Alcohol Retailing Deregulation - Implications for Ontario - February 10, 2014
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Alcohol
Retailing
Deregulation
Implications
for Ontario
A Beer Store Position Paper
February 10, 2014 Foreword by Greg Flanagan, Economist
consequences of retail system change tax-adjusted prices are higher on average
would or could bring. For example, in Alberta than in Ontario. And despite
proponents of privatization often argue Ontario having lower prices, its government
Contents Foreword that privatizing beverage alcohol retailing,
or otherwise opening it up to a greater
‘free’ market, will lead to efficiencies and
alcohol tax revenues have increased at a
far greater rate.
pages price reductions, all other things constant British Columbia, although only partially
(for example, public revenue). As this privatized, has experienced the same pri-
Foreword ....................................................... 2- 4 by Greg Flanagan vatization consequences as Alberta:
paper shows extremely well—the reality is
far different. compromised public revenues and higher
Executive Summary ................................. 5-9 consumer prices. Why has this happened?
Alberta, and to a lesser extent British The short story is excess capacity: the
Introduction ............................................. 11-12 Columbia, have privatized their beverage consumer base is now spread between
... claims of alcohol retailing markets. In reviewing the far too many small and less efficient retail
Ontario’s Liquor privatization experiences of these two outlets. On average each outlet’s sales
Retailing System .................................. 13 -15 retail deregulation provinces this paper illustrates well the are a fraction of what they could be in a
delivering lower relationships of competition, costs, more regulated/controlled system with
Deregulation and
Consumer Liquor Prices ................... 17-25 consumer prices, product prices, and public revenues. fewer points of sale. The unit cost of
For example, it is not possible to have retailing including product distribution
higher government lower product prices and maintain or and marketing is high compared to more
Deregulation and Provincial tax revenues and enhance government revenue. The one regulated markets like Ontario and this
Government Liquor Revenue .......... 27-35 continued social is directly related to the other. Therefore, leads to higher prices.
and environmentally for prices to fall public revenues must be
Deregulation and decreased. If public revenues are to be What about consumer gains from
Product Selection ................................. 37-39 responsible product maintained over time then prices must rise. privatization other than price – greater
Deregulation and
sale, all at the same convenience, increased product choice
When Alberta privatized the retailing of and the like? It is true that in Alberta and
Availability of Alcohol ..................... 41- 43 time, are simply alcoholic beverages in 1993 the Klein BC there are many more and therefore
not credible. government planned a revenue neutral tax convenient outlets. The hours of operation
The Impact of Deregulation scheme while promising lower product are extensive with Christmas day being
on Responsible Sales Practices ..... 45-51 prices to consumers. It was not to be. the only day retailers cannot operate in
The large expansion of retail outlets raised Alberta. But this doesn’t necessarily mean
Environmental Performance .......... 53-54 the costs of product distribution, marketing convenient in terms of product choice or
As an economist who has studied the
privatization of retail alcohol sales and retailing and to the surprise of the selection. Product listings in Alberta’s
Other Issues ........................................... 55-56 Alberta government, and Alberta consumers, central alcohol product warehouse
extensively, I find this paper to be a
valuable contribution to the growing prices increased. The ensuing negative mushroomed following privatization. But
Conclusions ............................................. 57-58 consumer reaction required Alberta to that doesn’t mean all those products are
literature on beverage alcohol retailing
in Canada. The public, and public policy reduce alcohol taxes on three occasions generally available to all consumers. The
Appendix A: following privatization in an ultimately average small Alberta liquor retailer can
Tax Rate Calculations .............................. 59 makers, are well served with this type of
fact-based informative research showing unsuccessful attempt to stabilize prices. only shelve so many products. Beer and
the reality of the trade-offs inherent in inexpensive wines dominate sales, so the
Sources ..................................................... 61- 63 Since privatization, Alberta’s alcohol tax small outlets concentrate on these most
policy decisions regarding any restructuring revenues (in real dollar terms) have
of the retailing of beverage alcohol. marketable products. It becomes expensive
declined on both a per capita and dollar to carry many products. If one were to
Too many ill-informed opinions have been per litre of alcohol basis. Alberta lost shop the province it is possible to find
expressed on how beverage alcohol is government revenue while consumers different prices and reasonable choice.
marketed in this country and what the paid higher prices. As this paper documents, However, the reality for most consumers
3 | FOREWORD
is the need to patronize a number of taxes, and free market economics. There The following paper compares the
different local retailers to find adequate was little public consultation and not performance of Ontario’s existing beverage
product choice while at the same time much critical analysis. In the end, Alberta alcohol retail system across a variety of
resigning themselves to pay local prices.
For many this has proved less convenient
and more expensive than what existed
gave up control of the market, and public
revenue was reduced. The benefits of
the change were more stores (albeit with
Executive factors to liquor retailing systems that
have undergone varying degrees of retail
deregulation with a particular focus on
before privatization.
Ontario already has a balance of private
more limited selection) and a broader
base of available alcohol products. Lower
prices were not one of the benefits.
Summary Alberta and British Columbia given the
robustness of available data on those
markets. Factors examined include
and public involvement in its alcohol expected impacts on consumer prices,
retailing system. The private sector is Once a regulated alcohol retailing system government revenues, product selection,
publicly regulated on all of the important is privatized it is extremely difficult and availability of liquor and responsible
aspects of control: store location, operating expensive to reverse – perhaps impossible. sales practices.
hours, days open, and product prices. Therefore, great care needs to go into the ... actual
Responsible sales practices are more consideration of policy changes in this Key findings of this research in-
easily administered and enforced and the market – a market whose products are
deregulation initiatives
clude the following:
system has a highly effective environmental not just some other consumer good. have resulted in higher
management system. Importantly, the consumer prices and
controlled number of retail sales outlets The consumption of beverage alcohol
lower government revenues Consumer Prices
means efficiencies are realized creating can have significant impact on social
the lowest price/highest public revenue wellbeing. Its sale is also an important as a proliferation of • The evidence is overwhelmingly clear
source of government tax revenue. This retail outlets has driven that deregulation of liquor sales in Alberta,
possibility. While provincial uniform pricing
paper brings considerable fact-based and B.C. resulted in higher cost and less
regulation makes for common prices in
insight to the potential consequences of up overall system costs. efficient retailing systems that drove price
urban, rural and remote areas, a practice
deregulating Ontario’s current system of increases to consumers – not price
that undoubtedly benefits rural consumers,
alcohol retailing. By empirically analyzing decreases.
