Beer Store response to legislation

Toronto, Ontario – The following is a statement from Charlie Angelakos, Chair of the Board of the Beer Store:

The Government of Ontario today passed legislation to terminate the Master Framework Agreement and attempt to absolve the government from damages it is liable for under the agreement.

In 2015, the Ontario Government entered into an agreement with the Beer Store to establish a new framework agreement for the sale of beer in Ontario until 2026. This agreement expands ownership of The Beer Store to all brewers in Ontario, large and small; ensures a greater opportunity for small brewers to gain market share through dedicated shelf space and greater in store marketing opportunities; expands the sale of beer to 450 grocery stores; preserves the right of brewers to actively compete with one another by setting their own prices for their products and ensures that the Beer Store continues to operate on a cash flow break even basis. The agreement also required the Beer Store to invest significant capital to upgrade its retail locations, and modernized the governance of the Beer Store. Beer can now be purchased in over 1,500 retail locations, including 450 Beer Stores, LCBO stores, grocery stores and convenience stores in some rural locations at prices that are among the lowest in Canada.

The Government of Ontario’s legislation is an attempt to circumvent its obligations under the agreement, including terminating the agreement before 2026, which would be a violation of the agreement. The government also seeks to potentially avoid the damages it would be liable for as a result of an early termination.

In response to the Government of Ontario’s focus on choice and convenience, over the last three months, the Beer Store, brewers and the Government of Ontario have been attempting, in good faith, to negotiate amendments to the agreement in order to address the objectives of the government.

The Beer Store believes that there is a mutually acceptable path to significantly accelerating the introduction of new retail locations for beer in Ontario while minimizing consumer beer price increases, minimizing incremental beer industry costs, and retaining as much government tax revenue as possible. Most importantly, these amendments would avoid a protracted legal battle and the significant damages to which the government would be exposed.

The Beer Store is deeply concerned about the impact that rapid changes to beer retail and distribution policy may have on its 7,000 employees, the thousands more who work for its suppliers, Ontario consumers who will pay higher beer prices, and for communities who rely on The Beer Store to sell beer responsibly and keep almost two billion alcohol containers out of landfill sites each year.

While the Act has been passed by the Ontario legislature, it has not yet been proclaimed into law. The Beer Store remains committed to negotiating amendments to the agreement.

The Beer Store believes in the sanctity of legal agreements. Businesses must be able to rely on the enforceability of legal contracts they enter into, including and particularly with governments. If a negotiated amendment is not reached and the Government of Ontario decides to proclaim the Act into law, the Beer Store will vigorously enforce its rights to remedies, including damages, when the government breaches its legal obligations.

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