There are two major alcohol players in Ontario right now: the LCBO and The Beer Store. We’ll dive into their histories and provide tips on navigating the strike if you’re a buyer or producer.
The Guestbook is a nonprofit newsletter. Please share this article and subscribe to support. Over the next few days, we’ll post updates on the LCBO strike and share some of our favourite local producers' stories. We’ll also talk to some key players within hospitality who are advocating for buyers right now.
The LCBO: Who they are and what they do.
For Ontario readers, the LCBO is likely familiar. For those of you joining us from across Canada or other parts of the world, Canadian liquor laws vary by province. In Ontario, the Liquor Control Board of Ontario (LCBO) is a government enterprise that acts as the province's retailer (B2C) and wholesaler (B2B) of alcohol (spirits, wine, ciders). Their employees are currently on strike for the first time in the corporation’s history.
The LCBO has five regional warehouse facilities, 389 convenience locations, 449 wholesaler grocers, and 18,000 restaurant and wholesale customers. The Alcohol Gaming Commission of Ontario is responsible for regulating alcohol licenses, delivery and sales. In the past few years, it expanded retail alcohol sales into select grocery stores. As a government enterprise, the LCBO’s net income goes to the Government of Ontario as an annual dividend, which helps fund local and provincial public programs and services, including health care, education, and infrastructure. For the year-end of March 2023, the LCBO provided the government with a 2.58 billion dollar dividend.
In short, LCBO provides significant revenue for the province. It has also been a stable employer for many in Ontario (for the past several years, the LCBO has had nearly 8,000 full-time employees).
The History of the LCBO
The LCBO is a Crown Agency (controlled by the Ontario Government) that was formed in 1927. In 1916, beer, wine, and spirits sales were banned during Prohibition, and the creation of the LCBO marked the beginning of the government's retreat from the temperance movement. The Liquor Control Act of 1927 authorized the LCBO to "control the sale, transportation and delivery" of alcoholic beverages in Ontario. Brewers Retail (now known as The Beer Store) was created to sell beer in a controlled way, while wines, spirits and some beer were sold in LCBO outlets. While there were once many independent wine shops in Ontario, today, most have been consolidated under the Wine Shop and Wine Rack (here is an older article discussing the consolidation and history of these shops).
The LCBO is still the leading supplier of alcoholic beverages to bars and restaurants in Ontario. With few exceptions, these establishments are required by law to purchase alcoholic products through the LCBO, The Beer Store, or directly from Ontario alcohol manufacturers. From the 1930s to the early 1970s, the LCBO implemented several initiatives to regulate the consumption of alcohol in retail and hospitality environments, but as alcohol became more widely accepted in the 1980s and into the millennium, these regulations changed to open up alcohol sales widely. For example, between 1927 and 1962, people who wanted to purchase alcohol required an individual liquor permit and purchases were tracked accordingly. They were attempting to promote moderate consumption in those times. If an individual went above a reasonable consumption amount in a week, employees were able to deny sales.
In 1934, the LCBO mandated oversight of on-premise consumption in hotels and other drinking establishments. They required limitations on singing, the number of people sitting together, and the segregation of females from unmarried males. Of course, none of this no longer exists, and the LCBO primarily only acts as a wholesaler and retailer of alcohol now.
The Beer Store: What is it?
The Beer Store is regulated by the Liquor Control Act and, therefore, by the LCBO. It is the largest beer distributor in Ontario. The Beer Store opened in 1927, similar to the LCBO after the end of the prohibition. Ontario did not want to operate this network itself (this differs in other Canadian provinces), so it permitted brewers to organize the Brewers Warehousing Company Ltd (a co-operative), which later became Brewers Retail, now known as The Beer Store. Today, The Beer Store has a co-ownership model, meaning any qualified brewer can become a shareholder of The Beer Store. To qualify, brewers need to operate at least one facility in Ontario, brew the beer, and sell it.
The historic agreement that made them a monopoly.
In 2000, through a deal with the provincial government, The Beer Store was given an exclusive monopoly on all sales of 24- and 12-packs of beer. This even meant the government-run LCBO was not permitted to sell 24 and 12-packs of beer. The Beer Store was also given the exclusive right to sell the most popular brands of beer to restaurants and bars (think B2B hospitality sales). Brewers were still allowed to sell beer at their breweries, but independent beer retail outlets were banned. This agreement was made public in 2014, and further details were released by the Toronto Star (found here).
