Economy & Politcal posted by

$700m in profits go to The Beer Store owners every year says OCSA study

ocsa-logoDetails released today from a study conducted by University of Waterloo Associate Professor of Economics, Anindya Sen, claim that differences in the prices of identical products between Ontario and Quebec enables the foreign-owned Beer Store to capture as much as $700 million in “incremental profits” each year because of the near-monopoly on beer retailing it enjoys in Ontario.

The Beer Store is owned by Anheuser-Busch InBev of Belgium, Molson Coors Brewing Company in the United States and Sapporo in Japan.

The study was sponsored by the Ontario Convenience Stores Association, who are lobbying for extended alcohol sales in retail settings in Ontario.

“This study found that there are significant differences in average beer prices between Quebec and Ontario.  Beer prices are an average of $9.50 per case or 27 percent higher in Ontario versus Quebec,” said Professor Sen.  “These findings aren’t necessarily an argument to reduce beer prices, as there are arguments that higher prices play an important social policy role.  But it raises the important question of whether through modernizing retailing the Ontario government could be benefiting more – and capturing more revenue – particularly in a period of large government deficits.”

“Professor Sen’s conclusions remind us why we need to have a serious discussion about Ontario’s outdated alcohol retailing system,” said Dave Bryans, CEO of the Ontario Convenience Stores Association.  “We know that Ontariocan expand alcohol retailing to more private retailers and still earn the revenue it now receives from the LCBO – and more.”

 

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2 Comments

  • This ‘study’ is rather blatantly pushing the desire of the convenience stores to sell beer. It does not acknowledge things like higher taxes and government-mandated minimum prices, which would continue no matter who has the right to sell alcoholic products. While there are several valid arguments for resolving the current duopoly structure, discredible reports like this one tend to undermine the discussion.

  • We Ontarians enjoy the highest beer prices of any of our neighbouring jurisdictions (Manitoba, Quebec, and south of the border MN, WI, MI, OH, PA, and NY).
    Our alcohol taxes are comparable to any of our neighbours, so that “excuse” is a red herring promoted by both the Beer Store and the LCBO. Our beer prices are higher because the Beer Store monopoly can charge whatever will maximize their profit margin, which is then sent out of the country (USA, Belgium, Japan).
    The government mandated minimum beer price works to the advantage of the Beer Store, not the consumer.

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