price competition between beer producers
in what The Beer Store calls the “beer the impacts of retail deregulation in other
• According to Statistics Canada data,
commons” keeps wholesale costs and provinces this paper demonstrates in an The issue of alcohol sales in corner stores retail alcohol prices in Alberta have
consumer prices low. The benefits of effective and compelling way that claims and gas stations is once again in the increased by 67% since 1993 more than
competition are realized and the cost of retail deregulation delivering lower news in Ontario. Proponents of deregulated double both the national average increase
advantages and efficiencies of a controlled consumer prices, higher government tax alcohol sales claim that deregulation will of 32% and the increase in Ontario of 28%.
retail system are achieved for the benefit revenues and continued social and lower consumer prices, increase product
of consumers, government and alcohol environmentally responsible product sale, choice, generate higher government • Statistics Canada data also shows that
producers. all at the same time, are simply not credible. revenues while at the same time improving in the last decade retail alcohol prices in
Those outcomes have never been responsible sales practices. Alberta increased at almost three times the
Public policy is difficult. It should be experienced elsewhere and they are rate of Ontario (28.2% vs 9.2%) and retail
based on solid fact-based research but unlikely to be experienced here in Ontario. While such claims may sound enticing, a prices in B.C. increase at 80% faster than
also has to respond to citizen’s wishes. review of the deregulation experiences of the rate in Ontario (16.9% vs 9.2%).
Political parties come with philosophical In short, policy makers need to ask them- other North American jurisdictions shows
perspectives that guide their policy direction. selves: Is it so difficult to access alcoholic that this combination of outcomes has PERCENTAGE CHANGE ALCOHOL PRICES
There is some controversy as to the balance beverages in Ontario that creating greater never been realized anywhere in practice.
(PURCHASED AT RETAIL) 2002-2013
between evidence based policy and convenience through privatization is worth In fact, increased availability of alcohol in 30%
ideology. In 1993, the sale of the Alberta the price to both consumers and taxpayers? jurisdictions that have deregulated liquor 28.2% Alberta
20%
Liquor Control Board’s retail assets and retailing has been accompanied by 16.9% B.C.
10%
the privatization of the retailing market significant increases in consumer prices, 9.2% Ontario
were pursued mostly due to ideology; an a general reduction in product selection 0%
ideology based on small government, low and lower government alcohol tax revenues. 2002 2013
4 | FOREWORD 5 | EXECUTIVE SUMMARY
• Current average Beer Store beer prices provincial government alcohol tax Product Selection Availability of Alcohol
are over $10 less per case than those of revenues since 1993:
private retailers in Alberta or B.C. • Deregulation in Alberta significantly • Adopting Alberta or Quebec retailing
• 35% decline in alcohol tax revenues increased the total number of alcohol systems would mean over 10,000
• Quebec is the only province in Canada per litre of absolute alcohol (LLA) sold products made available for retailers to liquor retail outlets in Ontario (up from
that has beer prices comparable to (measured in constant dollars) despite purchase at the province’s central existing 1,800);
Ontario’s and if Ontario’s beer taxes were higher consumer prices; distribution warehouse, but selection at
the same as those in Quebec (Quebec individual retail stores varies significantly • Public opinion research by Ipsos Reid
beer taxes are less than half those of • Alcohol tax revenue as a percentage indicates that most Ontario residents are
of liquor sales value dropped from and is much less than in Ontario and
Ontario), Ontario beer prices would be lower: hence consumers must shop around not supportive of paying higher alcohol
40% in 1993 just prior to deregulation prices for greater alcohol availability;
• The cost to the government of to 25% today; to find particular products.
implementing Quebec beer taxes in • Private liquor retailers in other jurisdic- • 81% of Ontarians are satisfied with
Ontario would be $350 million annually. • Partial deregulation of alcohol sales the existing beverage alcohol retailing
tions (i.e. Alberta, B.C. and Quebec)
in B.C. also resulted in a decline in system;
typically carry fewer beer products than
Average 24 Pack Prices (Bottles) government tax revenues per LAA
Beer Store outlets in Ontario. • 67% of respondents indicated that
from May 2013 IPSOS Reid Survey (measured in constant dollars) despite a
number of tax increases and higher they would be more likely to oppose
consumer prices. the sale of liquor in convenience stores
Average 24 Pack Price Urban Stores Rural Stores if they had to pay 15% to 20% more
• Ontario’s current beverage alcohol for alcohol products.
BC Licensee Quebec 105-170 50-80
$50 Retail Store $ 46.40 retailing system outperformed both
Convenience Store brands brands
$45
Alberta Private $
Liquor 43.12 Alberta and B.C. in government revenue
growth in the periods following full and
Responsible
Alberta Liquor Store 70-150 60-90
$40
Ontario partial deregulation in those provinces. brands brands Sales Practices
$35 Beer Store
Quebec Grocery $ 32.08 • Ontario generates over $1.2 billion B.C. Licensed 120-240 130-150 • Concerns about sales practices by
Depanneur
$ 31.60 Retail Store brands brands
$30
more from alcohol sales annually than private retailers in both Alberta and B.C.
it did in 1992; The Beer Store 280-330 110-180 prompted both governments to increase
brands brands related monitoring and enforcement
• If Ontario liquor revenue trends (incurring additional costs). This is
Price with Ontario Beer Tax
had following those in Alberta, the also true of several U.S. states with
BC Licensee
$50 Retail Store cost to the provincial treasury would
$46.57 $
45.58 have been $5.4 billion over the last
$45 two decades. U.S. state and B.C. Minor Compliance Check Program Results
Alberta Private
Liquor
$40 Ontario versus Alberta State/Province Year(s) Type of Licensee Failure Rate
1993 to 2012 (sale to minor)
Ontario
$35 $ 35.68 Beer New York 2011-2013 Retailers 41.7 %
Quebec Grocery Store Percent Change 1993-2012 100%
$30 Depanneur $32.08
Ontario Alberta Illinois 2009-2013 Retailers & Licensees 21.4 %
80% Arizona 2003-2012 Retailers & Licensees 30.7 %
60% Michigan 2006-2011 Retailers & Licensees 14.9 %
Government 40%
Ohio 2012-2013 Retailers & Licensees 21.4 %
Washington 2011 Failure Rate Government Stores 5.7 %
Tax Revenues 20%
Failure Rate Private Retailers 22.7 %
• Deregulation of alcohol sales in Alberta 0% British Columbia 2011-2013 Failure Rate Government Stores 6.0 %
has resulted in a significant decline in Population Alcohol Volume of Government Failure Rate Private Retailers 21.5 %
Retail Prices Alcohol Sold Alcohol
Revenues
6 | EXECUTIVE SUMMARY 7 | EXECUTIVE SUMMARY
deregulated alcohol markets. The results General Study per case higher than those in Quebec. committed to working with the government
associated with these enforcement The significance of this for potential beer and LCBO to explore ways to improve
programs demonstrate that compliance Conclusions sales in Ontario corner and grocery stores liquor retailing without jeopardizing the
with sale to minors laws decrease is that Ontario consumers will not get many benefits of the existing retail system.
