As you stock up at The Beer Store for Christmas, consider this gift idea from Tory Leader Tim Hudak: The end of an 85-year post-prohibition tradition of distribution in Ontario.
When it comes to beer, the right winger is right.
But before you raise a glass to Hudak, a note of caution: He also wants to sell off the LCBO, a far more complicated and controversial proposal that has no traction.
Hudak’s plan to privatize our booze stores and liberate our beer stores is, of course, a naked pitch for votes — the latest in a long line of proposals from politicians trying to profit from sour grapes among drinkers:
David Peterson mooted it in 1985, Mike Harris raised it a decade later and Dalton McGuinty revived it five years ago. But each time, Queen’s Park reconsidered the LCBO’s multi-billion-dollar cash flow and clung to it.
Rightly so. For all its faults — and I’ve written a few columns detailing them — the LCBO isn’t so bad that it can’t be fixed. The bottom line is that it’s worth more to our treasury as an ongoing government monopoly than as a privatized, atomized free-for-all.
Dismantling the booze monopoly would devalue its overall worth, diluting the final sales price and depriving the treasury of future revenues to fund government operations — without any assurance of better service (as Alberta has discovered).
Let’s set aside an LCBO sell-off for now, and consider Hudak’s better idea for beer. Not only is he right on this, it turns out most of us have the wrong idea about the Beer Store and its 440 outlets to begin with.
If I told you that government has no business in the Beer Stores of the province, I’d be wrong — because the government does not, in fact, own or run The Beer Store.
If I complained that those powerful Canadian-based breweries that run the Beer Store cartel should be forced to give up their quasi-monopoly, I’d still be wrong — because Labatt, Molson and Sleeman aren’t actually Canadian-owned any more.
In fact, the Beer Store is ultimately owned by three foreign multinationals: Anheuser-Busch InBev, Molson Coors and Sapporo. In what other country does an elected government act as an enabler for a foreign-owned cartel — based in Belgium, Brazil, the U.S. and Japan — that wields monopoly power on beer sales in such a lucrative, captive market? Who voted for this?
True, it’s technically a duopoly — with two players in the market: You can find a selection of mostly high-end beers across the street at the LCBO, but sales are largely restricted to six-packs. If you want the most popular brands, packaged in cases of 24, you must buy from The Beer Store — hence its unbeatable 80-per-cent market share.
Time has passed The Beer Store by, but we’re still stuck with a model conceived in 1927: Post-Prohibition, wine and spirits went to the LCBO while lower-alcohol beer was entrusted to a distribution co-operative formed by every brewery in Ontario. Over time, Brewers’ Retail snapped up all retail operations, and industry consolidation reduced its ownership to a handful of dominant breweries.
Today, it’s an anachronism run from abroad. And it’s indefensible, unless you believe in the British East India Company model of squeezing colonial markets.
Pay no heed to propaganda from the big beer lobby about how well it handles recycling. That’s just recycled greenwashing, and can’t countenance the cartel’s attempt to spare the sale of suds from competition — in perpetuity.
Ignore the arguments about its cost-effective distribution network compared to corner stores. Beer would also be sold by Costco and the big supermarkets that know what they’re doing (as they do in Quebec.)
Prices might not go down — hidden taxes won’t go away — and might even rise. That’s a price worth paying for the added convenience and coherence of dismantling a distribution strategy designed for 1927, not 2012.
Service can only improve. Presentation would probably perk up: Compare your local Beer Store, with its utilitarian displays that feel frozen in time, with the more updated look at LCBO stores, which have become more responsive to customers.
Unlike a risky privatization of the LCBO, pulling the plug on The Beer Store wouldn’t cost the treasury a penny. It’s not even an ideological question pitting government ownership versus privatization.
Leave the LCBO alone for now — Ontarians already own it, and it helps pay the bills. The Beer Store, however, is an embarrassment. It’s an outdated operation crying out for an update — an indefensible, secretive monopoly that serves foreign interests. Not Ontarians’ interests.
Who better than Hudak’s Tories — who don’t usually play the economic nationalist card — to liberate beer distribution from foreign domination and monopoly manipulation?
Martin Regg Cohn’s provincial affairs column appears Tuesday, Thursday and Sunday.
mcohn@thestar.ca, twitter.com/reggcohn.
