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Beer, October 2020 E-News

Wholesale Changes Around The Corner?

Licensed restaurants and bars have been allowed to sell take away packaged beer, cider, and wine for a few months now. This has been a welcome, albeit temporary, development for an industry decimated by the COVID-19 pandemic. However, on its own, this change falls far short of its potential to provide a lifeline to hospitality businesses.

In its efforts to modernize the rules impacting the alcohol sector, the Ontario government has stated that its goal is to improve consumer choice and convenience and provide more opportunities for private sector businesses. The idea of allowing beer and wine sales at “corner stores”, as is the case in our neighbouring province, has been cited and has many supporters. However, detractors point out that there is a risk of a loss of control over preventing sales to under-age age and intoxicated people.

The solution to unlocking the economic potential of this modernization is largely already in place. There is an existing network of around 17,000 licensed outlets whose employees are trained in the sale of alcohol, Ontario’s restaurants and bars. Your local bistro can provide corner store service while keeping the distribution of alcohol in responsible hands. The ability to provide “off-sales” should be made permanent.

There is a further barrier to making take away alcohol sales accessible to consumers and viable for restaurants. Ontario licensees have long been at a disadvantage because they largely pay the same price for the products they re-sell as the end consumer. After accounting for business overheads this leads to a sale price that is generally three times higher than if purchased through the existing retail sales network. This pricing structure encourages the consumer to stay at home and restricts the positive social and economic benefits of going out to a restaurant. It also makes take away sales either unaffordable for the customer or unprofitable for the restaurant.

The time has come to allow wholesale pricing for licensed establishments. There is no good reason that a restaurant such as C’est What, spending over a half-million dollars annually on alcohol has to pay the same price as someone picking up a couple of cans of beer from the LCBO.

Due to the pandemic, the economics of the hospitality industry have changed, perhaps in some ways forever. After months of enforced closure, social distancing rules have limited seating to effectively one-quarter of capacity, so its not surprising that restaurants have laid off millions of employees and are losing equally significant amounts of money. In an industry dominated by small business, there is no capacity to wait out months more of the COVID-19 status quo without closing up shop forever. This doesn’t have to happen. If we value the character and vibrancy of our main streets we need to give local business conditions that they can survive and thrive in. A simple change to allow wholesale pricing to restaurants would unlock the potential for them to remain at the centre of the cultural life of our neighbourhoods instead of going bankrupt.

Increased sales tax revenue from the value added sales price at licensed establishments would likely exceed any reduction in government revenue on the sale of the wholesale product. Also, the economic activity generated in the hospitality industry will lead to more jobs and go a long way to reducing the burden of unemployment benefits.

Allowing wholesale pricing will strengthen the ability of the hospitality industry to survive the pandemic while giving our communities more jobs, stability, and choice. Let’s do this!

C'est What
67 Front Street East