significantly in deregulated retailing Contrary to what several proponents of Quebec beer prices unless the Ontario The Beer Store has also long supported
environments. deregulated liquor retailing assert, there government lowers beer taxes to match the concept of LCBO-Beer Store joint
are no magic bullets related to Ontario’s those in Quebec. ventures as one way to enhance
• In Ontario, independent private retailers beverage alcohol system that will
would be unlikely to match current consumer convenience and improve
increase government revenues while Ontario currently generates approximately
Ontario responsible sales practices, even system efficiency and government
simultaneously reducing consumer prices $3 billion dollars annually from alcohol
with increased government spending on revenue performance without driving up
and expanding selection and access. sales (including retail sales tax revenues).
monitoring and enforcement. This is one of the single largest revenue consumer prices.
The current combination of high liquor
taxes and government liquor board streams for the province after personal The experience of deregulation initiatives
Environmental retailing has led some observers to income tax and it helps to fund various in other jurisdictions suggests that the
conflate high prices with government provincial services such as hospitals best way to improve liquor sales in
Performance controlled liquor retailing. In fact, existing and schools. The serious revenue and Ontario is through continued evolution of
government regulated retailing systems consumer pricing implications associated the existing system, not radical alteration.
• Unlike other provinces which have
deregulated alcohol sales, Ontario does such as Ontario’s represent relatively with radical changes to Ontario liquor Jurisdictions which have moved to
not have a comprehensive deposit efficient retailing models for a product for retailing system make potential changes deregulated markets have created
return/depot system for returning which the majority of the public expects far more problematic than proponents of marginal improvements in consumer
beverage containers including beverage some form of social control. deregulated liquor sales would suggest. access at the cost of higher prices,
alcohol containers. Changes to alcohol Moving to a deregulated retail market Successive governments, regardless of declining government revenues and a
retailing in Ontario, therefore, will have will undoubtedly increase the number of their political orientation, have all shared deterioration of socially responsible sales
more significant implications for container retail selling locations, but it will also one thing in common when it comes to practices. This does not seem like a
recycling and reuse than other provincial significantly increase costs and destroy beverage alcohol retailing in Ontario, prescription for success in Ontario.
jurisdictions. the economic efficiencies inherent in the more they reviewed the current liquor A few decades ago, Ontario consumers
• The beverage alcohol containers Ontario’s current alcohol retail system. retailing system, the less interested filled out prescription like slips and
currently collected through the Beer This effect will drive up consumer prices, they were in radical change. Political received alcohol in brown bags when they
Store’s deposit return system are reduce government tax revenues or reluctance to radically alter Ontario’s purchased alcohol at the LCBO. Today
equivalent to half the tonnage of generate some combination of both these current system is understandable in the provincial liquor retailing system is fully
materials collected through the entire changes. light of the consumer price impacts modernized and responsive to consumer
municipal blue box system. Because this Promises about lower consumer prices associated with actual deregulation in demands. At the same time alcohol is
packaging is managed outside the and windfall tax revenues for government other jurisdictions and the relatively broad marketed and sold responsibly while the
municipal waste system municipal from deregulated alcohol sales are simply support for, and satisfaction with, the province generates significant alcohol
taxpayers avoid $40 million in annual not supported by any evidence. Actual current system from Ontario consumers, tax revenues that grow steadily year after
waste management expenses. deregulation initiatives have increased taxpayers and social interest groups. year. Rather than jeopardize this growing
• It is unlikely this system could be consumer prices while severely restricting Maintaining the existing liquor retailing revenue stream, the province should
sustained under a convenience store the ability of governments to maximize model, however, does not mean that it explore options for retail improvements
liquor retailing model. Hence, if beverage revenues from alcohol sales. in the context of the existing system
cannot be improved. Both the LCBO and
alcohol containers had to be managed the Beer Store retailing environments which effectively balances consumer
While some Ontario consumers may needs, government priorities and public
through municipal waste channels prefer the convenience of alternate liquor have changed significantly over the past
municipal taxpayers would be saddled few decades. Recently, the Beer Store concerns.
retailing models such as Quebec’s, few
with an incremental $40 million a year are aware that Ontario beer commodity announced $30 million in retail investments
in cost. taxes are $3.50 (bottles) to $5.69 (cans) to open 13 new stores and renovate 61
others in 2014. The Beer Store remains
8 | EXECUTIVE SUMMARY 9 | EXECUTIVE SUMMARY
completely unregulated. Any person who
meets the government’s basic licensing
requirements can set up a liquor store
Introduction subject only to municipal zoning require-
ments. This is also generally true of wine
and beer sales in grocery and corner
stores in Quebec where again the number
of selling locations for alcohol is not
directly controlled or regulated. In other
jurisdictions (e.g. British Columbia or West
Virginia), governments have regulated the
number of retail liquor outlets, even those
operated by private businesses.
While much of the debate around retail
The issue of retail liquor sales is once
alcohol sales to date has focused on
again in the news in Ontario. While media
ideological considerations (i.e. government
coverage often characterizes the issue as
shouldn’t be in the liquor business) or
a question of whether retail liquor sales
consumerist motivations such increasing
should be “privatized” (most likely due to
convenience and accessibility or the
the dominant position of the government
general belief that deregulation will produce
owned Liquor Control Board of Ontario –
lower prices, less consideration has been
LCBO), Ontario’s beverage alcohol retail
given to the different costs and economic
system, like many in Canada, is already
efficiencies associated with deregulated
characterized by a mix of government and
retailing systems and the implications of
private sector retailers. The Beer Store,
these factors for consumers, government
Ontario winery retail stores and LCBO
and the general public.
authorized agency stores, all privately
owned operations, collectively account In this regard, the debate over the future
for about 37 percent of liquor sales by of Ontario’s beverage alcohol retailing
value in the province.1 While government system requires a thorough assessment
agencies regulate all provincial alcohol of the costs and benefits associated with
sales, government owned and operated the current regulated or controlled retail
LCBO stores only account for 65 percent market, where the government maintains
of alcohol sales by value in the province. control over the number, type and location
of retail locations, and the costs and
While private sector liquor retailers are
benefits associated with more deregulated
active in most provinces, their sales
retail systems where accessibility to
volumes and the degree to which the
alcohol is completely a function of market
government regulates the number of
dynamics and where selling locations tend
outlets varies significantly from province
to proliferate and overall system costs are
to province. In Alberta, for example, the
higher (i.e. lower overall system efficiency).
