Defying all odds, a clear victor has emerged in Ontario’s wildly unpredictable election campaign.
The big winner is . . . The Beer Store.
You could almost hear the clink of celebratory toasts on Victoria Day as the province’s de facto private beer monopoly cheered its unexpected triumph.
For two years The Beer Store had braced for battle, convinced that if Tory Leader Tim Hudak won power he would free our beer — liberating it from these foreign-owned brewers who control 80 per cent of the retail market (the LCBO gets the rest).
All along, Liberal Leader Kathleen Wynne and the NDP’s Andrea Horwath sided with The Beer Store, insisting it wasn’t a problem worth fixing. Would the Progressive Conservatives finally stand up to this well-connected cartel by allowing beer in corner stores?
Just before the holiday weekend, Hudak’s plan fizzled like a beer gone flat.
It didn’t “make the cut” for his campaign platform because “I have to set priorities — and I have big fish to fry,” he explained. “I’ll save that battle for another day.”
Now, his two-year battle plan has been poured down the drain. Why did The Beer Store suddenly become small beer for Hudak?
Back in 2012, the Tory declaration won headlines, raised expectations and rattled the big brewers. It sounded like a vote-winner:
“The province should also end the Beer Store monopoly and allow sales in corner or grocery stores.” You can still read it on Hudak’s personal website.
But The Beer Store is a well-connected cartel. Owned by Canada’s three biggest brewers, it is in turn controlled by the world’s mightiest multinational players: Molson Coors (with head offices in the U.S.); Anheuser-Busch Inbev (based in Belgium and Brazil) and Sapporo (Japan).
Canada’s National Brewers (which speaks for The Beer Store) recently hired Emma Breen — a Hudak family friend and former political staffer in the Mike Harris government — as Ontario vice-president. The big brewers also donate tens of thousands of dollars every year to Ontario’s three main political parties. In 2012, the NDP received more than $38,000 in union donations from various arms of the UFCW union, including $6,000 from its local 12R24, which represents 6,000 workers at The Beer Store.
Beyond political connections or donations, there’s a simpler explanation for why Hudak choked on The Beer Store in the homestretch: He bit off more than he could chew.
The Tories didn’t just promise to liberalize beer sales. They talked about privatizing and deregulating all alcohol distribution across Ontario, including sales of wine and spirits (largely controlled by the LCBO).
If Hudak were to deregulate it all — beer sales plus wine and spirits — he’d be diluting significant cash flow. The LCBO provides more than $1.7 billion in profit to the provincial treasury every year from retail mark-ups. Breaking it up would smash the LCBO’s monopoly power, reducing the money Hudak is counting on for deficit reduction.
There’s good reason to keep the LCBO intact, beyond the cash flow. While it can be improved, it has kept up with the times and offers a pleasant retail experience.
The Beer Store, by contrast, remains frozen in time. Most Ontarians don’t realize that its ossified outlets, which feel like state-owned stores from a bygone era, are not government-owned.
Liberalizing our beer sales doesn’t require any government to privatize The Beer Store, because it’s already privately-owned. The solution is to let other private retailers — not just corner stores, but supermarkets and other large outlets — also compete, while abiding by the same licensing and age restrictions (as with tobacco).
The politically practical way to achieve this is to liberalize beer alone, while leaving the LCBO as is. Hudak may have been reluctant to go only half-way — not just as a self-proclaimed free enterpriser, but because his home riding is in the heart of the wine-producing Niagara region, which also wants wider access. Opening up the tap for beer alone would be awkward for him.
Now the battle is lost. By overreaching — roping in higher-alcohol-content wine and spirits — Hudak dropped the ball on beer. His Liberal and NDP rivals have also ducked.
And so, back to the election campaign.
Which party will win the June 12 vote? Not a clue.