Who owns The Beer Store?
We think it's important to highlight that this is a privately held organization regulated by the LCBO. Unlike the LCBO, it is not a government enterprise.
Since 2015, any qualified Ontario brewer is eligible to become a shareholder of The Beer Store. In reality, it is nearly 100% owned by three international beverage conglomerates: Anheuser-Busch InBev SA, based in Belgium and Brazil; Molson Coors Brewing Co., incorporated in the United States; and Sapporo Breweries Ltd. of Japan (which bought Sleeman). Brewers who want to sell at The Beer Store must pay a listing fee. Small Ontario brewers may list two products at up to seven locations “proximate” to their breweries free of a listing fee.
The LCBO Strike: How does it relate to The Beer Store? When and why did it start? What’s the current status of the strike?
The Beer Store and the LCBO Strike
In 2000, the Ontario government signed a Master Framework Agreement (MFA) with the multinational brewing companies that own The Beer Store (as we discussed above, the details of this agreement were released publically in 2014). The MFA gave The Beer Store exclusive rights to sell 12- and 24-packs of beer as the province expanded sales of beer and wine to grocery stores. It was set to expire in 2025.
We’re going to do a more extended post on this, but in brief, in December 2023, Doug Ford announced that beer, wine, cider, and ready-to-drink cocktails would be available in convenience stores and all grocery stores by 2026 once the MFA deadline expired. Then, in May of 2024, Ford announced that the expansion of alcohol sales into grocery stores and convenience stores would happen in 2024 before the MFA expires. By accelerating the timeline (and effectively breaking the MFA), the Ontario government will have to pay a $255 million penalty to the multinational owners of The Beer Store. If Ford had waited until January 2026, the province would not have had to pay The Beer Store anything. During this transition, The Beer Store will be required to keep 300 stores open until the end of 2025. Side note: in his 2018 election campaign, Ford promised to allow beer and wine to be sold in convenience stores and grocery stores.
When and why did the workers go on strike?
On July 5th, LCBO workers officially went on strike for the first time in the company’s history. Although there have been several negotiations in the past, the union and LCBO have always reached an agreement before a strike occurred.
The LCBO workers’ union was already concerned about layoffs as a result of the shift to an open-market model where large chain grocers can sell alcohol. With Ford’s acceleration of the agreement to 2024, the union sprung into action. The union is hoping to negotiate a boost in severance pay to dissuade layoffs and protect other worker rights.
So what’s going on now?
The LCBO workers' union is on strike, and a historic rally was held today. 700+ stores are closed across Ontario for at least two weeks. The latest LCBO offer to the union did include wage increases, but the main points of negotiations continue to be:
Job Security and Severance
Public Profits/Fund Diversion
Further Privatization of Alcohol Sales
What does this mean for hospitality businesses and individuals? How can you continue to support local alcohol producers across Ontario and keep your business going as both a buyer and producer?
For businesses, try to plan ahead. If the strike goes beyond 14 days, the LCBO will open a limited number of stores through weekends; however, people are already experiencing delays through the wholesale portal.
For alcohol producers, keep selling directly. We’ve seen lots of local producers waive delivery fees and band together within their communities.
Whence works exclusively with local Ontario alcohol manufacturers, which means buying with Whence means buying directly from local producers.
Support local! Go to your local bottle shop, wineries, co-ops, distillers, and cider makers—it’s a great time to support these businesses and the movement of direct purchasing. Not only will you help them grow, but you will also experience all the hard work and love they put into their products!
If you need assistance with the procurement of alcohol, please email orders@withwhence.com; we have several producers we can connect you with. Purchasing managers, general managers, operators, and owners—reach out to us. We are here to help.
If you are a supplier looking to supplement sales - we can help. During the strike, we are offering to provide FREE storage and delivery to the GTA. Please reach out to us at orders@withwhence.com or hello@withwhence.com to work with us. We want to be an extension of your team and support you in any way we can during this time.
Over the next few days, we’ll post daily updates on the strike's status and share some of our favourite local producers' stories. We’ll also talk to some key players within hospitality who are advocating for buyers right now.
Drop us a comment or connect with us if you have something to share, are interested in participating in our newsletter or just want to say hi! hello@withwhence.com
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