number of private liquor stores is
Proponents of deregulated alcohol
retailing models often suggest that
1 Based on sales data from LCBO Annual Report 2012 prices will drop, government revenues
and TBS sales data. will increase and accessibility to alcohol
11 | INTRODUCTION
products will significantly improve if the of selling locations, the question remains owned by Ontario’s three longest
government deregulates alcohol sales.2 as to whether it is in the best interests of operating breweries, Labatt, Molson Coors
However, the actual experience of Ontario consumers and taxpayers to do and Sleeman.4 In 2013, 100 different brewers
jurisdictions which have fully or partially
deregulated alcohol sales and moved
towards retail models characterized by
so. It is with the hope of clarifying what
taxpayers and consumers can actually
expect with deregulation of Ontario
Ontario’s sold more than 400 brands and more
than a thousand products at the Beer
Store.5 Excluding sales taxes and depos-
many more selling locations per capita
suggests there are significant economic
and consumer trade-offs associated with
alcohol sales that this paper was written.
There are clear trade-offs to be made in
Liquor its, Beer Store sales totaled $2.7 billion in
calendar year 2012.6
the move toward these models, especially
when government wishes to maintain and
any move to a higher cost and less
economically efficient retail model. The Retailing Ontario wineries operate 472 winery retail
stores which are limited to selling “Ontario
even grow its alcohol tax revenues.
In the view of the Beer Store, public policy
Beer Store believes it is important that
these trade-offs be objectively assessed
and that any public policy decision to
System wine” produced by the winery. With sales
of $232 million in fiscal 2012, these stores
accounted for about 13% of Ontario wine
decisions about beverage alcohol retailing move towards a different retail system be sales by volume. Although 292 of these
should be based on the best information made with a clear understanding of the stores are located off manufacturing sites,
available, especially the deregulation resulting consequences of those trade-offs. new winery retail stores can only be located
experiences of other jurisdictions, and at a winery’s manufacturing location.7
not misconceptions about what should or
might happen in theory if the government In smaller and remote communities liquor
moves to a deregulated alcohol retail is sold in combination with other goods
market. by private sector retailers operating as
LCBO agents and TBS Retail Partners.
The Beer Store takes this position There are currently over 1,800 retail These 219 agency/Retail Partner stores
because time and time again, actual alcohol outlets in Ontario. The Liquor account for approximately 3% of provincial
deregulation initiatives have resulted in Control Board of Ontario (LCBO), an retail liquor sales.
higher consumer prices and lower Ontario crown corporation, operates 634
government tax revenues as a proliferation stores which account for approximately Total alcohol sales in Ontario were worth
of retail outlets has driven up overall 95% of spirit sales, 87% of wine sales approximately $7.1 billion in Fiscal 20138
system costs. Deregulation initiatives have and about 20% of beer sales. LCBO (excluding sales taxes).9 Of this approximately
also been shown to increase regulatory sales, excluding harmonized sales tax and
costs as governments attempted to deposits, totaled $4.9 billion in fiscal 2013
4 TBS Financial Statements are available online at its website.
sustain responsible sales practices at (including wholesale and retail sales).3
Shareholders include Labatt Brewing Company, a subsidiary
the growing number of new retail outlets of Anhueseur-Busch InBev; Molson Coors Brewing
The Beer Store, authorized to operate Company; and Sleeman Breweries Ltd., a subsidiary of
(e.g. Alberta and British Columbia).
under the Liquor Control Act, operates Sapporo International.
While Ontario could move to a completely 448 stores which account for approximately 5 Products or stock keeping units refer to beer packages
available for sale. For example one brand selling in bottle
deregulated or a less regulated retail 75% of retail beer sales. The Beer Store six-pack, twelve-pack and twenty-four pack package
market and produce an increased number also sells and delivers beer to licensed configurations would be considered three products.
establishments, LCBO stores and agency 6 TBS Financial Statements 2012.
stores, and collects beverage alcohol 7 Under terms of trade agreements with the European Union
2 See “Privatizing liquor sales will benefit Ontario consumers”,
containers for either recycling or, in the and United States, new Ontario winery retail stores can only
be opened at Ontario winery manufacturing sites.
editorial Windsor Star, Feb 25, 2013; “Indeed Convenient”, case of refillable beer bottles, reuse. It is
8 Fiscal year references to the government of Ontario are
editorial, The Globe and Mail, Monday, July 8, 2013.
“Allowing private liquor stores to Ontario’s mix could add fiscal years which represent the 12-month period ending
$1B, says B.C. industry spokesperson: Ontario could see March 31st of each year.
3 LCBO Quarterly Financial Report, Fourth Quarter F2012/
of a windfall of $1 billion if adopted British Columbia’s mix 9 Cross selling between the LCBO and TBS has been
F2013, page 5. Total LCBO sales include sales to agency
of private and publicly operated liquor stores.” Toronto Star, factored out to arrive at this estimate.
stores, licensees and TBS.
May 9, 2013
12 | INTRODUCTION 13 | ONTARIO’S LIQUOR RETAILING SYSTEM
$5.7 billion is associated with retail sales. The LCBO determines what it sells and the Beer Store does not control market distribution model; more consistent prod-
Excluding sales tax revenue, Ontario in conjunction with suppliers determines access, product selection or product prices. uct selection between outlets; effective
collected approximately $2.28 billion from what prices those products sell for.12 Like socially responsible sales practices and
the sale of alcohol products in Fiscal 2013 most provincial liquor boards the LCBO The Beer Store is unique in that it higher paid unionized retail staff. But while
with a net income at the LCBO projected has a uniform pricing policy meaning that operates as a completely open retail and the Beer Store system may embody many
to be $1.711 billion (inclusive of beer taxes any particular alcohol product will sell for wholesale system. Any brewer in the of the characteristics of a regulated retail
collected by LCBO on LCBO retail beer the same price at every single outlet in the world can list whatever beer product they model it is a misnomer to suggest that its
sales and wholesale sales of imported province. In Ontario uniform pricing is also want in which ever Beer Store outlet they structure inhibits or limits price competition.
