Category: Ontario

I am increasingly finding myself far more disinterested in the current reforms of the beer distribution system in Ontario than I am annoyed by them. They seem to be geared to offer little that I expect to alter my shopping experience. But last week there were a couple of hints as to what is going on behind the closed process of government and industry negotiations that are worth noting if only for their entertainment value:

=> First, last Thursday Ben Johnson posted a great interview with the provincial Finance Minister in which he learned “the LCBO will roll out “craft beer zones” to 25 other LCBO locations across Ontario. Similar to the LCBO vintages section, these craft beer zones will feature and highlight craft beer made in Ontario.” It would be similar if there weren’t more than 300 Vintages locations in Ontario. Oddly, 20 years ago, the vintages section carried good beer, mainly imports but some local micros, too.

=> Second, Toronto’s Metro confirmed that there will be annual limits to the works out to the equivalent of 279 six-packs — or about 70 cases of beer — sold daily per store… and also “unspecified penalties for retailers who try to sell more than their allocation”!! I think I mentioned this before but it’s nice to see that it was not just my bad math. So… what does this mean? On a hot Friday in late July does the grocer cut off sales at 2 pm because the daily, weekly or monthly quota was reached?

These weird revelations are in addition to the numbers we have so far that indicate my city of 122,000 people will be lucky to get two of the new grocery store permits. More weirdness that remind me of something I came across some years ago now. Amongst my cult classic publications, I contributed the chapter “Beer and Autonomy” to the book Beer & Philosophy published in 2007. I opened the chapter with a quote from Pete Brown: “more than climate or genetics or anything else, drinking behaviour is governed by culture. And that culture is created by the laws that govern it.” Looking at that now I quibble with one word. Created. I would think now that the culture is expressed by the laws that govern it. I concluded the chapter with the thought that the beer laws of Canada ought to lead one to question the vision the state has of its own citizenry.

The more I read and write about Ontario in particular I find myself wondering if might be better off questioning the vision the citizenry has of itself. These “reforms” are, yes, a bit more than shuffling the deck chairs but are so restricted that they must be messaging something related to cultural identity. Jordan has expressed measured optimism but I can’t shake the feeling that we are dealing with a set of business and political interests that, in the words of one economic development officer spoken years ago in another province, is based on the principle “we pick the winners.” Because the marketplace can’t be trusted to pick the right winners. Because Ontarians can’t be trusted and may not even trust themselves.

Well, the members of the editorial board of The Globe and Mail are not impressed. At least that is reassuring:

Politicians will be, more than ever, deciding who gets to sell beer and who does not, and which beer, where, when, how and at what price. Competition will still be largely forbidden. But, good news: If you are unhappy about anything, please write to the new Beer Ombudsman. He’s there to listen.

Ah, the Beer Ombudsman. What a silly idea. I eat a lot of toast and sometimes it doesn’t turn out. I want a toast ombud, too. It’ll never happen. But so might any number of bits of the policy… plan… ideas set out in the announcement. We all remember what happened to the LCBO Express stores idea. What exactly did happen yesterday anyway? As the Toronto Sun reported, the Premier put it this way:

“The days of monopoly are done,” Wynne said Thursday. “This is the biggest shake up to the sale of beer in Ontario since we repealed prohibition in this province and that was in 1927.”

Well, not exactly. Ontario never had much of a prohibition and the final centralization of retail stores happened more like in 1940 or so through the actions of Mr. E.P. Taylor in his gathering up of many of small breweries and their wholesale and retail divisions into what would become Carling-O’Keefe, one of Canada’s largest breweries until Moslon snapped it up in the 1980s. And Ontario was never really dry as humourist Stephen Leacock lampooned in his 1917 essay “In Dry Toronto“:

“…will you please tell me what is the meaning of this other crowd of drays coming in the opposite direction? Surely, those are beer barrels, are they not?” “In a sense they are,” admitted Mr. Narrowpath. “That is, they are import beer. It comes in from some other province. It was, I imagine, made in this city (our breweries, sir, are second to none), but the sin of selling it”—here Mr. Narrowpath raised his hat from his head and stood for a moment in a reverential attitude—”rests on the heads of others.”

See, when I was researching and writing the section for from 1900 to 1980 in our cult classic Ontario Beer, I came to see that Ontario went through a number of very intense shifts in its beer retailing rules and restrictions in little over a decade mainly starting in the middle of WWI, even though smaller changes had been coming for decades. What Leacock was lampooning was the situation in the early part of the regulatory temperance experiment in which Ontario brewed at a large scale for export only but then imported beer came in from intra-provincially brewers direct to the drinker through a process of individual purchases and delayed deliveries that – on paper – occurred outside of the province. The law literally allowed that the sin was only in the local sale of local beer.

