Apparently some people still believe that ending the Beer Store’s death grip on Ontario private beer retailing will increase prices. They believe this, apparently, because the Beer Store holds it up as fact, citing Alberta’s experience.
As you may know, I lived in Alberta before and after privatization. I’ve watched the liquor retailing landscape change over 20 years and so feel better qualified than most to point out some things the Beer Store would rather omit.
Although it’s true the average price of beer is higher in Wild Rose Country, consider this:
- In 1993, if you walked into an Alberta liquor store you chose from whatever bland beer was available. It was practically unheard of to find craft beer back then. Once experimental styles brewed in small batches, using (more expensive) two-row barley came to market, the average price of beer went up. When higher alcohol and import beer became available, consumers gratefully paid for what was previously not. In Alberta you can get Brewdog’s Tactical Nuclear Penguin – a 32% ABV beauty from Scotland – but it’s going to cost you $88.00. The Bruery’s Bois might run you $53.00, but at least it’s available. Better beer, not increased competition, will raise the average price.
- In Alberta there’s currently just one distributor to supply 320 communities with beer from more than 70 countries. Molson, Labatt, Sleeman (the three big quasi-Canadians) share or operate their own warehouses in Alberta. Big Rock has a separate area set aside in its Calgary brewery, with its own Alberta Liquor & Gaming Commission office on-site. Everyone else – whether a local craft brewer, someone from San Diego or Fredericton, or an overseas exporter – passes their wares through Connect Logistics’ warehouse, just outside of Edmonton. One importer I spoke with said he can warehouse a keg in Ontario for $13.00. In Alberta, the same keg costs him $42.00. That’s not the fault of increased options; it’s rather the opposite.
- Alberta’s much smaller population is far less dense than Ontario’s (5.7 / km² vs. 14.0 / km²), making distribution a more expensive proposition.
- Alberta also taxes beer more, on average, than Ontario.
Despite all the factors that make the average price of beer higher, it’s still common to be able to find the most popular brands – those produced by the owners of the Beer Store (Bud, Coors Light, Canadian, Shock Top) – at lower prices in Alberta. That’s because liquor store owners in Alberta can’t survive by gouging customers. In Ontario, the owners of the Beer Store keep more because your only other choice for the most common labels is the LCBO (which almost always matches the BS price).
Despite the Beer Store’s rallying cry that privatization will lead to higher prices on the brands you currently enjoy, it’s highly improbable. What’s more likely is Labatt and Molson lowering the cost of their own product at the Beer Store in order to retain customers, as those craft brewers currently paying their much larger competitors for slots start to explore new options.