beer to the Beer Store and licensees) a legislative requirement for all beverage choose. Brewers are also free to set their The Beer Store has extensive price
and taxes on domestic wine and beer alcohol retailers meaning that for products own selling prices subject only to basic competition between brands within its
sales outside the LCBO system totaling sold in both the LCBO and the Beer Store LCBO price approval requirements system and with its open listing policy,
$569 million.10 Sales taxes related to or winery retail stores the retail price to (i.e. compliance with legislated minimum has an ease of access that surpasses that
alcohol sales, including those at licensed the consumer for the same product will and uniform pricing requirements). found in classic deregulated systems.
establishments, equate to approximately be the same in both types of outlets. Provincial regulation allows brewers to
change beer prices on a weekly basis.13
$750 million per year11 bringing Ontario’s
annual liquor revenues to just over $3 Compared to privatized or deregulated Winery Retail Stores
liquor retailing alternatives, liquor board The open nature of the Beer Store
billion annually. combined with pricing freedom for Ontario wine stores, in particular, offsite
monopolies generally share a number of winery retail stores, like the Beer Store,
defining characteristics: there are fewer individual brewers has created a highly
competitive beer pricing market. Typically are somewhat unique. These stores
Key Characteristics outlets per capita; efficient distribution;
the Beer Store processes hundreds of which sell only domestic wine produced
uniform pricing within the jurisdiction
of the Ontario Liquor (i.e. no price variation between retail outlets price changes every month and the average by the owner winery are often located
adjacent to a grocer. With sales restricted
Retailing Model in remote versus urban areas); more retailing selling price in the system has
only increased by 2.8% since 2003 while to domestic wine, they, like Quebec
consistent product selection at retail grocery and corner store wine sales
the general rate of Ontario inflation over
Liquor Control Board locations; effective responsible sales
procedures and higher paid unionized the same period was approximately 20%. (restricted to Quebec bottled wine), are
technically in violation of Ontario’s
of Ontario staff. In the case of the LCBO, which has While Ontario’s uniform pricing regulation
obligations under international and
made significant investments in its retail precludes price competition between
The LCBO is a classic government owned beer retailers such as the LCBO and the interprovincial trade agreements.
system over the last two decades, one However, they have been grandfathered
liquor retailing monopoly. Although it might also add that Ontarians have Beer Store, price competition between
competes to a certain extent with both individual brewers and brands within under existing trade agreements.
access to a more upscale retail shopping
the Beer Store and winery retail stores for environment than normally associated the Beer Store system is significant. The most significant issue related to these
customers, these competing retailers do with privatized beverage alcohol sales. Furthermore, lower priced products are outlets in relation to changes to Ontario’s
not stock a full range of alcohol products. not restricted to larger outlets in urban retailing system is that Ontario cannot
As such the LCBO is the only full product centres, but are available at all Beer Store
range liquor retailer for most Ontarians. The Beer Store locations throughout the province, hence
increase the level of discrimination (vis a
vis foreign products) associated with its
Although sometimes referred to as a rural consumers benefit as much as urban retail system without increasing Ontario’s
monopoly the Beer Store might be more consumers. vulnerability under trade agreements.
10 See LCBO press release June 17, 2013: http://www.lcbo. accurately described as a “beer As a beer commons, the Beer Store has For example, if Ontario attempted to
com/lcbo-ear/media_releases/content?content_id=2421In commons”. Unlike a classic monopoly, implement a policy like Quebec’s where
Ontario. For estimate of beer and wine taxes see Ontario many of the characteristics associated
Budget 2013: A Prosperous and Fair Ontario, Budget Papers, with a classic regulated alcohol retailing only Ontario-bottled wine or beer could
page 222.
system: fewer outlets per capita; efficient be sold in corner or grocery stores,
11 The Ontario government does not publish information on 12 Suppliers will quote prices to the Board, which are then such a change could generate a trade
sales tax revenue related to alcohol sales specifically. This
figure has been estimated by TBS based on estimates of
subject to standard Board markups associated within each challenge which Ontario (or Canada)
category. While suppliers are free to change prices on a
retail sales at LCBO, TBS and winery retail stores and the monthly basis, the Board has final authority over whether 13 See Ontario Regulation 116/10 (under Liquor Control Act)
would be unlikely to win.
estimated value of liquor sales at licensed establishments. that price change is accepted or rejected (or amended). sections 11 & 12.
14 | ONTARIO’S LIQUOR RETAILING SYSTEM 15 | ONTARIO’S LIQUOR RETAILING SYSTEM
variable tax rates as well as the variations
in manufacturing, distribution and retailing
costs in those jurisdictions. This is
Deregulation especially true in Canada where alcohol
taxes are among the highest in the world
ranging from 40% to over 70% of retail
and Consumer price. Adopting a retail model present in
one jurisdiction and expecting to achieve
prices similar to that jurisdiction without
Liquor Prices also adopting that jurisdiction’s alcohol
tax rates is not a realistic expectation.
Prices in Canadian provinces are generally
higher than those in the U.S. not because
of inefficiencies in regulated Canadian
retail models or the often alleged lack of
Proponents of deregulated liquor retailing retail price competition, but rather because
in Ontario often point to prices in of the significant differences in state
neighbouring jurisdictions with grocery versus provincial taxes.
or corner store sales, such as Quebec
or New York state, to argue that alcohol For example, a comparison of state liquor
prices will drop if the retail systems tax rates in New York, Michigan and
present in these other jurisdictions were Ontario (Table 1) shows that state taxes
adopted in Ontario (i.e. the belief that for wine and beer products are only 2 to 5
retail competition will result in lower prices). percent of the rates in Ontario and
between 14% and 25% of the Ontario
However, differences in liquor prices rate for spirits.
between jurisdictions are affected by
Table 1: Comparison of New York, Michigan and Ontario Liquor taxes
(excluding sales tax)
