Are you thirsty?
As of 7 a.m. Thursday, there are 4,000 more places for Ontarians to pick up beer, wine, cider or ready-to-drink cocktails like hard seltzer, as the floodgates open for alcohol sales in corner stores.
“This is something we’ve been waiting a long time for,” said a delighted Kenny Shim, president of the Ontario Convenience Store Association (OCSA), and owner of Busy Bee King Mart at King and Bathurst.
It’s a major step in the Ontario government’s opening up of the alcohol retail market. The next step comes Oct. 31, when grocery stores and big box retailers get their shot.
With Thursday’s launch, consumers are going to be seeing plenty of familiar brands on the shelves, convenience store owners, retail experts and producers agree. And the prices will also be higher than consumers are used to seeing at The Beer Store or LCBO.
“These stores only have so much space. They need tried and true brands that are going to sell,” said Lisa Hutcheson, managing director at retail consultancy J.C. Williams Group.
Beers from international brewing conglomerates such as AB-InBev and Molson Coors will have a prominent spot in convenience store fridges, while the likes of Yellow Tail Shiraz or Kim Crawford Sauvignon Blanc will dominate the wine shelves.
“It’s going to be things like Coors Light and maybe a few local breweries. They’re certainly not going to be doing Vintages wines, or obscure brands,” Hutcheson predicted. Nor, Hutcheson added, are there likely to be ultrapremium offerings.
“I don’t know if we’re going to see Cristal or Dom Pérignon, but in some of the higher-end spots, I suppose it’s possible.”
Still, with a requirement that convenience stores have at least 20 per cent of their shelf space for beer and cider devoted to local brands, and a 40 per cent requirement for local Ontario wines, that gives local producers a shot.
But there are no guarantees about exactly which local brands get chosen, admitted Steam Whistle Brewing president Bromlyn Bethune. At convenience stores, space is at even more of a premium than it is in any other retail setting, Bethune added.
“They’re pushing out Coke, Pepsi and Frito-Lay products to make room for beer and wine,” said Bethune. “They need to have something they’re confident is going to sell.”
For smaller craft breweries, convenience store sales are a bit of a question mark so far, said Mandie Murphy, head of sales and marketing at Left Field Brewery. While independent stores are showing some interest, the chains are sticking with big conglomerates and larger craft breweries such as Steam Whistle, Collective Arts or Muskoka Brewery.
“It’s just not very realistic for a brewery of our size. The chains have so many stores to supply,” said Murphy.
Still, she said, independent stores such as those in the OCSA are showing a bit more interest, even if there’s a bit of a knowledge gap.
“I think if we can bridge the education gap, the independent stores could be a good channel for us,” said Murphy. “It’s great that the 20 per cent requirement is there. It’s an opportunity.”
Shim said it will likely take him and other convenience store operators several months to figure out what customers are actually buying. But well-known brands will be a big part of the mix, at least at first.
“You’re going to have Coors Light, you’re going to have Corona, absolutely. But there are a hundred other local breweries. It’s going to be trial and error,” said Shim, who vows to stock more than the government-mandated minimums for local producers.
“I’m going to be having 40 per cent local beer. For wine, it will be 50 per cent,” said Shim. “The province gave us this opportunity. I think we have an obligation to support local producers.”
A government mandate isn’t an ideal situation, said Anne Kothawala, president and CEO of the Convenience Industry Council of Canada, a national organization which represents large convenience store chains such as 7-11 and Circle K, as well as distributors.
“We understand why that was put in place. We support local producers (but) it’s a delicate balance. We’d like this to be an open market, and we’d like our customers to decide,” said Kothawala.
As for what price consumers will be paying, Shim and Kothawala insisted that the sheer number of outlets people will be able to buy alcohol at will keep markups from being too high. While acknowledging that convenience stores charge a premium, Shim said the sky is not the limit.
“There’s a limit to how much we can charge, because otherwise people just won’t buy it,” said Shim.
Kothawala said the premium convenience stores charge over other retailers has shrunk substantially over the years, partly because of increased competition from dollar stores and pharmacies selling pop, chips and other convenience store staples.
“That premium on convenience was really a thing 20 years ago. All of those retail outlets didn’t really exist,” Kothawala said.
Hutcheson agreed, adding that consumers are also more price sensitive right now, given the slowing economy.
“At the end of the day, there’s going to be way more availability and options, so I think the retailers are going to have to be very careful about how much they try and push that price,” said Hutcheson.
