The Beer Store must 'reinvent itself' to survive, retail expert says

Buying beer at the Beer Store could soon be a thing of the past if the company doesn’t find a way to “reinvent itself,” one retail expert says.

On Thursday, the Ford government announced plans to expand Ontario’s alcohol retail system no later than 2026, opening up the sale of beer, wine, and ready-to-drink products to corner stores and eliminating the cap on licences for grocery and big box stores.

The province made the announcement two years ahead of the expiry of the Master Framework Agreement (MFA), a 10-year contract signed in 2015 that governs how alcohol can be sold in Ontario. The end of the MFA will mean a significant increase in competition for the foreign-owned Beer Store, which was previously given exclusive rights to sell beer in 12 and 24-packs as part of the decade-long deal. The changes announced Thursday will mean all retailers will now be permitted to sell beer in larger formats, ending the Beer Store’s monopoly.

• Ontario unveils plans for beer and wine in corner stores

The Beer Store will maintain its recycling and deposit program as part of a new five-year contract.

In response to the news Thursday, the union representing 6,500 Beer Store workers said the Ford government’s decision to end the MFA could be “disastrous” for its members.

“Our members go to work every day in local communities across the province. We sell beer responsibly and deliver it efficiently. We keep our communities safe, and we carry out extremely important work processing and transporting recyclable materials across Ontario through the Beer Store’s recycling program,” John Nock, president of UFCW Local 12r24, said in a written statement.

Nock warned that changes to the retail landscape could cause the price of beer to increase.

“The current system maintains price consistency across Ontario. All these things could change. The price of beer may go up. As popular as it is to be promised a beer, changes to the current system could be extremely chaotic, and could bring many unforeseen consequences,” he wrote. “I’m not sure how necessary any of this is.”

Retail expert Lisa Hutcheson told CP24.com that the news may spell the end of the Beer Store as a retail outlet.

“If the Beer Store is going to stay in its current model, it's going to be redundant,” Hutchson, the managing partner of Toronto-based J.C. Williams Group, said Friday.

“It's going to have to differentiate itself. It's going to have to reinvent itself because… I don't see it as a sustainable model when it's going to have competition.”

She noted that even the alcohol recycling business could change in the coming years as companies design new, more environmentally-friendly packaging.

“I think it's Carlsberg that has a biodegradable bottle now that they've been testing in Europe,” she said.

“The need to recycle is going to change because I think we're going to see things packaged differently as well.”

Hutcheson said the Beer Store could look to update its outdated retail model by making their stores more experiential and attractive to customers.

“If you think a little bit about where the LCBO was and… what it used to be to what it is today, they've done a really good job at location, first of all, making sure their locations are accessible, and curating to their customer,” she said. “Really switching the stores to be more experiential.”

She added that the Beer Store has plenty of time to figure out what’s next.

“I think back to the pandemic and… the retailers, the companies that all pivoted in a couple of months,” Hutcheson said. “These guys have two years to figure out what they want to be.”