Ontario changes to alcohol sales could lead to higher prices next year | Canada Voices

Some alcohol prices in Ontario could rise in the new year, with several changes to the alcohol marketplace set to take effect.

The changes flow from Premier Doug Ford’s plans to expand and modernize how alcohol is sold in the province, which has seen beer, wine and coolers now sold in convenience stores, a sharply reduced footprint for The Beer Store and a shifting system for empties.

When the expansion was announced last year, the government said all retailers would have a 10-per-cent wholesale discount from the LCBO until an overall new wholesale pricing structure is rolled out in 2026. This spring, the government temporarily increased that discount to 15 per cent for bars, restaurants and convenience stores, citing the need to protect them from impacts of U.S. tariffs.

That is set to end Dec. 31, and some of those businesses say it may mean they have to pass their price increase on to their customers.

A new era dawns as beer and wine hit Ontario’s corner-store shelves

Restaurants already operate under tight margins, with 41 per cent unprofitable, said Kelly Higginson, president and CEO of Restaurants Canada. It’s reasonable to assume that at least some will pass on their higher alcohol costs as of Jan. 1 due to the reduced discount.

“We have also seen double-digit inflationary pressures around food, around insurance, around commercial rent – you kind of name it, it’s gone up,” she said in an interview. 

“We haven’t raised menu prices as much as our input costs have been increasing, but we will have to raise prices for alcohol. We will not have an option, because we can’t continue to raise prices on food.”

Anne Kothawala, the president and CEO of the Convenience Industry Council of Canada, also said it is possible some corner stores may have to increase alcohol prices. But what they and many others in the alcohol marketplace are perhaps more concerned about is a looming new cost structure.

The LCBO is becoming the exclusive wholesaler and is setting a new formula adding taxes, markups and fees to a supplier’s set price, which some are worried will prohibitively raise prices for some retailers.

Major retailer associations wrote to Finance Minister Peter Bethlenfalvy in the fall requesting a proposed new pricing model be delayed from its planned Jan. 1 implementation date, in a letter obtained by The Canadian Press.

“As we analyze the LCBO’s proposed pricing model, significant discrepancies have emerged between LCBO’s projected impacts and industry estimates of how much prices will increase for retail and hospitality buyers,” said the letter signed by the convenience industry council, Restaurants Canada, Beer Canada, Drinks Ontario, Spirits Canada and the Ontario Restaurant, Hotel and Motel Association.

The government has been “listening to stakeholder feedback” and has delayed the implementation of that new pricing system until April, a spokesperson wrote in a statement.

Some in the industry are hopeful that means the LCBO will make changes to the formula before then.

“We continue to work with the government over our concerns with the proposed pricing structure to ensure that any changes reflect the unique nature of our industry and maintain prices for consumers,” Kothawala wrote in a statement. 

Another factor that could increase prices for consumers is a change to alcohol recycling. 

Under the expansion announced last year, all grocery stores selling alcohol were supposed to accept empties starting Jan. 1, but they balked at that and recently reached a deal to avoid it, with The Beer Store getting a continued responsibility for the deposit return program.

Consumers will continue to exchange empties for their deposits at Beer Store locations, with grocers footing the bill. They may well pass some or all of the costs of that system onto consumers by raising prices.

Grocers are pleased that bars, restaurants and convenience stores will now be receiving the 10 per cent wholesale discount instead of 15 per cent, because it “levels the playing field,” said Gary Sands, senior vice-president of public policy and advocacy with the Canadian Federation of Independent Grocers.

Grocery stores had not received the temporary bump to 15 per cent and were not happy that they had to both incur extra recycling costs – convenience stores were exempt from that obligation – and receive a smaller discount.