Accessibility Needs to be Part of the Debate Over the Future of the Beer Store

Canada, Commentary, Regulation, Steve Lafleur (historic), Uncategorized

Recent revelations about the Ontario government’s relationship with the Beer Store have led to renewed interest in reforming Ontario’s byzantine liquor regulations. Many of the policy implications have been discussed ad nauseum, but one remains curiously absent from the debate: accessibility.

As of August 2014, the Beer Store operated 448 outlets in Ontario. Excluding a small number of craft breweries, the province had a total of 1773 alcohol vendors. By contrast, Alberta has over 2000 vendors to serve less than half of Ontario’s population and 2/3rds of its land mass. New York City, which is less than 1/1000 the size of Ontario and has 2/3rds of its population contains 1368 wine and liquor stores on top of the grocery stores, gas stations, and drug stores that sell beer in the State. In short, Ontario’s retail alcohol sales outlets are incredibly sparse.

To some, alcohol accessibility might seem like a minor concern. After all, people can just pick up beer on the drive home, right? That might work out for drivers – though it’s not clear that making alcohol sales largely auto-dependant is a good thing – but it’s another story for non-drivers. There are parts of Downtown Toronto where the closest alcohol outlet is a long hike past many convenience stores and bars. For low-income suburban residents, the closest outlet can be a long transit journey away. Those with physical disabilities face even greater barriers. Ontarians pay with their time and money to artificially boost the Beer Store’s bottom line.

From the standpoint of a monopolist, having few outlets makes perfect sense. Building and running more outlets would cost more money. They obviously don’t expect that doing so would appreciably increase their sales, otherwise they would build more outlets. Instead, they force people to use the small number of outlets, convenience be damned.

If this line of argument sounds familiar, it’s because the same concerns exist with another highly regulated industry: banking. The federal New Democrats have proposed the idea of capping ATM fees, noting that low-income Canadians disproportionately pay those costs. While the proposal misses the mark, it does touch on a relevant problem: many poor communities lack convenient banking access. Consequently, many residents either withdraw money from banks they don’t have accounts with (meaning they pay fees), or from “white-label” ATMs that charge steeper fees. This is a legitimate problem that could get worse as banks close locations to save money. It is a particular concern for low-income transit dependent suburban residents, who are already saddled with long commutes. It could be the case that the costs and complexities of commercial banking inevitably mean that some communities will be underserved, but no such argument exists for alcohol distribution.

Accessibility of retail alcohol isn’t merely an Ontario problem. Manitoba and Saskatchewan each have provincially owned liquor stores, which follow the same low-outlet density model. Both provinces allow “off-sales” at licensed hotels, which typically purchase products from the provincial liquor distributor at or near the full retail price, then tack on an additional markup. Though they do help fill in gaps in accessibility, they are often located in low-income urban neighbourhoods, meaning that the additional cost is borne by lower income residents in Winnipeg, Regina, or Saskatoon.

Some argue that increasing access to alcohol would lead to a raft of social problems. They note that communities with a high density of alcohol outlets tend to have higher crime indicators. Some of this is  self-selection. Certain people (such as students) tend to locate in the type of neighbourhood where alcohol is more accessible. But even if extreme outlet densities can lead to social problems, Toronto wouldn’t burst into anarchy if, say, craft brewers were able to sell beer in convenience stores or supermarkets.

Accessibility is crucial to any discussion of liquor policy. If a highly regulated industry selling a widely popular product isn’t providing reasonably accessible service to consumers, something is amiss. It is particularly problematic when lower-income consumers are disproportionately affected. If the Beer Store wants to keep costs down by having a small number of outlets, they should be allowed to do so. But they should not be allowed to prevent competitors from filling in the accessibility gap.