Booze is coming to Ontario corner stores next week. Here’s what you need to know

August 31, 2024 Canuck

Ontario residents will soon be able to pop into their local corner store to grab beer, wine, and ready-to-drink cocktails as the province proceeds with a plan to expand the alcohol retail marketplace.

Starting Sept. 5, licensed convenience stores across the province will be permitted to sell alcoholic beverages.

Here is what you need to know about the expansion of alcohol into convenience stores:

Which convenience stores are planning to sell booze?

According to the Alcohol and Gaming Commission of Ontario (AGCO), as of August 29, licences have been approved for 4,146 conveience stores.

At least one convenience store chain has already confirmed its plans to sell alcohol to go. In a news release issued in August, 7Eleven said it received its convenience store liquor licences from the AGCO and is currently training staff at 58 locations across the province. The company noted that the expansion is expected to result in 60 new full-time jobs at stores across Ontario.

Will convenience stores be permitted to sell alcohol outside of LCBO hours?

According to the AGCO, licensed convenience stores will be permitted to sell alcohol between the hours of 7 a.m. and 11 p.m. seven days a week. Licensed convenience stores that are open on holidays will also be permitted to sell alcohol on those days.

“The AGCO may place conditions on some licences that further limit the hours during which alcohol may be sold,” according to information posted on the agency’s website.

“Selling alcohol outside approved hours could result in a penalty up to $50,000 or the suspension or revocation of your licence.”

What will pricing be like?

Retail analyst Bruce Winder told CP24.com that there is still some uncertainty around product pricing ahead of the rollout.

“Are convenience stores selling it at a large premium, a small premium, at the same price? It will be really interesting to watch once this is rolled out,” Winder said.

In May, the province announced that there would be an “interim wholesale discount” of 10 per cent from the LCBO basic retail price for other retailers. This discount would apply until 2026, the Ford government said. The LCBO is currently the wholesaler for both convenience and grocery stores.

“A post-2026 wholesaler price that is consistent for all retailers will be determined by a formula that adds taxes, mark-ups and fees to a supplier’s set price,” the province said in a news release back in May. “The government will continue to consult with stakeholders on the new model.”

Daniel Tsai, a lawyer and lecturer at the University of Toronto, said consumers shouldn’t expect a big bargain when alcohol hits the shelves at corner stores.

“When you look at the initial liberalization of the sale of alcohol in stores, initially the Ford government targeted large chains… the common complaint among consumers, of course, is this is more expensive than going to the LCBO,” he said.

“So the question will be, are they going to be competing on price? And that’ll be a concern for consumers. Maybe they’ll want to stick to the LCBO if they know it’s going to be cheaper to buy it from there.”

Will this result in a big boost in revenue for corner stores?

There may be a big bump in sales initially, Tsai said.

“You’re going to see an initial increase overall just because people are going to be so excited by the prospect of being able to go and buy alcohol from their local gas station or corner store. But then what’s going to happen is, because it’s going to be everywhere, there might be a slight bump over time,” he said.

“What the Ford government is really hoping for is a cumulative effect where all these businesses are selling alcohol and that just boosts overall provincial revenues.”

Tsai noted that for some corner stores, they may see the opportunity to sell alcohol as a bit of a “lifeline.”

“At the end of the day for these small (convenience) stores, they do see this as an opportunity to drive up sales as part of their business,” he said.

“Also, this is a tough economy and when you see people coming in and they’re making choices to maybe not buy certain items because it’s too expensive or you’re seeing a drop in spending per customer, then something like adding booze to your offerings in your corner store, especially for a small business owner, might be perceived in some ways as perhaps even possibly a lifeline to help your business stay afloat.”

Why haven’t more grocery stores signed up to sell alcohol?

Approximately 450 grocery stores are currently licensed to sell beer, wine, cider, and ready-to-drink cocktails in the province. As of Oct. 31, 2024, all grocery stores, including big box stores, will be permitted to sell alcoholic beverages provided that they obtain a licence. According to the AGCO, approximately 177 new grocery stores have applied for a licence to sell alcohol, a significantly lower number than the number of convenience stores that have applied. Winder said this is likely due to the requirement that licensed grocery stores accept empty alcohol containers.

“I have a feeling that for grocers, when you combine the low margin, they’re probably making less than five per cent gross margin on alcohol sales, and now you add on the burden of labor and capital and hygiene even, dealing with used bottles coming back, it creates massive complications and massive costs for the grocers,” he said.

“That’s my hypothesis as to why a lot of grocers haven’t signed up. They need to make more money on the category in order to offset the cost to run the category.”

Some of the grocery stores previously licensed to sell alcohol in Ontario decided to stop selling booze, citing high levels of theft and low profit margins.

Michelle Wasylyshen, a spokesperson for the Retail Council of Canada, whose board of directors includes executives from major retail chains such as Sobeys, Metro, Loblaw, Costco, and Walmart, said she suspects some grocers are taking a “wait and see” approach.

“Grocers are watching to see if the economics around selling alcohol become more viable before they can offer their full support. As such, very few have applied for new licenses,” she said in a statement emailed to CP24.com.

“The primary concern is the plan to force consumers to return their empty alcohol containers to grocery stores. Operating return-to-retail systems are expensive, take up valuable floor and backroom space, and create health and safety concerns. Grocery stores were not built for this purpose and adaptation of stores will cost hundreds of millions of dollars – costs which Ontario consumers would ultimately bear.”

What does the future hold for the LCBO and Beer Store?

LCBO locations will continue to be the exclusive retailer for spirits in the province. The Beer Store, which is set to receive $225 million from the provincial government as part of an agreement to expand alcohol sales in Ontario ahead of schedule, will continue its bottle recycling program.

Winder said in the short-term, he doesn’t expect much to change for the brick-and-mortar LCBO and Beer Store locations.

“There’s probably going to be a transition year or two as issues get resolved, business models are refined, but over time, I could see the LCBO shrinking, maybe having less stores or a smaller footprint,” he said.

“They don’t need to be really the full distribution model for the province like they were before. They might be a specialty alcohol store where they have half the stores or less than half the stores.”

He said he envisions a similar situation playing out for The Beer Store.

“I think that in the long run we probably don’t need The Beer Store anymore,” he said.

“I know the province has sort of thrown them a bone, giving them some money to kind of keep the returns facilities for a while. But once the returns issues are settled with other large grocers, then there’s probably not really a big need for The Beer Store.”

Why are health experts concerned about alcohol in corner stores?

Both the Ontario Public Health Association (OPHA) and the Centre for Addiction and Mental Health (CAMH) have spoken out about the possible harms associated with expanding access points to alcohol.

In a letter released in May 2023, the OPHA outlined the “inevitable consequences of illnesses, deaths and social harms to our citizens that will follow with increased sales and consumption of alcohol in Ontario.”

“There’s lots and lots of research that tells us that as consumption of alcohol goes up, there are so many related harms that could happen,” John Atkinson, the OHPA’s executive director, said in an interview with CTV News Toronto last summer.

“These kinds of harms include everything from increases in chronic disease like cancer, because alcohol is a known carcinogen, [and] increases in streets and domestic violence, road crashes, thefts.”

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