State Tax Ontario Tax14 Difference between Taxes
New York
Beer (24 Cans) $0.33 $9.95 Ontario tax 30 times higher
Wine 750ml $0.06 $3.37 Ontario tax 56 times higher
Spirits 750ml $1.34 $9.78 Ontario tax 7 times higher
Michigan
Beer (24 Cans) $0.47 $9.95 Ontario tax 21 times higher
Wine 750ml $0.11 $3.37 Ontario tax 30 times higher
Spirits 750ml $2.49 $9.78 Ontario tax 4 times higher
14 See Appendix A for details of Table 1 tax rate calculations.
17 | DEREGULATION AND CONSUMER LIQUOR PRICES
This tax differential is also in a significant Chart 1: Average Liquor Board To add further clarity to the inter- Chart 3: Average Beer Prices
factor in comparing beer prices between Spirit and Wine Prices16 provincial beer price comparison, the Private Retailers (Per Litre)
$38
Ontario and Quebec. While Societe des Beer Store commissioned Ipsos Reid, in Quebec Grocer/Depanneur
$37.06 Average Spirit Price $9
Alcools (SAQ - the Quebec liquor board) $36.87
Per Litre May of 2013, to conduct a survey of Ontario Beer Store $8
markups on wine and spirits products are $35.75
$36 private beer retailers in Quebec, Alber- Alberta Private $7
$35.78
similar to those applied by the LCBO, the ta and B.C. The survey found that Beer B.C. Private $6
Quebec beer tax on beer sales in grocery $34
Store prices were significantly lower than $5
$33.84 $33.87
and corner stores is less than half that those found at private retailers in Alberta $4
of the beer tax collected in Ontario. For $32.79
and B.C.17 $3
$32
example, Quebec’s basic beer tax on $2
24-cans is $4.26 while the equivalent In the case of Quebec, where no uniform $1
taxes in Ontario total $9.95 – Ontario’s $30
pricing law exists and prices vary widely $0
taxes are 134% higher. Ontario taxes on from retailer to retailer, some larger 6 PACKS 12 PACKS 24 PACKS
PEI NS NB QUE ONT MB BC LDB
refillable bottles are approximately 85% grocery retailers were found to have Alberta and B.C. were recalculated with
Average Wine Price prices on some products that were lower
higher than the equivalent Quebec taxes. Per Litre $17 Ontario beer tax rates instead of the
$16.59
$16
than Ontario prices. However, prices in relevant provincial tax.
$15.83 $15.97
Ontario, like many provinces, is also a $15.74
many other Quebec retailers were found
$15
uniform pricing jurisdiction, meaning that $14.78 $14.73 to be higher and as a result the average Normalization of tax rates is important in
$14.34
any alcohol product by law must sell for $14
selling price in Quebec was found to be comparing prices between jurisdictions
the same price throughout the entire $13 similar to the average selling price in in order to assess whether Ontarians
province.15 Uniform pricing requirements PEI NS NB QUE ONT MB BC LDB Ontario despite Ontario having a are getting competitive prices from the
generally benefit rural and northern con- significantly higher beer tax rate. existing retail system. For example, beer
sumers as there is no price differential While LCBO volume weighted average tax rates in B.C. are higher than those in
paid by those consumers in relation to selling prices are not the lowest in either As can be seen from the price data in Ontario so part of the difference in beer
urban consumers. category, they rank second lowest among Chart 3 liquor board beer prices in other prices between the two jurisdictions is not
liquor boards in average prices for both provinces are 10% to 40% higher than a function of the different retailing sys-
Differences between taxation and pricing wine and spirits. With respect to beer those at the Beer Store, while private tems, but the variation in provincial
policies mean that alcohol price prices, as Chart 2, below, illustrates, retailer prices in Alberta and BC are 30% tax rates.
comparisons between jurisdictions are not Beer Store prices are lower than those to 51% higher than those at the Beer
straightforward. Information on prices in for any provincial liquor board. Store. While Quebec prices for 24 packs Similarly, Quebec and Alberta both have
privatized retail systems is more difficult to were slightly lower than those for the Beer beer tax rates that are lower than Ontario’s
obtain as prices vary from retail location Store (1.5% less) that differential is far less and consequently, unadjusted price
Chart 2: Liquor Board Beer Prices:
to retail location. A comparison of volume than the tax differences between the two comparisons between these jurisdictions
Volume Weighted Average Prices
weighted average selling prices for wine provinces. are distorted by the variations in beer tax
$6.00
and spirits at different Canadian liquor $ 5.68
rates if they are not adjusted.
boards shows that current LCBO prices $5.50
Chart 4 shows the same comparison of
prices at independent alcohol retailers in Chart 4: Average Beer Prices Private
are very competitive in comparison to $ 5.13 $ 5.07 Retailers (Per Litre): Prices with Ontario
other provinces.
$5.00 Quebec, Alberta and BC with those at the Tax Rates Quebec Grocer/Depanneur
$ 4.58 $ 4.47 $ 4.53 $ 4.54 Beer Store with prices normalized for tax- $ 9
$4.50 Ontario Beer Store $8
ation rates. Prices surveyed in Quebec, Alberta Private
$ 4.05 $7
$4.00
B.C. Private $6
15 In Ontario uniform pricing at retail is required by section
3(1)(i) of the Liquor Control Act which states that the Board $3.50 $5
17 See Ipsos Reid CNB: Beer Pricing and Brand Availability
has the power “to fix the prices at which the various class- PEI NS NB ON ON MB SK BC $4
Study, June 2013. Survey conducted May 2013. Ipsos
es, varieties and brands of liquor are to be sold and, except LCBO TBS MLCC SLGA LDB $3
Reid collected hundreds of price samples from various
in the case of liquor sold through an outlet designated
brands from 30 retailers in Que, AB and BC. For example, $2
by the Minister of National Revenue under the Excise Act
16 Average prices obtained from provincial liquor board Quebec prices for 6, 12 and 24 packs respectively are
(Canada) as a duty free sales outlet, such prices shall be $1
annual reports for Fiscal 2012. LCBO prices from based on the average price of 82, 298 and 177 samples
the same at all government stores;” $0
Quarterly Financial Report for Fiscal 2012. respectively from different retailers in that province.
6 PACKS 12 PACKS 24 PACKS
18 | DEREGULATION AND CONSUMER LIQUOR PRICES 19 | DEREGULATION AND CONSUMER LIQUOR PRICESAs can be seen from Chart 4, once prices British Columbia also implemented a Distribution Branch (LDB) stores;22 Chart 5: Change in Liquor Prices at
are normalized for tax rates, Quebec 24 partial deregulation initiative between • Estimate that BC consumers will Retail 1993-2013 Statscan
and 12 pack prices are 11% to 15% more 2002 and 2008 by doubling the number pay 10% to 20% more for alcohol
than those in Ontario and surveyed 6 of private beer and wine stores (called with Licensee Retail Store (LRS) 67.4% 70%
pack prices are 37% higher than average licensee retail stores (LRS)) and allowing expansion – BC LRS expansion has 60%
Beer Store prices. these stores to sell not only beer and wine caused consumers to pay millions 50%
but also spirits.19 While the BC Liquor more for alcohol;23
A central point of debate regarding Distribution Branch (the government 40%
32.5%
deregulation of alcohol sales in Ontario owned retail system) did shut down some Boyd, University of Saskatchewan 28.2% 30%
is what the impact of deregulation would government liquor stores during this Business School, 2011: 20%
be on consumer prices. As the above period, the combined number of LRS and
comparison of Canadian beer prices • Alberta private retailer prices 18% 10%
government liquor stores increased from higher than Saskatchewan Liquor and
illustrates, Ontario’s system is currently 514 in 2002 to 853 by 2008.
