Trevor Dailey's Weblog

Ontario’s Progressive Conservative Premier Doug Ford has announced a “buck-a-beer” will be coming to Ontario soon. I could not care any less than I already do about the price of beer, I drink so occasionally one could argue I do not drink at all, but I get annoyed when I hear Premier Ford say “a buck-a-beer” because it is dishonest. First, let us turn the clock back for a brief history lesson to explain how we arrived at this “buck-a-beer” in the first place.

In 1915, there were 49 beer manufactures in Ontario. Under the Conservative government of Premier William Howard Hearst, Ontario enacted prohibitions of alcohol by means of The Ontario Temperance Act in 1916 when there were 65 breweries in Ontario. By 1917, the number of Ontario breweries was 23. When the Conservative government of Premier Howard Ferguson ended Prohibition in Ontario in 1927, there were only 15 beer manufactures left in the province. In 11 years, the Conservative government had almost completely destroyed the beer manufacturing industry in Ontario with Prohibition.

Since 1927, the Ontario government has strictly controlled the production, distribution, sale, purchase, and consumption of all alcohol in the province of Ontario with the Liquor Licence Act. In place of prohibition, the Conservative government created the Liquor Control Board of Ontario (LCBO) in 1927. The LCBO was incorporated into a Crown Corporation by the Ontario Progressive Conservative government of Premier Bill Davis in 1975. Premier Ferguson forced the remaining beer manufactures into a LCBO overseen cooperative in 1927, and over the years, as a result of sales, buyouts, and mergers, only three beer manufactures remain in the cooperative that are today all foreign owned. Labatt (49% ownership) is owned by Anheuser-Busch InBev (Belgium), Molson-Coors (49% ownership) is owned by Coors (USA), and Sleeman (2% ownership) is owned by Sapporo (Japan). This government created privately owned beer oligopoly, Brewers Retail Inc., controls about 80% of the retail beer sales in Ontario through its chain of Beer Store brand retail stores. During Ontario's Progressive Conservative government of Premier Mike Harris, the LCBO made a nonpublic agreement with Brewers Retail Inc. in 2000 giving the Beer Store exclusive right to sell the most popular brands of beer to bars and restaurants and the exclusive right to retail 12 and 24 packs of beer. In the interest of temperance and moderation, that has been at the core of the LCBO since 1927, the LCBO sets the minimum price of alcohol for sale in Ontario. The current minimum price for non-draft retail beer sold in Ontario is approximately $3.00 per litre, and that works out to be around $1.25 a bottle or can. This is where we come to the “buck-a-beer” promise.

Source: MINIMUM PRICING OF LIQUOR AND OTHER PRICING MATTERS

Premier Ford wants to reduce the minimum price of any non-draft beer with an alcohol volume below 5.6 per cent in Ontario to $1.00. The last time beer was at that minimum price was 2007.

Lakeport Brewery in Hamilton sold its beer for “24 for 24” from 2002 to 2006, and heavily advertised this, helping to increase its market share. Teresa Cascioli, who became CEO of Lakeport in 1999, brought the company far away from its 1998 bankruptcy in just eight years. Lakeport was bought by Labatt in 2007 for $201 million, the brewery was permanently closed by Labatt in 2010, 143 employees lost their jobs, and production transferred to the Labatt plant in London. Just because beer manufactures may sell a beer for one dollar does not mean they are going to do it, especially if it undercuts their premium beer brands. That is exactly what Lakeport was doing to Labatt by selling its beer for $1.00 before Labatt bought Lakeport; the brewery that had become a source of continual annoyance and trouble for the big three beer manufactures of Brewers Retail Inc.

The former Lakeport brewery, located at a historical Hamilton brewery built in 1947, was stripped of all brewing equipment and brewing infrastructure and the plant gutted and sabotaged by Labatt. The brewing equipment was sold for scrap. Concrete was poured into some of the building's drains to prevent any large scale brewery operation there ever again. Labatt refused to sell the Lakeport concern or lease the building to any beer manufacture.

The minimum retail price for non-draft beer was raised from $1.00 to $1.06 by the LCBO in 2008.

In 2018, it is improbable any beer manufacture could make a profit regularly selling its beer for only $1.00 because of the low beer quality, federal and provincial taxes, and production costs. As Teresa Cascioli said during Lakeport's "24 for 24" years:

Obviously, the business fundamentals have to be there, whether it's toothpaste or beer, supply and demand have to go hand in hand, and there has to be profitability for the manufacturer.

There may be one or two brewers willing to sell their beer at the minimum price of $1.00, but Labatt is not going to sell Budweiser, that has been one of Ontario’s top selling premium beers for decades, for a price of only $1.00 anymore than it is going to sell it for the current minimum price of $1.25. Few brewers sell their beer at discount prices at the current beer price minimum of $1.25. The motivation for this reduction in the minimum price of beer appears to be the claim by Premier Ford that lowering the minimum price of beer will create competition among beer manufactures and stop “lining the pockets” of the beer oligopoly. This is complete nonsense. The beer oligopoly is just that, an oligopoly.

Source: MINIMUM PRICING OF LIQUOR AND OTHER PRICING MATTERS

If Doug Ford was honest, he would eliminate the minimum retail price for beer, lower the provincial taxes on beer, he would get rid of the LCBO, and he would break up the beer oligopoly. This will not happen because it was the Conservative government that enacted prohibition in 1916, created the LCBO and the beer oligopoly in 1927, incorporated the LCBO into a Crown corporation in 1975, granted Brewers Retail Inc. exclusive rights in 2000, and supports temperance at the same time it collects massive alcohol tax revenues reaching a record of $5.89 billion in 2016-17.

© Trevor Dailey

This article is edited and revised from time to time.