I probably should have gotten to this earlier in the week, but better late than never. 

Right. Alcohol in the 7/11. 

It is sometimes difficult to keep track of the ins and outs of alcohol policy in Ontario. People’s memories are short for detail on big problems that do not really concern them. I have made a sort of cottage industry out of calmly and patiently explaining that The Beer Store is not government owned or run, but people continue to believe that to this day. Sometimes I go on panel shows or just the news and have to explain this and the anchors inevitably look at me like I have a second head for keeping this detail straight. 

Of course it’s difficult to keep track of this. Alcohol policy comes up about once a year in any substantial way and you have things to do.

Cast your mind back to 2015. The Province under the Liberals made a deal with The Beer Store and the LCBO that they were going to open up beer and wine sales in grocery stores. There were going to be 450 grocery stores. The deal was going to last 10 years. 

This was a good thing. It allowed more shelf space for craft producers in the province. It was a shot across The Beer Store’s bow. It made them spend money on improving the shopping experience. It let them know there would be additional competition in 2025 in the form of more grocery stores and potentially convenience stores.

Some people thought this did not go far enough. There are always people who want to privatize liquor sales. If you do that overnight, that’s not a good deal for the consumer. Prices would go up substantially because profit margins would be increased by private sales. No one is looking to make less money. 

Doug Ford’s government feel that liquor privatization did not go far enough, and whether you like him or not, that is a position held by many. He threatened to blow up the Master Framework Agreement in 2019. Doing so would allow the province of Ontario to do just about whatever it wanted including beer in convenience stores prior to 2025. 

Molson and Labatt did not like this and threatened to sue. Incidentally they are the ones who own The Beer Store. Also, Sapporo a little bit. No, it’s still not government owned. Molson and Labatt claimed, and rightly, that breach of the Master Framework Agreement would significantly damage them. They threatened to sue for a billion or so dollars of damages. 

That’s a big round number and those are bad for politicians. “Buck-a-Beer Doug loses the province a Billion” would run as a headline. Terrible optics. 

So the Master Framework Agreement is only nominally blown up and it sits on the Lieutenant Governor’s desk waiting to be signed out of law. It has been there for two years as a sword of damocles over the heads of the large brewers of the province and could theoretically be revoked any day. Hurt their business, hurt their unions, hurt the several hundred millions of dollars of logistical savings The Beer Store represents. Leverage! Brutal carrot and stick Hobbesian politics, but effective. 

But they still want to privatize more of the market and liberalize alcohol policy without removing that lever. What do you do?

Well, in the pandemic, due to the closure of restaurants in lockdowns and grey tiers, alcohol policy has been significantly amended in Ontario. Alcohol can be sold to go from restaurants. You can get a growler of beer to go. You can get a bottle of wine or liquor delivered with your meal. There are caveats on this that went into effect on December 9th of 2020. If you have a license from before that and are a place of business that is based primarily around in person food service, you’re good to go. After December 9th, you’re not.

Some restaurants have pushed the limit on this. They offer to-go or delivery alcohol with “food” which constitutes a bag of chips. This is not a new dodge. There have historically been establishments that serve “food” in the form of a single sandwich on a plate to justify their license. The important thing is that it is available for purchase, not that it constitutes food in a substantial way. Oh, talk to an English publican about “substantial meals.”

The 7/11, I hear you say, got their licenses after December 9th! This is not that! This is only for in-person on-premises sales. The 7/11, I hear you say, only wants to have a small licensed area in their stores, which are already crowded, so that people can drink alcohol in person at the 7/11! It’ll be maybe 15 square feet! 61 stores at maybe 15 square feet is 915 square feet across the province of licensed alcohol space! And they’ll have to train all their staff on smart serve for this brilliant and profitable and revolutionary idea!

Listen, I know I have to explain things about alcohol policy, and I’m usually very patient about it but I need you to stop being a credulous nitwit for a second. Things happen in sequence and are pushed by events and don’t happen in a vacuum. If you legitimately think that’s the plan, then how did you tie your shoes? How much money do you legitimately think that would make them? Like, tell me, who’s drinking in the 7/11? What’s the hourly profit on that? Who wants to drink in a 7/11? I wouldn’t drink a coffee in the one I visit periodically. 

7/11 is set up on Uber Eats which is a delivery service. Doug Ford met with their CEO on a trip to Texas as reported by the CBC and probably discussed this play. A similar thing has happened in Pennsylvania where you ended up with restaurants in grocery stores and convenience stores that allowed you to get around a legislative solution to the problem of off sales with a regulatory pen stroke. 

Clearly, if the 7/11 is granted liquor sales licenses, what will happen is that the Province will wait for the foofaraw to die down, and then some day about three to six months from now or when vaccinations are taking up a large part of the news, they’ll get the AGCO to solve the legislative problem with a regulatory pen stroke. “After all,” they will say, “the 7/11 pilot project has gone really well, and there sure are a lot of people in that 915 square feet of licensed space, and gosh they’re buying food. I guess the 7/11 is a restaurant now.” And they’ll drop the December 9th date and whammo beer in convenience stores for to-go sales and delivery.

Additionally, since they’re technically a restaurant, they get to write their own mark up. You ever notice how a beer at the brewery costs the same as at the LCBO as at The Beer Store? Retail pricing controls. It’s chipping away at that too.

Bad policy. Plays fast and loose with the concept of a restaurant. Awards favoritism to a single vendor, until it doesn’t. Are all convenience stores that want to do this going to need to be restaurants, or is this just a temporary policy merkin until 2025? Do we have inspectors enough for that? I bet they won’t hire any additional ones.

Make no mistake. 2025 will bring additional grocery sales as standard across the province. In all probability, convenience store sales too. It was always going to. The issue is that people are taking advantage of the pandemic to shred policy in multiple jurisdictions in a disaster capitol carrion feast. Just over in Manitoba, similar doings are a-happening. 

This just pushes an agenda because the possibility exists. You can’t plan a pandemic, but since the policy loophole is there, people will exploit it to their own ends. It’s a very opportunistic play and, although I hate to say it, a clever one. It signals to The Beer Store that, yes, in 2025, you’re contending with convenience stores and no, we haven’t forgotten about it.