The Beer Store faces cash shortfall after launch of alcohol in grocery stores

Feb 21 2020, 8:15 am

The Beer Store has reported a cash shortfall following the launch of alcohol in grocery and convenience stores in 2019.

According to a spokesperson from The Beer Store, the company operates on a break-even basis.

This means that neither profit nor loss are carried over from year to year, and it’s why The Beer Store model offers Ontario the lowest before-tax prices on beer in Canada.

“The 2019 cash shortfall at The Beer Store is a direct result of the opening of beer sales in 450 grocery stores across Ontario and of the continued uncertainty surrounding The Beer Store’s current 10-year operating agreement with the Province, which was signed in 2015 and would be costly to terminate,” the spokesperson told Daily Hive.

In June, the Ford Government passed legislation to terminate the Master Framework Agreement and absolve the government from damages for breaking the contract.

The agreement outlines a deal made between the three major brewing corporations (Labatt, Molson, and Sleeman), The Beer Store, and the Province of Ontario. It states that the province would ensure that beer would not be authorized for sale or distribution in Ontario except for by The Beer Store, the LCBO, stores operated by either, breweries, or duty-free stores.

If the agreement were to be breached, the document states that a remedy would be required. These options include the potential a monetary award as hefty as $1 billion, to be paid by the breaching party.

The Beer Store told Daily Hive, the agreement currently swims in “continued uncertainty.”

“We have a responsibility to consumers in communities, large and small, across Ontario to continue to fight to keep beer prices low and to deliver other community benefits, including responsible point-of-sale and our world-class recycling program,” the spokesperson said.

One of those decisions is 10 planned community store closures in 2020. Five stores — 572 Church Street, 1200 Dundas Street West, 1285 Queen Street East, the location at Don Mills and Eglinton, and 2866 Ellesmere Road — will close at the end of February.

Five more are planned for later in the year. The spokesperson says that the leases on each of the five initial stores that are set to close were expiring.

“The good news in terms of our employees is that this process has not required any layoffs. Every employee has been offered another position at another Beer Store location,” the spokesperson said, adding that right now, the company’s focus is continuing consultations with the government.

“In the meantime, we continue to be committed to our operating agreement, which has included a $100 million investment by Beer Store owners into modern consumer-friendly upgrades and programs.”