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Ontario Needs to Allow Competition for its Alcohol Industry to Prosper

05/03/2015 11:27 EDT | Updated 05/03/2016 05:12 EDT
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beer flight of five sampling mugs of light and dark craft beer in a bar

The Methodist Rome is what the world once called Toronto and it is a partial explanation to our greater province's historical makeup around the time our Prohibition years in Ontario fell underway -- it's difficult to say it even really ended. The Liberal government's recent announcement to allow beer sales in grocery stores and craft brewer membership to The Beer Store's executive board is a first step to actually repealing prohibitive practices from production to distribution to consumer rights.

From the production to the sales process, Ontario liquor laws are antiquated as the ideals that formed them. The bottleneck of monopolized retail distribution ensures that supply stays in the hands of a few major producers while local producers fight to make incremental gains in the marketplace. Based on laws from almost a century ago, The Beer Store owners control almost the whole markets flow. Craft brewers have been invited in but still come nowhere close to holding clout on the executive board. Once again, it's a first big move but to create actual equality between brewers and even wineries and hard-alcohol producers, a new distribution system must be modeled and implemented.

Ontario's announcement to allow up to 450 grocers to license their facilities for alcohol sales is another smokescreen once the intent is understood. Certainly this is a great increase in potential tax revenue but not necessarily a win for consumers. Trading Busches for Westons is not real trade, merely a welcoming of another elite to an exclusive monopoly. The grocers that are able to afford and prove the viability of these proposed licenses will be the ones that can afford arena naming rights, not the ones you greet by name.

Therein lies the problem, the post-Victorian LCBO is still based on a moral code, not an ethical one. Is it ethical to treat small business owners as though they don't exist? Is it ethical to continue the practice of big business alcohol distribution? The provincial government in the 1930's went to extreme lengths to ensure nobody but those of moral standing could procure alcohol sales licenses in their hotels. There isn't much difference in the current model by allowing grocers the ability to sell. The casual consumer will find a little more convenience but will grocers be able to to source their own alcohol or be forced to rely on outdated model of importers and distribution chains?

To truly open the marketplace we need to repeal the prohibition on sales, production and distribution that has plagued Ontario. Certainly the Beer Store is an efficient model of distribution and empty collection but their consumer experience is an experiment in cruelty and a practical example of a broken system designed to benefit its owners. Traveling almost anywhere else in the world and seeing the breadth of choice is angering as a consumer and producer.

Adding 450 new retail outlets through grocery chains will ensure the continued, mediocre success of variety that inhibits the LCBO from offering the choice of even the most conservative state. Why stock 30 craft varieties when six major brands cost less in administration, distribution and display? Meanwhile, the very thought of an independent business owner opening a store dedicated to the 200+ breweries, six craft distilleries, 150+ wineries and one sake brewery in Ontario is an idea as foreign as the ownership of the Beer Store. To add even a touch of madness, the aforementioned producers are only allowed a single retail store and unable to cross-sell their colleagues products.

If Ontario's government is truly interested in opening competition in this sector it must allow reforms along the lines of what the Ontario Craft Brewers recently proposed -- allowing Ontario breweries to compete in the same way that the Beer Store owners can by opening their own retail chain. It's a small measure of craziness when competitors are begging to sell each others product because shelf space elsewhere can be so difficult to acquire. Even with these obstacles, craft beer in Ontario continues to gain market share even as beer overall declines compared to wine and spirits.

If small business owners are allowed the same opportunities as international brewers it will only add local jobs to many Ontario communities -- about 1000 to 2000 with this new liberalization according to the OCB, but it's only a start. Allowed the chance, this could be 4000 to 5000 and it could even move into fields like sake and craft whisky production at a much larger scale than today.

Prohibition won't end in earnest until the playing field is leveled and competition, real competition, is allowed in Ontario. The economic advantages of allowing liberalized alcohol sales are obvious and they include the continued operation of the Beer Store, LCBO and merely allow the real democratic tenet of choice and entrepreneurship to flourish. The year is 2015 and we finally have the chance to end a 99 year prohibition and allow Ontario's hard-working alcohol industry to flourish instead of propagating mediocre legislation and anti-consumer practices.

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