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News Story
Beer monopoly: Lack of competition stings Ontario consumers
By Ottawa Business Journal Staff
Wed, Jun 20, 2007 1:00 PM EST

Summer is here. Bring out the beer! But, if you're buying your beer in Ontario, you may be paying WAY too much.

Canny beer drinkers can save up to $10, sometimes even more, on a case of 24 of the more popular brands by hopping over the Ottawa River to buy beer in Quebec.

It's true. I didn't believe it until I checked the other day. I always thought retail prices were pretty well in step on both sides of the river. Otherwise, why would anyone who lives in the Ottawa area shop regularly for beer, or any other commodity, on the side of the river where retailers offered a raw deal?

Good, old-fashioned competition seems to be the chief reason that beer drinkers can find lower prices in Quebec than in Ontario.

An example: a case of 24 Labatt Blue cost $26.94 in the Costco store on Maloney Boulevard in Gatineau when I checked the other day. In Beer Stores in Ottawa, a case of 24 Blue cost $36.35.

In both cases, the price included all federal and provincial taxes and a bottle deposit of $2.40. Thus, the beer drinker could save $9.41 on a case of Blue by buying in Quebec – or close to $30 if he or she stocked up with three cases.

Another example: A Loblaws supermarket, also on Maloney Boulevard in Gatineau, had a case of 24 Budweiser priced at $27.86, all taxes and bottle deposit included. At three Beer Stores where I checked in Ottawa, the price of 24 Buds was $36.35.

Even though the Ontario Beer Stores said Budweiser was "on sale," the price in Ontario was $8.49 higher than in Quebec.

Both examples were for a case of 24 bottles of the regular size of 341 mL.

One reason for the price difference, of course, is that you cannot buy beer in a supermarket in Ontario.

In the Loblaws store in Gatineau, each customer was limited to three cases of Budweiser at the sale price.

How refreshing to have beer sale limited in quantity! It makes you feel pretty sure you're getting a bargain. It's like a real supermarket price war, where retailers sell at close to cost in order to make a sale.

The nearby presence of a Costco shopping club may have influenced Loblaws to price its beer so competitively.

Costco club members pay about $1 a week to shop in the stores, of which there are three in Ottawa. Of course, there is no beer for sale in Ottawa's Costco stores. The Ontario government won't allow it.

When I visited, the Costco in Gatineau had a promotion on Corona Extra, a Mexican beer brand that seems to be especially popular in summer. Cases of Corona were piled high in a prominent aisle position.

The posted price of a case of 24 Corona was $26.99. But that was before Quebec sales tax of 7.5 per cent and federal GST of six per cent. It was also before the bottle deposit of $2.40. With these added, the price at the check-out was $33.16.

At Ontario Beer Stores where I checked in Ottawa, a case of 24 Corona Extra sold for $44.35 – which was $11.19 higher than the price at Costco in Quebec.

It's illegal to transport beer – or any alcoholic beverage – across provincial boundaries for resale without provincial government approval. But at least we can bring over beer, wine and spirits for our own consumption or to serve to our friends.

Many people in other parts of the world would be staggered to learn how we handle the sale of beer in Ontario. The only places we can buy beer in the province are a chain of beer stores, operated by three big Ontario brewers, and in liquor stores, operated by the Ontario government.

Competition? Don't make me laugh.

People like to complain about how the big oil companies supposedly set retail gasoline prices. But the retail gasoline market in Ontario is wide open compared with the retail market for beer, wine and spirits.

I checked with Sara Taylor, manager of communications for The Beer Store outlets throughout Ontario, and she confirmed retail beer prices are set by the brewers.

In most industries, manufacturers are even forbidden from publishing "suggested" retail prices.

Labatt has recently been advertising a "summer-long sale price" on some brands in some quantities. Can you imagine the indignation there would be if Esso, for example, announced a summer-long sale price on regular unleaded gasoline? This price would be what all gasoline outlets throughout Ontario would charge.

Ontario Beer Stores are owned by Labatt, Molson and Sleeman. Other brewers can only sell their products at The Beer Store if they pay for the privilege – a cost of doing business that, naturally, is passed on to consumers.

But don't the government's Liquor Control Board of Ontario stores compete with The Beer Store?

Are you kidding? I visited my friendly neighbourhood LCBO store the other day to inquire what it charged for a case of 24 for popular brands like Labatt Blue or Molson Canadian.

"We don't sell by the case," the LCBO sales clerk told me. Why not? "That would be competing with the Beer Store," she explained.

Heaven forbid there would be any competition in the sale of beer in Ontario!

While a case of 24 beers is usually the cheapest way to buy beer, Labatt currently offers an 18-pack of Blue in Ontario that sells for a lower price-per-bottle than the 24 pack. Even so, the price of the 18-pack is about a dime a bottle higher in Ontario Beer Stores than for the 24-pack in the Loblaws and Costco stores where I checked in Quebec.

Some taxes on beer are higher in Ontario than in Quebec. But taxes do not explain the huge price difference on some popular brands. Indeed, on many less popular brands, there is little price difference between Ottawa and Gatineau. That suggests it is only on brands where there is vigorous retail competition in Quebec that a big price gap exists.

Wouldn't you know it? The Ontario government takes the biggest proportion in taxes on the lowest-priced beer. On the buck-a-bottle brands – yes, even in Ontario you can find beer for $1 a bottle – the federal and provincial governments together grab a whopping 50 per cent.

A poor guy pays a dollar for a beer, and 50 cents go to the government.

Is it any wonder that the Ontario government and the province's big brewers like things just the way they are?

But, when I last checked, there were still five bridges across the river to Gatineau.


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