OCSA Submission to the Alcohol and Gaming Commission of Ontario

Ontario Convenience Stores Association (OCSA)

Submission to the Alcohol and Gaming Commission of Ontario (AGCO)

“Regulatory Modernization in Ontario’s Beverage Alcohol Industry”

September 20, 2013

For the benefit of all small businesses in Ontario’s retail sector, the Ontario Convenience Stores Association (OCSA) strongly recommends that the Alcohol and Gaming Commission of Ontario (AGCO) make a clear and public determination on what classification of products are allowed to be sold by The Beer Store, the LCBO, and winery, distillery and brewery retail stores in this province.

Introduction

The Ontario Convenience Stores Association (OCSA) is pleased to have this opportunity to submit the following recommendation to the AGCO’s consultation discussion paper on regulatory modernization in Ontario’s Beverage Alcohol Industry.  As an association that represents 7,500 independent and chain convenience stores which employ 75,000 in this province, we are hopeful that the below considerations are taken in to account when developing future regulation changes.

Understanding that the convenience store sector is a non-licensed channel and is therefore not directly captured in the target stakeholder audience for this consultation, the OCSA nevertheless feels that the AGCO and the Ontario government can use this opportunity to further encourage a fair and competitive environment for many segments of Ontario’s economy.  Our view is that in specific instances, changes/enhancements can be made that have a far reaching affect on businesses outside the AGCO’s intended catchment.  Through adoption of a ‘big-picture’ approach, this consultation has the potential to address issues in broader market environments while stimulating Ontario’s retail sector economy and generating greater returns for the Province.

Recommendation #1

In the case of Ontario’s convenience stores, members continue to be affected by the regulations, or lack thereof, that govern The Beer Store.  In particular, the lack of publicly acknowledged or available ‘rules’ that dictate what The Beer Store is allowed and not allowed to sell to the Ontario public is confusing.  This issue has been a growing concern since The Beer Store began to increasingly encroach into the c-store market over the past 2-3 years.  The recommendation we would hereby like to submit, is that efforts be accelerated to better define the customer experience at The Beer Store, and have the AGCO make a clear and public determination on items that these vendors are allowed to offer.

Recommendation #2

In addition to the above point on The Beer Store, the OCSA would also like to propose that the AGCO consider limiting the items that the Beer Store, the LCBO, winery, distillery and brewery stores are allowed to sell to only beverage alcohol products.  The obvious case for consideration on this recommendation is that in any instance where a retail outlet has been granted the ability to sell products commonly offered by our members in addition to beverage alcohol, the c-store is at a significant disadvantage.

It is particularly troubling for our industry to observe the B.C. Lottery Corporation launching a pilot project to sell Lotto 6/49 and Lottomax tickets at B.C liquor stores.  Currently 90% of private liquor stores in B.C. are participating in lottery retail, leaving many in the c-store sector in that Province without a reliable source to help establish and maintain a customer base.

With lottery being a principle driver of revenues for our member’s stores, the threat posed by government allowing The Beer Store and the LCBO to sell lottery in Ontario is one that causes great concern. The OCSA hopes that the AGCO recognizes the significant effect a decision like this would have on Ontario small businesses, and will take a pro-active approach in terms of limiting this possibility before it is considered.

Ontario’s Convenience Stores

Ontario’s convenience stores are small businesses that are mostly family owned and operated, and are subject to some of the most restrictive regulations of any business retail sector in the Canadian economy.  The heavy regulatory burden, which is imposed by government and is mostly related to sale of tobacco and lottery products, is absorbed by our members at significant cost.  With the decline in tobacco usage and sales, the continued growth of the contraband tobacco market, and the steady decline in lottery sales as government expands distribution, our members continue to find it challenging to remain profitable.

A peripheral, but not insignificant factor affecting financial health in this sector is the threat that The Beer Store poses when they begin to sell items commonly offered by convenience stores.  Over the past three years, our members have noticed certain Beer Store locations offering confectionary goods, clothing, gift cards, and barbeque paraphernalia.  When certain Beer Store locations began selling propane tanks in the summer of 2012, the OCSA used it as a cause to formally complain to the AGCO.

While we understand that by expanding its product offerings The Beer Store is only trying to increase profits, it is coming at the expense of these small businesses that are forced to lay off clerks and sometimes close because of it.

The fact that The Beer Store has been granted a monopoly in this province to sell beer products, rightly or wrongly, should be reason enough to limit them from competing with businesses that currently do not have the same government granted ability.  In not prescribing a set list that is considered fair by our sector, The Beer Store will always have the potential to become “convenience stores that sell beer” and put legitimate family run stores out of business.

In closing, the OCSA would like to acknowledge the receptiveness that the AGCO has extended to our sector on this issue over the course of the past months and years.  Certainly, through the courteous and professional dialogue that has been established between our organizations, improvements have been made which to which our members continue to be very appreciative of.  That said, without a regulation or policy that will hold the Beer Store publicly accountable, our fear is that the problem outlined in this submission will continue to reoccur.