Liberalizing beer and wine sales could hurt Ontario’s spirits industry: study

Liberalizing beer and wine sales could hurt Ontario’s spirits industry: study

Premier Doug Ford’s plans to liberalize the sale of beer and wine could cause a major hangover for Ontario’s domestic spirits industry, a new report warns.

The Canadian Centre for Economic Analysis study, commissioned by the Association of Canadian Distillers, says restricting variety stores, supermarkets, and big box outlets from selling whisky, rum, gin, or vodka will be harmful to the sector’s health.

“Distilled spirits manufacturers are sensitive to structural shifts in the environment in which they operate,” says the 22-page report, which will be released Thursday.

“Changing consumers’ access to distilled spirits relative to other types of beverage alcohols is one such change that can have potentially significant repercussions for the industry,” it continues.

“Proposed policy changes to further extend the sales of beer and wine into new retail channels but exclude distilled spirits can impact the local demand for spirits by rendering these less convenient to access relative to other types of beverage alcohols.”

Spirits sales will be limited to the government-owned Liquor Control Board of Ontario monopoly.

That puts the province’s $1.1-billion-a-year beverage alcohol industry at a disadvantage, said Jan Westcott, president and CEO of Spirits Canada.

“It should be fairly obvious. The Ford government promised fairness and choice for Ontarian adults,” said Westcott.

“People can’t choose what they can’t find on store shelves. Allowing imported beer and wine in stores that can’t sell Ontarian spirits made from Ontarian grains by Ontarian workers makes no sense and would be a very costly mistake,” he said.

The study notes there are 4,600 jobs in spirits manufacturing in the province and 74 per cent of Ontario production is exported, including brands like Canadian Club rye, which is sold around the world.

“Nonetheless, local sales remain essential to the health of the distillery industry in Ontario, as the revenue from local sales supports local producers’ ability to export their products by reducing their exposure to the fixed costs of production,” it continued.

“Sales in Ontario support an estimated 30 per of the production of distilled spirits in the province. As a result, major changes in the local demand for distilled spirits will impact the margins that local producers earn and thus their fiscal capacity to reinvest in their business.”

There could also be a trickle-down effect, the study said, claiming Ontario would lose five additional jobs from every distillery job that vanishes.

Ford’s government is currently negotiating with the Beer Store and other stakeholders about expanding sales.

Currently, retailing is limited to LCBO outlets and agency stores, the breweries-owned Beer Store, 450 supermarkets, and private domestic-wine stores.

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Government officials declined to comment Wednesday because they had not yet read the report.

The premier has said he wants Ontarians to be able to buy beer and wine at more outlets, but does not want to similarly expand the sale of spirits.

Robert Benzie

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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