And even when the rules were tweeked to stop that nonsense, there was still plenty of drinking going on. A Federal Royal Commission did the rounds on the question of tax evasionduring the years of official temperance and found out masses of beer was going out the back door of the “exporting” breweries for local consumption. As we stated in the book, in the spring of 1927, Labatt was implicated in kickbacks to customs officers in testimony before the Federal Royal Commission on Customs and Excise as it took evidence in hearings across Canada. When a shipping clerk called Aikens admitted he sold strong ale in London and vicinity, he explained that he only sold to people that he knew. He was congratulated for having such a host of friends. Labatt did, however, insist to the Commission that it had stopped shipping by camouflaged rail car in 1924 and, unlike most of its competition, had accounted for all taxes due. Such honesty.

All was forgiven as what replaced the process of tight control through regulatory temperance (and its really light ales along with some Ontario wine unless you had a cousin in the distillery in which case you got rye) was a succession of market control systems, laws and agencies which will be continued under the next new system announced this week. Don’t think so? Consider these aspects to the process leading up to the report issued by the Premier’s Advisory Council on Government Assets (the rather gutturally acronymed “PAC-OGA”) yesterday:

1. In the original announcement starting up this project in April 2014 it was stated that “will recommend how to maximize the potential of these government enterprises to ensure that Ontarians receive the value they deserve.” Note recommendation to the Premier is the goal.

2. An interim report is presented by PAC-OGA in November 2014 which explains how stakeholder (but not public) consultation had taken place:

We structured our review in two phases. Phase I, the results of which are included in this report, incorporated detailed reviews of the subject entities, stakeholder consultation and the development of our initial thinking on proposals for the future direction of each company. Phase II will incorporate further discussion and consultation on the proposals. This will further our goal of reaching agreement among the appropriate parties, leading to definitive recommendations to government for consideration in the 2015 Provincial Budget.

Note that discussion and consultation was to occur in Phase II.

3. But when the final report is announced yesterday, a deal has been struck. It even has at page 47 an “execution copy” of a document titled “Modernizing the Distribution of Beer in Ontario Framework of Key Principles” which has been worked out by Brewers Retail Inc. Molson Canada 2005, Labatt Brewing Company Limited, Sleeman Breweries Ltd., the Premier’s Advisory Council on Government Assets and the Ontario Ministry of Finance. It is also more of a transitional agreement than a simple non-binding memo of understanding. At section 10(c) it states that the parties agree to ” to negotiate the New Beer Agreements on terms acceptable to TBS and the Province, with the view to entering into the New Beer Agreements between the relevant parties as soon as possible and in any event before June 30, 2015.” Done deal. Recommendations and consultations finished. Working out the fine print as we speak. We are well on our way.

But to what? We’ll find out sometime in July, I suppose. Sure, the wish list has been published and will likely fall in place roughly as outlined but it is still a control system. The interests of big beer have been protected for at least a decade as have been enhanced revenue streams to the province’s coffers. There is lip service to concepts of “social responsibility” but no explanation of what that really means in this new world. Good reason. It means the same old thing as the same old structure still sits at the heart of the deal. If you have any doubt that that is not the case, that this is somehow a great leap forward for liberty, have a look at page 31 of the final report where it actually states:

The Ontario taxpayer is better off because they enjoy the same low prices as the Quebec taxpayer, but substantially more revenues go to the government.

Let that sink in for a minutes. No public discussion and locked in for a decade or more PLUS the report explains away how Quebec prices are the same as Ontario’s even with their 8,000 outlets because distribution costs are higher. See, Ontario is better off because instead of spending that money on beer delivery truck fleets – and instead of enjoying lower actual retail prices – all that money is scooped up by Ontario’s Ministry of Finance. Wonderful. Surreal but wonderful. What would Leacock have said about this sort of reform?

I am not thrilled. Not really all that moved. The cornerstone of the big beer retail reform announcement that by two years from now there may be 150 grocery store licenses to sell beer to 13,000,000 Ontarians can quickly be boiled down. The reality is that as my town represents 1% of the provinces population that is an average allocation of 1.5 licenses for this city. On average.

If you have a look at the report issued by the Premier’s Advisory Council on Government Assets chaired by Ed Clark you see the other problem. At page 33 we see that licences “will be granted in urban areas”; “will be granted in a manner to ensure a fair representation of privately owned grocers”; and most importantly “will be issued through a competitive process based on the discount off the retail price at which grocers will purchase the beer from the LCBO.” So, there are no rural stores getting anything, it’s an auction that everyone gets a shot at but those with the deepest pockets will win. So most will end up in Toronto and maybe Ottawa because that’s where the best return will be made for the few holders of these licences. I am expecting little local change from the grocery store in initiative. Your grocery list is not “about to get a whole new look.”

But that is only one element of the whole. If you look at that headline up there, it is a quote from the introduction from last November’s interim report from the Advisory Council. It literally smacks of paternalism given there was no real public input in the process – but, despite that, there are still there are other other new initiatives that will create more interesting change. I think I will look at those bit by bit. There is a lot to look at. First, however, I think I am going to look at the process, how we got here – including how historically only the temperance movement from the 1870s to the 1920s triggered actual broad public input in the reform of alcohol sales. That was the only time that our betters were not firmly in control. Those times of referendum after referendum were very unOntarian. Ontarians actually like being controlled by their betters. And that won’t be changing anytime soon from the look of yesterday’s announcement.