Scott Stinson: Ontario's Beer Store is (predictably) collapsing
A company that thrived under the "Only Place You Can Get a Case of Beer" business model is struggling now that you can get cases of beer from other places. Go figure.
By: Scott Stinson
A major Ontario retailer announced last month that it would permanently close 20 locations in August. This follows the closure of 10 of its stores just over a week before that, and precedes the planned shuttering of 10 more locations in September.
What business could possibly be swooning this much? A general retailer pummelled by Amazon? An exporter battered by Trump’s tariffs?
Nope: Beer. Seriously. The Beer Store seems to be going down faster than, well, a nice, cold beer.
Welcome to the uniquely weird world of alcohol sales in the province of Ontario, where somehow selling beer has become a struggling business.
Some background is probably required, for those who, understandably, must think by this point that I am full of shit.
For ages the vast majority of Ontario’s beer sales ran through The Beer Store, a chain of 450-ish outlets that was co-owned by Canada’s largest brewers. You could also get beer at the provincially owned LCBO, but the largest size available there was a six-pack. That was it. This system was exceedingly unfriendly to consumers, but owing to our puritan roots and the fact that the brewers had excellent lobbyists at Queen’s Park, it remained that way through decades — and governments of all three major parties.
About a decade ago, the Toronto Star got its hands on one of the agreements between The Beer Store and the province, which revealed what a sweetheart deal it was getting. Among other things, the deal greatly restricted the degree to which the LCBO could compete in beer retail, which caused much frothing over the fact that The Beer Store, long since owned by multinational conglomerates, was getting preferential treatment over the province’s own booze outlet.
The Liberal government of the day responded by loosening The Beer Store’s stranglehold on beer retail, but just a little: allowing it to be sold at a limited number of grocery stores, a hilariously small step but one that in Ontario was nevertheless a great leap forward.
Doug Ford’s Conservative government had long wanted to expand alcohol sales much further, but always stumbled over the fact that The Beer Store had a deal that prohibited such expansion until 2026. But then Ford wanted to hold an election last spring and he convinced The Beer Store to let him break that deal a year early for $225 million, which always seemed like an awfully steep price to move up that expansion by what amounted to a number of months.
It’s only in recently, though, that it has become clear how spectacularly dumb that giant payment was in the first place.
The Beer Store, previously sheltered from competition, is now besieged on all sides. Gas stations and convenience stores can sell beer to those who are looking for the closest place to grab a couple of cheap cans, and big-box stores can sell it in larger quantities and at discounts. It’s also available in a much wider range of grocery stores and there’s still the LCBO for those who would rather do all their alcohol-related shopping in one place.
This is, to be clear, a good thing. More choice is better, and despite the fretting and hand-wringing from some parts, Ontario has not fallen into a drunken wasteland now that beer is available everywhere from Petro-Canada to Costco.
But for The Beer Store, which previously operated under the business strategy of Only Place You Can Get a Case of Beer, this has been a disaster, as evidenced by all the store closings. And the locations that are still operating are providing a much worse consumer experience.
Anecdotes aren’t evidence and all that, but one of the Beer Store locations nearest my suburban Toronto home has been fairly instructive of the changes the outlets have undergone recently. When it opened just a few years ago, it was a veritable beer wonderland, a large walk-in space that had shelves full of domestic and international craft cans and bottles, plus the cases of big-brewer staples like Canadian and Coors Light.
Now, it appears to be struggling just to fill the shelves. The wide variety is gone, especially among domestic craft beers, replaced by larger cases that take up more space. A couple of refrigerated coolers that used to feature dozens of different beers that were popular for those “mix and match” carriers now hold things like six-packs of Corona and Miller Lite. This isn’t a Soviet bread-line situation, but it’s a noticeable step down from how things used to be.
All of which makes some sense, when you think about it. Beer producers didn’t suddenly find themselves with the capacity to greatly crank up their output, but they did have a significant increase in the number of places that could sell their product. Especially for smaller brewers who are selling through places like grocery stores and gas stations, that leaves little left over for The Beer Store — which, as mentioned, is also owned by their largest competitors.
The Beer Store has effectively been rendered much worse at the one thing it is supposed to do: sell beer. The business case for its existence has collapsed, which, again, shouldn’t be surprising: it turns out that open markets are a lot more competitive than a near-monopoly!
Ontario taxpayers can be forgiven for wondering just why, exactly, they were required to shovel $225 million into a rapidly decaying retail operation. More importantly, they can hope that, when 2026 rolls around, they aren’t expected to do it all over again.
Scott Stinson is a journalist in suburban Toronto.
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Fascinating. The only thing dumber than the Beer Store is the alcohol only recycling that takes place there.
The only shocking thing about any of this is that it took multiple generations, including seven entire years under a pro-alcohol-liberalization government, to get to this point.
In many places, this would be a day one move. Pass laws that any beer can be sold anywhere that qualifies for a reasonably easily obtained licence, compensate any stakeholders that you are obligated to compensate, and let the monopoly fall.