0%
delivering significantly lower retail beer Gaming Authority (SLGA) stores prices;24
prices than every province in Canada Virtually all of the studies that reviewed Campanella, Flanagan, Canadian Centre Since 1993, retail alcohol prices in Alberta
other than Quebec. However, once these two retail deregulation initiatives for Policy Alternatives, 2012: have increased by over 67% or more
Quebec prices are normalized for the found an increase in consumer prices than double the national average around
variation in provincial tax rates, they are associated with an increase in the number • Alberta and BC private retailer prices 32.5%.26 While it is true that the general
also higher than beer prices in Ontario of alcohol outlets: higher than SLGA and BC LDB prices; CPI change for Alberta during this period
(in other words if the provincial tax rate in • BC LRS mean store prices 18% more is also higher than the national average,
Quebec was the same as that in Ontario, West, Fraser Institute, 2003:
on average than BC LDB stores.25 the gap in Alberta CPI for alcohol
current retail prices in Quebec would be • Alberta retail liquor prices up 8.5% purchased at retail of 34.9 percentage
higher than those in Ontario). (1993-1996), wholesale prices The repeated findings that liquor prices points is far larger than the 14.9% gap
down 3.4%;20 increased with deregulation in Alberta between general Alberta CPI and national
Consumer Price Flanagan, Canadian Centre for Policy
are also consistent with Statistics Canada CPI.27 Alberta’s higher general CPI
data with respect to consumer price
Impacts of Deregulating Alternatives, 2003: changes for alcohol purchased at retail.
increase does not explain its dispropor-
tionately higher increase in alcohol prices.
Liquor Sales • Alberta retail liquor prices have Since 1993, Alberta ranks number one in
increased by more than CPI for other the change in the consumer price index It is important to note that changes in
In Canada, the province of Alberta Alberta goods;21 related to alcohol purchased at stores. retail prices can also be affected by
privatized the Alberta Liquor Control taxation changes. However, Alberta
Board (ALCB) retail system in 1993.The Consumers Association of Canada, government taxation revenues have not
number of retail alcohol outlets in the 2003, 2006: kept pace with other Canadian jurisdictions
province jumped from 202 in 1993 to over • Despite lower taxes Alberta private since deregulation. One study analyzing
500 a year later and has since expanded store prices are higher than BC Liquor per capita alcohol taxes has concluded
to 1,300.18 that Alberta lost $1.5 billion as a result of
22 Consumers Association of Canada, Privatization of BC’s
Retail Liquor Store System: Implications for Consumers,
18 Between September 1993 and March 1994, the ALCB 19 Between 2002 and 2006, the number of LRS stores in May 2003.
shut down 202 ALCB stores as it granted private licenses B.C. increased from 290 to 654. 23 Ibid, p 6, Consumers Association of Canada, British
to stand alone liquor stores. By the time the last govern- 20 West, Douglas, The Privatization of Liquor Retailing in Columbia’s Liquor Distribution System: “Does it work for 26 Chart 5 Source: Statistics Canada, pulled from CAMSIM
ment store had closed, retail licenses had been granted Consumers?”, March 2006, p 2, 6-8.
Alberta, Fraser Instititute Digital Publication January 2003, Table 326-0021 available online at http://www5.statcan.
to 535 private operators. Since that time the number of
p 49-50. 24 Boyd, Colin, “Alberta Liquor is not cheaper”, Special to the gc.ca/cansim.
private liquor stores has grown to approximately 1,300.
A number of private wine and beer stores that were 21 Flanagan, Greg, Sobering Result: The Alberta Liquor StarPhoenix (Saskatoon), January 11, 2011. 27 In Canada nationally, alcohol retail prices have increased
operating in Alberta also converted to full liquor stores Retailing Industry Ten Years After Privatization, Canadian 25 Campanella, David and Flanagan, Greg, Impaired at a rate below general CPI changes, a 32.5% increase for
during the transition. Source “A New Era in Liquor Centre for Policy Alternatives and Parkland Institute, Judgement: The Economic and Social Consequences retail alcohol compared to a 43.5% general CPI increase.
Administration: The Alberta Experience” Alberta Liquor June 2003, p 31. of Liquor Privatization in Western Canada, Canadian In Alberta retail alcohol prices have increased faster than
Control Board and “Quick Facts Liquor – April 2013”, Centre for Policy Alternatives and Parkland Institute, the province’s general CPI change between 1993 and
Alberta Liquor and Gaming Commission, available online December 2012, p 10-11. 2012 – 67.4% increase in comparison to a general CPI
at http://www.aglc.gov.ab.ca change of 58.4%.
20 | DEREGULATION AND CONSUMER LIQUOR PRICES 21 | DEREGULATION AND CONSUMER LIQUOR PRICESprivatization between 1993 and 2011.28 were high-end wines and spirits such as
While the exact revenue impact of moving champagnes and single-malt whiskies.
to an open liquor market can be debated, West reviewed 144 products from a 1996
in both Alberta and B.C., governments Westridge price survey in comparison
lowered alcohol tax rates shortly after to the 1993 ALCB price catalogue and
permitting an expansion of retailing outlets. found price drops for only 9 products in
three categories (scotches, other liquers
The Alberta government, in response to (such as brandy) and other wines (such
wide-spread consumer complaints about as champagnes). While one champagne
rising liquor prices following privatization product dropped in price by 29%
was forced to lower its initial revenue- following privatization, 94 percent of the
neutral post-privatization per litre tax rates products surveyed increased in price.31
on multiple occasions between August
1994 and January 1996.29 These reductions While not all of the ALCB premium
cost the Alberta treasury approximately product markup reductions associated
$95 million annually (based on 1994 with conversion to flat tax may have been
volumes) or about 20% of ALCB liquor passed onto to Alberta consumers, there
revenues at that time. is little question that the flat tax induced
markup increases associated with lower
Another consumer impact associated priced wine and spirit products, which
with Alberta’s post-privatization markup were passed onto consumers in the form
structure relates to lower priced and of higher prices.
premium priced products. As part of its
privatization initiative, Alberta converted In terms of consumer price impacts, in
its percentage liquor board markups to addition to higher consumer prices
per litre charges. In products with a wide overall, Alberta’s new liquor taxation
variation in retail price such as wine and structure ensured that price increases
spirits the conversion to a per litre charge would be disproportionately skewed
represented a shift in taxation from higher toward lower priced wines and spirits.
priced products to lower priced goods.30 In this sense, the post-privatization ALCB
markup structure was regressive in
Virtually all of the products that dropped comparison to the previous ALCB markup
in price following Alberta privatization structure in that it disproportionately
increased prices for price sensitive
consumers.
