I took some time on a pation this weekend and gave good reflection upon the varying issues which would most likely result from a deregulation of the LCBO and Beer Stores. I am a former employee of the LCBO and sat down on the weekend with a few buddies who work at the Beer Store and discussed at length this topic (and enjoying a few beverages ourselves.)
The first key point we thought of was the perception by most Ontarians that if alcohol distribution was deregulated and made available in conveneince stores that this move would create “pricing competition” within the market. This is entirely untrue! The minimum price of a bottle of wine, liquor, or a case of beer is dictated by Dalton McGuinty. The province of Ontario specifically sets a mimimum price and (as published in the Sun) this price is raised, like many other taxes, almost within question, each year. IF convenience stores were allowed to sell alcohol they would have to adhere to this minimum price. We are fortunate to live in the province with the second LOWEST price for alcohol across Canada. In Ottawa we just happen to border on the province with the cheapest alcohol so I understand why the issue keeps coming up and there wasn’t a day where I didn’t have to answer a customers question about why alcohol is cheaper is Quebec?
This leads me to my second point. If alcohol prices are regulated, and the Beer Store is owned by the AB InBev, MolsonCoors and Sapporo brewers, which my friend pointed our makes the Beer Store almost like a “wholesale” business, I ask anyone to tell me a reason why they would think the Wineries and Brewers wouldn’t charge a higher premium to distribute their product to another ‘middle-man’ retailer? This creates another tier of pricing and therefore another mark-up, plus the convenience store would have to have a profit margin, and also cover losses due to theft, but I will get to that later. Our best guess would be that convenience stores would have to charge about $20 more than the current price for a case of beer to cover mark-up, theft, renovations, and the extra staffing it requires to manage and sell alcohol
For a convenience store to carry alcohol there would have to be significant investment in remodelling the stores, both for fridge space and for ‘physical barriers’. One this many people do not pay attention to is that while the convenience stores do a respectable job of controlling tobacco sales, they also have to build a counter space between the customer and the regulated product. If cigarette cartons were located beside the potato chips, I guarantee ‘loss due to theft’ would definitely exceed actual sales of those products. Translating that to alcohol, the convenience stores would have to remodel the store to create safe physical barriers to prevent theft by minors and ‘marginalized persons’. If you read this article and scoff at the idea that YOU would steal alcohol, then that is most likely true. For many people that you are no considering, but that employees of the LCBO and Beer Store spend much of their day dealing with.
We are fortunate to live in such a beautiful city as Ottawa, but we would be remiss to think it is a city without problems. Employees at certain downtown LCBOs deal with theft multiple times a day and on certain days employ security guards.
In Toronto this is a daily fact and MOST of the LCBO and Beer Store locations employ security guards for all of their open hours. If you would like a further example, my buddy told me about the Beer Store on Rideau which was built as a gorgeous self-serve store, but that they have to keep the gates locked to access the beer due to their clientele. Again this does not speak of most people, but the few and marginalized will always present challenges, but that speaks to a larger social problem then the one I am discussing today. I am just saying most people don’t open their business multiple days of the week to a questionable person whose breath smells of Listerine not because he brushed his teeth, but because the pharmacy was open first and that particular individual was thirsty . . . but I digress.
My final point here is that I can understand why convenience stores are crying out to sell alcohol. Now that my current Loblaws in open 24 hours a day, I haven’t been to a convenience in quite some time, and the last time I was there I remarked almost all the customers were there buying cigarettes. Selling alcohol in convenience stores might create a small increase in ‘convenience’ but the risks are huge. I remember being in Montreal and the Depanneur was supposed to stop selling alcohol at 11pm and it was admittedly 1am. I witness a drunken individual walk into the store and become irate that he could not buy a case of beer which was on a display beside him. His response was to slam down $20 and grab the beer and walked out. The cashier stood there unfazed as he just remarked that it “happened all the time”. I personally would not wish to have the risk of this occurring in the city where I live and I wonder what happened to that drunken person (who was driving) that night, or to the unknowing innocent public the next time that that again “happened all the time”.
Matthew K