2016 Ontario Budget

February 25, 2016

Below are the sections from the 2016 Ontario Budget related to beverage alcohol:
Beverage Alcohol

The Province continues to modernize policies to reduce regulatory barriers for Ontario’s beverage alcohol manufacturing industry. This includes:

  • Reducing the administrative burden on businesses involved in liquor manufacturing and distribution;
  • Allowing the sale of certain non-liquor products, such as artisanal foods, at manufacturers’ on-site retail stores, which will enhance the cultural and culinary experience at these stores; and
  • Removing local grape content requirements for wineries located outside Ontario’s three designated viticultural areas to level the playing field for all wine manufacturers in Ontario.

In addition, the government will support Ontario’s growing craft spirits industry by allowing direct delivery to bars and restaurants, and for on-site distillery stores, reducing charges and allowing an exemption for promotional distribution.

To encourage the continued success of Ontario’s growing craft cider industry, the government will introduce the sale of cider alongside beer in grocery stores and permit Ontario craft cider to be sold at farmers’ markets.

The government will continue to support Ontario’s dynamic craft beer industry by extending funding for the Ontario Microbrewery Strategy. This strategy will provide $1.4 million over two years in marketing support to complement the brewers’ successful launch in grocery stores.

These changes support new investment and innovation, while ensuring the continued responsible sale of alcohol.

Increasing Convenience & Choice - Beverage Alcohol
The government has delivered on its promise to introduce the sale of beer in grocery stores. Sixty locations across Ontario are now authorized to sell beer. Up to 150 stores will be authorized to sell beer by May 1, 2017, and up to 450 stores could eventually be approved to do so.

Building on that progress, the Province is moving forward with expanding wine sales to further improve consumer choice and convenience. By fall 2016, up to 70 grocery stores across Ontario will be authorized to sell wine and beer together through newly allocated authorizations. Eventually, up to 150 grocery stores will be approved to sell wine from Ontario, across Canada and around the world.

In addition, up to 150 of the province’s private winery retail outlets now located at grocery stores will have the opportunity to operate their store inside the grocery space, enabling customers to buy wine with their groceries. In total, up to 300 grocery stores — both large chains and independents — will sell wine inside their stores.

The government also continues to carefully regulate the sale of alcohol. The same requirements for safe and responsible retailing of beer in grocery stores will apply to wine. This includes designated sales areas, restricted hours of sale and rigorous training for grocery store staff.

The Alcohol and Gaming Commission of Ontario will be responsible for the authorization and ongoing regulatory oversight of grocery store operators selling beer and wine.

The government will also make it easier for consumers to discover products in their local community. Vintners Quality Alliance (VQA) wine is available at farmers’ markets and Ontario craft cider and fruit wine will be included. Cider and fruit wine will also be sold in grocery stores.

The Liquor Control Board of Ontario (LCBO) will continue to be a modern, efficient and innovative organization that consistently strives to reach consumers in new ways.

The LCBO has already made significant progress in modernizing its operations by:

  • Launching a pilot program to sell 12-packs of beer at 10 LCBO stores;
  • Introducing specialty stores that feature beverage alcohol products from around the world; and
  • Rolling out new Craft Beer Zones to 25 LCBO locations across the province.The LCBO has also been working to build an e-commerce platform and enhance its current retail and wholesale functions, with further details expected in the coming months.

LCBO E-Commerce Platform
The LCBO is moving forward by creating a best-in-class e-commerce open marketplace to enhance the consumer experience and provide more opportunities for suppliers.

This platform will enable beverage alcohol producers, suppliers and agents from across Canada and around the world to list their products for sale on the LCBO’s website, providing broader market access.

It will provide consumers with access to a wider variety of products, as well as the flexibility to order online and pick up products in store or have them delivered to their home.

This new platform will be operational by mid-2016.

In addition, the government is committed to ensuring its efforts to reform beverage alcohol retailing and distribution in Ontario are aligned with the Province’s social responsibility goals and priorities. These include the development of a comprehensive alcohol policy framework to support the safe and responsible consumption of alcohol.

The Ministry of Health and Long-Term Care is currently leading consultations with key stakeholders, including health professionals, addiction treatment providers, beverage alcohol industry stakeholders and law enforcement to inform the policy’s development. Pending the results of these consultations, including advice already received on the Fetal Alcohol Spectrum Disorder strategy, the government expects to dedicate a portion of alcohol revenue to support resulting programs.

Alcohol Charges
The following changes are proposed to complement the beer initiative introduced last year:

  • The Liquor Control Board of Ontario (LCBO) would increase the ad valorem mark-up for wine products by two percentage points, effective June 2016.
    • The wine mark-up will be further increased by two percentage points in April 2017, two percentage points in April 2018 and one percentage point in April 2019.
  • Establish a definition of authorized grocery store and provide for the collection of tax in those stores.
  • The basic tax on non-Ontario wine purchased at winery retail stores would be increased by one percentage point in each of June 2016, April 2017, April 2018 and April 2019.The government will change the minimum price for wine to be consistent with spirits and beer. The minimum retail price for table wine will increase to $7.95, including deposit, for a 750 mL bottle, phased in over three years.
  • The minimum retail prices for cider, fortified wine and low-alcohol wine will also be phased in over three years.

The government proposes to introduce legislation in the future to:

  • Establish higher basic wine tax rates for sales at winery retail outlets that operate their stores inside grocery stores; and
  • Replace the current mark-up and commission structure at on-site distillery retail stores with a tax on purchases of spirits.

Follow this link for the full 2016 Ontario Budget