28 See Campanella and Flanagan, p 14.
29 In August 1994 the ALCB reduced its post-privatization In B.C. the Liquor Distribution Branch
per litre markups by 11% to 29% depending upon the (BCLDB) did not introduce a flat tax for
product category. The Board also implemented a 10%
surcharge on higher priced products, which was gradually wine and spirits in conjunction with
reduced to zero over an 8 month period ending in May expanded private sales, but like Alberta it
1995. in January 1996, the ALCB reduced its per litre
markups by approximately 3% in each product category. did lower overall markup rates for private
30 For example the conversion from a 159% percentage sector retailers. The BCLDB discount
markup to a $14.95 per litre spirit markups dropped the provided to private liquor stores was
ALCB markup on a 750ml bottle of single malt scotch
that previously retailed for $90 by $40 per bottle (from
increased shortly after expanding private
$55 to just over $11 per bottle). In products like beer,
that have far much less price variation between premium
and discount products the compressing effect of the flat
tax was far less pronounced. 31 West, p 48.
23 | DEREGULATION AND CONSUMER LIQUOR PRICESsales. The discount increased from 10% mistaken assumption that deregulation These factors collectively create more model has all the same economic cost
of LDB selling price to 12% in 2002, 13% would result in lower not higher prices. costly and less efficient retailing systems issues as those outlined above for Alberta
in 2005 and 16% in 2007. This increase in In fact, the exact opposite is what occurred. that generate price increases for consumers. – total volume sold is spread over
the LDB discount effectively reduced the Following retail deregulation, Washington thousands of small retailers leading to
markup it collected on sales through state liquor prices increased and, as a As the author of Sobering Result points higher per unit selling costs and higher
private liquor stores. For example, on an result, the neighbouring Oregon Liquor out about Alberta: product distribution costs.
average priced one litre bottle of spirits Control Commission posted a 30% to “The private retail liquor market has
the LDB currently collects about $5.00 35% increase in sales at its government Furthermore, as noted earlier, the tax
evolved into one where there is differential between Quebec and Ontario
less in markups than it does on its own stores close to the Washington state considerable inefficiency in the form
sales. The Consumers Association border.34 for beer products is significant and it is
of excess capacity, duplication, and economically impossible for a corner/
of Canadian has estimated these tax redundancy, particularly in urban
reductions cost taxpayers millions on an Study after study has made it clear that grocery store retail model in Ontario to
controlled alcohol markets deliver lower centres. This inefficiency generates deliver the same prices as those found in
annual basis. As Bruce Cran, President considerably higher costs of retailing,
Consumers Association of Canada points cost and more efficient retailing models Quebec without the Ontario government
when compared to deregulated alterna- even though wages are at one-half also adopting the same beer tax rate as
out: compared to other jurisdictions.”36
tives.35 A combination of factors drive up Quebec. The cost of implementing
Why then does the BC Government costs associated with deregulated alcohol Colin Boyd, a University of Saskatchewan Quebec beer taxes in Ontario would be
deem it necessary to provide the sales: business professor, has noted that while $350 million on an annual basis. In the
private stores an additional 3% Alberta’s population increased post- absence of such a significant tax reduction,
discount totaling tens of millions 1) more points of sale; Ontario’s beer prices are likely to increase
privatization, its population per liquor
annually. These millions are coming 2) increased distribution costs as store decreased with the rapid expansion in a move to a grocery and corner store
directly out of the Provincial Budget. liquor must be delivered to many more of retail outlets: “Prices are higher with retailing model, not decrease.
What are we being deprived of to raise outlets; private, stand-alone liquor stores because
this multi-million handout, hospital
beds? knee replacements?32 3) higher per unit selling costs as total
higher total overhead costs must be Conclusions
passed on to the consumer.”37 Deregulation and Consumer Prices
liquor sales volume is spread over
In both jurisdictions private sector retailers more selling outlets resulting in less In this context, privatization of liquor • The evidence is overwhelmingly clear
were successful in lobbying for lower volume sold per store; retailing has compromised the ability of that deregulation of liquor sales in Alberta,
government taxes as necessary to mitigate governments to maximize revenues B.C. and Washington State resulted in
rising retail price impacts. 4) the requirement to fund new retailer associated with beverage alcohol sales. higher cost and less efficient retailing
margins; and, Deregulation in Alberta created down-
The retail price impacts associated with systems that drove price increases to
an expansion of liquor retailing in Alberta 5) higher marketing costs for liquor ward pressure on ALGC markups as both consumers.
and B.C. are consistent with a more manufacturers and agents as private sector retailers and consumers
expressed concerns about the high price • A move to a more costly and less
recent deregulation initiative in Washington hundreds of independent retailers
of alcohol. efficient deregulated liquor sales system
State. The rise in retail prices associated must be contacted to get listings
will result in higher, not lower, consumer
with closure of government liquor stores and retail shelf space. While Quebec’s retailing system has not prices unless significant tax reductions
came as a shock to many consumers undergone significant change in many occur to compensate for increased retail
who supported private liquor sales on the years, its grocery store retailing system and distribution costs:
for beer and wine is often promoted as
34 Oregon Liquor Control Commission Revenue Presentation
to the Oregon State House Revenue Committee, February a model which will both lower prices and • The cost of implementing Quebec
32 Press Release, Consumers Association of Canada, 14, 2013. The Oregon Liquor Control Commission enhance consumer convenience. However, beer taxes in Ontario would be $350
January 8, 2007. estimated its products had a 30% price advantage in
the Quebec corner/grocery store retail million annually;
relation to private liquor retailers in Washington state
33 See “Liquor Buyers Cross State Line: Price went up-not
post-privatization versus a 5% to 10% advantage prior to
down-after Washington State Ended Control of booze privatization. • The cost of implementing New York
sales”, Wall Street Journal, September 3, 2012; “Liquor
35 See Flanagan, Campanella and Flanagan, Boyd. 36 Flanagan, p 45-46. State beer taxes in Ontario would be
Privatization: The Fallout” SeattleMet, August 21, 2012.
January 8, 2007. 37 Boyd, “Alberta Liquor is not Cheaper ... $750 million annually.
24 | DEREGULATION AND CONSUMER LIQUOR PRICES 25 | DEREGULATION AND CONSUMER LIQUOR PRICESYou can also read
