Indebted Ontario Raids Beer Money to Fund InfrastructureAri Altstedter
Ontario plans to allow grocery stores to sell beer and will take a bigger cut of price increases as it seeks to eliminate a deficit and invest in infrastructure.
New rules would mean as many as 450 grocers such as Loblaw Cos. and Metro Inc. in Canada’s largest province can sell six-packs of beer, the government said in a statement today. That will free up beer sales confined to outlets of the province’s liquor monopoly and the 447 locations operated by The Beer Store, a government sanctioned monopoly established during the prohibition era and now controlled by Molson Coors Brewing Co., Anheuser-Busch Inbev NV and Sapporo Holdings Ltd.
Ontario will also boost revenue by C$100 million ($82.3 million) a year by taking a larger share of beer-price increases, leaving a smaller share for producers. Prices on the seven most-popular brands will be frozen.
“When people ask why they can’t buy cold beer the same place they buy the rest of their barbecue supplies, the answer cannot be what worked at the end of prohibition works today,” Kathleen Wynne, Ontario’s premier, said Thursday at a press conference in Toronto.
Ontario said it has guarantees the most popular beer brands, representing 50 percent of Beer Store sales, will not see price increases through May 2017.
Former Toronto-Dominion Bank Chief Executive Officer Ed Clark, who headed an advisory council that proposed the changes to Ontario, said he’d like to see beer sold in grocery stores by Christmas.
The Beer Store reported C$302 million in revenue in 2012, the most recent data available. Ted Moroz, a spokesman for The Beer Store, didn’t immediately return a voice mail message requesting comment on the new rules.
Ontario Finance Minister Charles Sousa will present a budget on April 23.
Freeing up beer sales is among the recommendations arising from the advisory council’s recommendations that will also see the province sell a stake of its electricity utility. The government is seeking funding for its C$130 billion, 10-year spending plan for transit, transportation and infrastructure, while paying down a C$10.9 billion deficit in 2014-15.