corner stores worth the cost?
He casts this as a drama pitting small mom-and-pop shops against big foreign-owned brewers. But the Beer Store updated its ownership structure in 2015 to include 31 Ontario-based brewers; the supermarkets are domestically owned (and unionized) companies with razor-thin margins; and a good number of Ontario’s convenience stores are owned or supplied by big chains, some of them foreign-owned.
There is a better way for Ford to reduce his losses. Given that the deal expires in 2025, Ford could just delay the game for a few years before slowly phasing in more outlets, while making other non-monetary concessions; or he can castigate the Liberals and blame them for tying his hands (if not his tongue).
For now, Ford is flailing. When he runs out of arguments, he calls up live radio shows and adopts his everyman persona:
“You don’t think that the people of Ontario are mature enough to be able to go into a, let’s say, Costco, Loblaws, walk by, grab a bottle of wine, couple of steaks, or a case of beer?” he asked rhetorically on Alan Carter’s AM 640 radio show other day, after hearing us debate the issue on the noon broadcast.
It was an odd riposte from Ford, suddenly conflating convenience stores and supermarkets, as if he were projecting a love-hate relationship onto the airwaves. Imagine something so elusive as beer and steak in supermarkets — except that this image is not a remote fantasy for most of us, merely a misapprehension for a premier who doesn’t drink or eat red meat, and perhaps forgets it’s already on offer.
In today’s Ontario you can pick up enough supermarket beer to wash down those steaks, without anyone questioning anyone’s maturity. Ford’s Loblaws fantasy has already come true — without breaking any contracts.
Martin Regg Cohn is a columnist based in Toronto covering Ontario politics. Follow him on Twitter: @reggcohn