Will the price of alcohol come down for consumers?

The Ontario government yesterday announced it is cutting LCBO wholesale prices for bars and restaurants, enabling curbside pickup of beer, wine and cider from licensed grocery stores, and freezing the basic beer tax rate.

The government says the move will result in savings for businesses of an effective 20 per cent when compared to retail prices. This change will provide approximately $60 million in annual support to restaurants, bars and other businesses, said a statement.

It did not mention if the projected 20 per cent savings will percolate down to the consumers.

It also did not mention when the new prices are taking effect.

Peter Bethlenfalvy, Minister of Finance, said a permanent wholesale discount will put about $60 million a year back into these important businesses, so they can invest in themselves and their workers.

The government has also frozen the basic beer tax rates that were set to be indexed to inflation on March 1, 2022 to support beer and craft beer brewers to recover and grow, and to save consumers money. The beer basic tax rates are prescribed amounts of tax added to beer sold in Ontario. The rates adjust annually based on the Consumer Price Index. The government is freezing the beer tax rates until March 1, 2023.

Doug Downey, Attorney General of Ontario said the province has more than 18,000 bars and restaurants.

Highlights of the new legal framework for the sale, service and delivery of beverage alcohol include:

  • Allowing licensed grocery stores to offer curbside pickup of beer, wine and cider
  • Streamlining licensing and renewals for businesses through a single primary licence with endorsements for additional activities, such as on-site retail stores or brew pubs
  • Reducing red tape by streamlining reporting requirements for manufacturers
  • Increasing flexibility for grocers to cross-promote beer, cider and wine with non-alcohol products
  • Enhancing social responsibility in the Alcohol and Gaming Commission of Ontario’s Registrar’s Standards by requiring individuals who sell, serve or handle alcohol to recertify their Smart Serve training
  • Making permanent the extension of retail sale hours to 7am to 11pm for alcohol that were put in place in March 2020 in response to Covid-19.

These initiatives build on the government’s actions to date to offer greater choice and convenience for consumers, and more opportunities for businesses, including:

  • Expanding sales of beverage alcohol to more than 270 new retail outlets across Ontario since 2018, including 191 LCBO Convenience Outlets and 87 grocery stores
  • Permanently allowing licensed restaurants and bars to include alcohol with food as part of a takeout or delivery order
  • Making it easier for businesses to create and extend patios
  • Allowing manufacturers with an on-site store to sell eligible beer, cider, wine and spirits products at farmers’ markets
  • Supporting alcohol producers by creating more flexible delivery rules, including allowing eligible alcohol manufacturers to deliver their own products and charge a delivery fee
  • Reducing the minimum price of spirits consumed at licensed establishments
  • Permitting alcohol service on docked boats with a liquor sales licence
  • Giving licensed restaurants and bars and retailers more flexibility in using liquor delivery services
  • Delivering a Winery Agri-Tourism Covid-19 Relief Initiative that provided a one-time $10 million grant in 2021 to support wineries and cideries impacted by the COVID-19 pandemic.

Quick Facts

  • The new LCBO wholesale prices for businesses with a licence to operate a liquor consumption premises from the Alcohol and Gaming Commission will come into effect on January 1, 2022.
  • This price cut will be achieved by increasing the discount on liquor consumption premise licensees’ alcohol purchases from the LCBO to 10 per cent* and eliminating the 6 per cent mark-up on cider, wine and spirits. When combined with HST recovery and container deposit fees, these licensees will effectively pay 20 per cent less than retail prices for alcohol purchased wholesale from the LCBO. *The 10 per cent discount will not apply to kegs of beer or cider.
  • The beer basic tax rates are prescribed amounts of tax added to beer sold in Ontario. The rates adjust annually based on the Consumer Price Index. The government has frozen the beer tax rates until March 1, 2023. This is the third year in a row the government has frozen these rates. Similarly, LCBO beer mark-ups will not increase until March 1, 2023.
  • Prior to the modernized legal framework, which came into force November 29, 2021, Ontario’s liquor legislation had not been comprehensively updated in over 40 years. In 2018, the government announced a comprehensive review of the beverage alcohol sector, including modernizing the rules for the retail and consumption of beverage alcohol.

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