Ontario allows sales of Canadian and international wines in 300 grocery stores

TORONTO – Wine, beer and cider will be sold in up to 300 grocery stores in Ontario in the next decade, but that appears to largely be the extent to which the Liberal government is planning to modernize alcohol distribution and sales.

Premier Kathleen Wynne announced Thursday that the province will now allow wine to be sold in grocery stores, building on her government’s expansion of beer sales last year. An initial block of 70 so-called “universal” licences for grocery stores to sell wine and beer will be allocated this summer, with an eye to having them operational in the fall.

There are currently 292 retail wine stores operating separately in grocery stores, and up to 150 of those could be converted to beer and wine outlets inside the stores with a shared checkout, still operated by the private wine companies.

The timeline will ultimately be up to government but recommendations from Ed Clark, the former TD Bank executive turned premier’s adviser on government assets, suggest that by 2025 Ontario could see beer and wine sold in 300 grocery stores, with a further 150 selling beer only.

Thursday’s announcement also contained a handful of changes for the spirits, cider and fruit wine industries, but beyond those new measures, the province seems content to end alcohol liberalization there.

Wynne called it a “delicate balancing act” between the needs of the industry, its desire to grow, trade obligations and ensuring competitive prices.

“All of those balls were in the air as the (Clark) council did its work, and as I say, I think we’ve reached a good balance of all of those things,” she said.

“We very intentionally didn’t blow the system up because it works very well, because it allows for very good and competitively low prices for consumers.”

Those prices could rise in the next few years. Clark said the government will announce a new minimum price for wine in next week’s provincial budget, though he said the current minimum is so low nothing is sold at that price right now.

Grocery stores will not be permitted to sell wines for cheaper than $10.95.

Ontario is staring down a $7.5-billion deficit, but Clark said increases in government revenue directly from this initiative are not significant and are spread over a number of years.

Of the initial 70 licences for grocery stores, half will be restricted to selling only Ontario Vintners Quality Alliance wines for the first three years, while the rest can sell Canadian and international wines as well. After the initial three-year period those stores’ restrictions would be lifted, and every three years the province would roll out a new tranche of Ontario-only licences. This would allow producers to keep up with increased demand.

Wynne also announced that cider can be sold in any grocery store that sells beer, and that the program allowing VQA wines to be sold at farmers’ markets will expand to include fruit wines and craft cider.

Small producers of spirits will get to sell directly to bars and restaurants, and will be allowed a greater commission. The Liberal government has made a “fundamental decision” that “hard liquor” will not be sold in grocery stores, Wynne said.

Spirits are also the Liquor Control Board of Ontario’s highest-margin category and therefore critical to the revenue the LCBO provides to government.

Ontario now has more than 240 wineries, with VQA sales in the province totalling $288 million in 2014-15 — a 66-per-cent increase in five years. Total wine sales in Ontario amount to about $2.2 billion per year, two-thirds of which are from imported wines.

Opposition parties both called the announcement a “distraction” from other problems the Liberal government is facing.