A Letter Requesting a Decrease in Beverage Alcohol Pricing

On Thursday, January 28, 2021, Carol Jolly, Executive Director of the Junction BIA, sent a letter of the Provincial Minister of Finance, Peter Bethlenfalvy, supporting a call by the Ontario Restaurant Hotel and Motel Association (ORHMA) and the Toronto Association of BIAs (TABIA) for a reduction in beverage alcohol prices by 20% to support the province’s restaurant industry. See below for a copy of the letter. 

Businesses – Consider sending This Letter to the Minister of Finance, as well. 

Attention: Hon. Peter Bethlenfalvy, Minister of Finance 

Re: Urgent Recommendation for Inclusion in the 2021 Provincial Spring Budget: Beverage Alcohol Price Reduction

Thank you for your government’s continued efforts to support Ontarians. The Junction Business Improvement Area is one of Toronto’s 80+ BIAs. Standing with TABIA and ORHMA, we collectively represent over 80,000 small and medium-sized businesses and property owners. These are challenging times of an enormous magnitude, and we understand the complexity of the decisions being made.

Since the COVID-19 pandemic came upon us, the hospitality industry has been devastated. Hospitality businesses experienced the negative impact of the COVID-19 outbreak first and will be the last to recover. The journey since the start of the pandemic has been painful, and the pain for most is now unbearable. The economic crisis in the foodservice sector will linger long after the pandemic is over. There is no doubt that food and beverage operations need a lifeline to endure the painful journey that lies ahead.

For the approximately 17,000 food and beverage establishments operating in Ontario, this lifeline can be found in Beverage Alcohol pricing. A reduction here is tangible, measurable and will float directly to an operator’s bottom line where the need desperately exists. More than three-quarters of all food service establishments in Ontario are licensed to sell and serve beverage alcohol, buying $577,465,000 of product directly from the LCBO in 2019.

Embedded in the full retail price of beverage alcohol is a complex regime of fees, levies, markups and taxes, both Federal (e.g. Excise or Customs Duties and GST) and Provincial. Is this much different than embedded taxes and fees in gas prices or the Federal Governments Carbon Tax? In a capitalist, competitive and entrepreneurial society, volume purchasing of goods and services favourably impacts the basic unit price. This is the case with almost all products and services sold in Ontario, with the exception of beverage alcohol.

The province’s retail agency stores have received a discount with the LCBO accepting a delivery commission associated with delivery platforms. Why not reflect discount pricing to the province’s licensees? We are only requesting fair treatment for our restauranteurs.

During these critical times, beverage alcohol pricing reduction directly flows into a restaurant’s bottom line. It will significantly impact the weak profit margins experienced by Ontario’s foodservice operations, which are already the lowest in Canada, according to ORHMA. These thin margins are reputed to be the primary impediment for the success of full-service foodservice investments from other countries, specifically from the USA, where previous entries into the Canadian market have not been successful. 

In Ontario’s Economic Outlook and Fiscal Review of 2019, the Minister of Finance announced that the government is committed to modernizing the rules for the retail and consumption of beverage alcohol and had previously appointed Ken Hughes as a special advisor to oversee this. COVID-19 has brought an urgent need to accelerate and implement a fair beverage alcohol pricing regime for licensees.

Ontario should follow the lead of British Columbia and support Ontario’s licensees by reducing beverage alcohol products by 20% as compared to consumer prices. Not only is this a fair and ethical decision, but it will significantly support the province’s restaurants during a very tough recovery journey.

Respectfully,

 

Carol Jolly, Executive Director

The Junction BIA

(416) 561-3683 – mobile

 

CC: Hon Doug Ford, Premier of Ontario / Hon. Lisa McLeod, Minister of Tourism, Sport, Heritage, and Culture / Hon. Vic Fedeli, Minister of Economic Development / John Kiru, TABIA / Diane Brisebois, Retail Council of Canada / Tony Elenis, ORHMA