Ontario grocers feel ‘hoodwinked’ by alcohol bottle return rules

October 25, 2024 Canuck

Ontario grocery stores — particularly smaller, independent shops — say new bottle return requirements that were sprung on them a week before they’re set to take effect may make it impossible to participate in Premier Doug Ford’s expansion of alcohol sales.

Grocery stores that aren’t already selling alcohol can start stocking their shelves with beer, wine and coolers as of Thursday, the next step in Ford’s expedited rollout.

Uptake has been relatively low, with just over 400 new grocery stores signing on to join the existing 450 grocers licensed to sell alcohol, out of around 5,000 such stores in the province.

Grocery stores were already concerned that those that sell alcohol will also have to accept empties.

Having the smell of stale beer mingling with the smell of fresh food — and having to put not-quite-entirely-empty bottles that become fruit-fly magnets near produce sections — would not be good for business, they said.

But with new and detailed requirements communicated to them this week by the Liquor Control Board of Ontario just days before they begin, retailers say they don’t know how they will make it work, and some are planning to hand back their licences.

Ford’s plan to expand alcohol sales in gas stations, convenience stores and grocery stores has met some challenges along the way, including limited buy-in on the part of grocers. (Christopher Katsarov/The Canadian Press)

“We feel hoodwinked by this,” said Brad Fletcher, president of The Village Grocer in Markham.

His store has been licensed since 2019, but he does not see any way to continue making it work once they have to accept, sort, clean and palletize empties and associated packaging.

“We, for a long time, have been questioning the profitability of carrying beer and wine in our store,” he said.

“It has been a struggle, with low margins that we’ve been receiving. We weren’t making any money on it at all, and maybe, in fact, losing some. But we did it as a convenience to our customers.”

Recycling requirements surprised some grocers

Stores such as The Village Grocer that are within a five-kilometre radius of a Beer Store are exempt from having to accept empties until Jan. 1, 2026, so that is when the store is planning to stop selling alcohol, Fletcher said.

“We are prepared to hand our licence back at the 11th hour,” he said. “Our customers love it, but at the same time, we’re not built to be a bottle depot for returns.”

Stores were told earlier this year that there would be a requirement to accept empties, but the details released this week are taking many by surprise.

A person pushing a shopping cart passes in front of a person pushing a baby carriage in the opposite direction, in what appears to be a parking lot. The image only shows the people from the neck down, one in an orange shirt, the other in a dress. — Some of the big grocery storechains are also questioning the feasibility of the alcohol expansion plans in light of the in-depth recycling requirements, according to the Retail Council of Canada. (Sean Kilpatrick/The Canadian Press)

Stores will have to accept not just bottles and cans, but packaging such as bags, boxes, plastic rings and bottle caps. They will have to sort empties into four different categories, including clear glass and coloured glass. They will have to package refillable containers so they don’t break in transit to The Beer Store. They will have to ensure the others are suitable for recycling, which grocers are interpreting to mean taking any cigarette butts out of bottles and cleaning them.

“The costs and the logistics of an independent retailer having to do that … it’s beyond,” said Gary Sands, senior vice-president of public policy and advocacy with the Canadian Federation of Independent Grocers. “We can’t even imagine how that’s going to be possible.”

‘The deal has gotten worse for us’

The LCBO said in a statement that details of responsibilities under the deposit return program were shared with participating grocers “as soon as possible, following finalization of government policy.”

Mike Sharpe, who runs a store in Campbellford, got one of the new licences set to take effect Thursday. But after seeing the new rules, he said he will not be participating.

“The idea of having a huge back room where we’re sorting and doing this makes no sense,” he said.

“Everything sounded great, so we applied, and then every day since they’ve issued a licence, the deal has gotten worse for us.”

It’s not just the smaller or independent grocers that have concerns. The big chains are questioning the feasibility as well, said Sebastian Prins, director of government relations for the Ontario section of the Retail Council of Canada.

“We could have seen a much different outcome here, if it was easier to calculate,” he said.

“Folks just got the documents a few days ago, and it’s kind of well, ‘Is this a venture we want to take on? I don’t know.’ This is a complicated requirement in exchange for selling more alcohol.”

Prins said the majority of the larger stores are planning to add alcohol sales at locations within five kilometres of a Beer Store, meaning they aren’t obligated to accept empties right away. Some chains are licensing one new location outside of that radius as a test, and his organization is working with a York University professor to assess the costs and logistics.

“While we get two cents a can from The Beer Store, the costs are well, well, well above that,” he said.

WATCH | Ford’s alcohol expansion plan has already hit convenience stores. Here’s what to know:

What to know about alcohol sales in Ontario corner stores

2 months ago

Duration 2:20

As of Sept. 5, more than 300 corner stores in Ontario can sell beer, wine and ready-made cocktails. CBC’s Lane Harrison breaks down what shoppers need to know about how it will all work.

A spokesperson for Finance Minister Peter Bethlenfalvy said the province is pleased that more than 400 new grocery stores are licensed to sell alcohol starting Thursday and provide Ontarians with more choice.

“By opting into the recycling program, grocery stores will join a safe and successful program that has been used not only by the Beer Store but other jurisdictions,” Colin Blachar wrote in a statement.

Stores will be allowed to negotiate their own, alternative arrangement with The Beer Store for drop off and pick up of empties, Blachar said.

But the grocers question the utility of that clause, with the independent stores in particular saying their negotiating power stacked up against The Beer Store is extremely limited.

Thousands of convenience stores across the province have signed on to the new alcohol regime and have been able to sell beer, wine and ready-to-drink cocktails as of early September. They are exempt from recycling requirements.

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