Ontario to Expand Alcohol Sales

How will this impact Ontario wineries and the marketplace?

Last week the Ontario Government announced that it will transition to a “new retail marketplace” by expanding alcohol sales to convenience, grocery, and big box stores across the province starting in 2026.

This week’s newsletter is niche-Ontario-alcohol-policy-content, providing a summary of the announcement and discussing what it might mean for Ontario’s wine industry and wine-adjacent businesses; plus there’s a compendium of reactions to the news (👀 appendix). Given the intricate layers of rules and legislation that oversee Ontario’s wine industry and retail sales model, below is a bit of glossary to help keep track of some of it.

Summary of Ontario’s Announcement

On December 14, 2023, the Ontario Government announced that by January 1, 2026, consumers will be able to buy wine (and beer, cider, and RTD beverages) at participating convenience stores (including gas stations) and grocery and big box stores, representing a major expansion of how and where alcohol is sold.

The new, more open marketplace will see up to 8,500 new stores, which WineAlign says is “almost quadruple the number of wine retail outlets now in operation.”

To facilitate the change, the government will not renew its agreement with The Beer Store (expiring Dec. 31, 2025), which outlines how a limited number of grocers can sell certain types of alcohol. The Beer Store and LCBO will continue their operations in Ontario’s new marketplace.

The government announced it would introduce “competitive pricing to all private retailers,” and provide “transitional and time-limited supports” to Ontario-based producers, such as:

• Dedicated shelf space requirements for small producers;

• Establishing a wine and grape industry sector and government table; and

• Introducing new legislation, that if passed, will eliminate the 6.1% wine basic tax at on-site winery retail stores.

Ontario does not currently have true wholesale pricing for alcohol, but two years ago the government announced that licensees (ie. bars, restaurants, bottle shops) would receive a 10% discount on beverage alcohol purchased from the LCBO. Under the new announcement, the LCBO “will be the exclusive wholesaler for all retail, bars and restaurants selling alcohol,” and will also continue its role in distribution; however, the announcement also states that “the province will also permit more flexible distribution models for small producers.”

The government ended its announcement with a commitment to consultation:

In the months ahead, the government will continue to meet and consult with industry partners, local beverage alcohol producers and other stakeholders on additional areas of the future marketplace including licensing, wholesale pricing and taxes, mark-ups and fees.

Insights from an Ontario Winery

William Roman is the General Manager at Ontario’s Rosewood Winery & Meadery, and we talked about how this announcement may impact Ontario’s wine industry and the marketplace overall. Generally, Roman is supportive of the move:

“At a high level, conceptually, yes this is a good thing. I believe in the free market and allowing more point of sale outlets in Ontario is a step in the right direction. Change is good but it has to be done in an effective way.”

To be effective, Roman says there needs to be more wine tax reform, and he has been an active advocate for tax reform for Niagara's wine industry. Roman shared that approximately 30% of the price of a wine bottle is paid in taxes to the government by the producer — and that’s just at the provincial level — it does not include federal taxes, HST, and other taxes and fees. (According to Wines In Niagara, Ontario wines are among the highest taxed in the world with about 65% of every bottle sold going to taxes and LCBO levies.)

Roman says the government needs to look at Ontario’s wine industry with a long-term growth lens, rather than just as a tax revenue generator, to help invest in it to see it grow and thrive. He pointed to research from Wine Growers Ontario which reports that for every $1 spent on Ontario wine in Ontario, $3.29 in business revenue is generated across the province. By comparison, for every $1 spent on imported wine in Ontario, $0.90 in economic impacts are generated across the province. The business case is there for investing in Ontario’s wine industry.

Roman said Oregon as a good example to learn from as their wine industry was established in the 1970s, around the same time as Ontario’s wine industry. According to Roman, over the last 50 years, while Ontario’s vineyard plantings have decreased, Oregon’s have grown three-fold because its government supported the industry by not over-taxing them.

We also talked about what dedicated shelf space for small local producers might mean and Roman made two important points. “There are a lot of assumptions of what is a ‘small business’ and how that will be defined and by whom.” There needs to be discussion with small producers to help clearly define who is a small producer, and Roman and other smaller wineries should be at the government’s table to take part in those discussions.

And second, Roman suggested that there should be a mandate for dedicated shelf space, pointing to the Canadian Radio-television and Telecommunications Commission’s Canadian-made content requirements as an example that can be followed. “If they want to preserve Canadian-made TV, they should do that for local wine, too.”

We also talked about the need for wholesale pricing, flexible distribution, market expansion opportunities, how the VQA system could be modernized to better support wineries; and how restaurants pivoted during the pandemic to create Ontario’s bottle shop sector, which could really thrive under this new model if given the right conditions.

So, Now What?

After reviewing the reactions to the news, and speaking with William, the Ontario government’s announcement seems like a positive move, but for it to be effective — to truly modernize the marketplace and support small businesses — certain conditions need to be put in place. Or as WineAlign put it: “Many other logistical details of this new arrangement are not immediately clear and may take the intervening two years to crystalize.” In the spirit of The Most Wonderful Time of the Year, let’s hope Santa brings the wine industry and related businesses everything on this wish list.

TL;DR: Ontario has taken steps to modernize its retail alcohol model and support the province’s wine industry; however, time will tell if the right conditions are put in place to foster competitiveness and growth.

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APPENDIX - Reactions to the Announcement

A round up of some of the reactions to the news:

• Drinks Ontario released a statement saying that “strategies supporting the beverage alcohol industry and developing entrepreneurial opportunities will be a boon for both small and large businesses;” and are pleased that there will be a review of taxes, fees, and mark-ups.

• Grape Growers of Ontario said eliminating the 6.1% wine tax is a “bold move [that] will invigorate our wineries,” calling it a “a win-win” for industry and consumers.

• LCBO acknowledged the announcement, stating they “welcome the opportunity to be the exclusive wholesaler of beverage alcohol in Ontario.”

• Ontario Chamber of Commerce welcomed the news, calling it a “progressive step” that will open up “new avenues for economic growth and market expansion, especially for local producers.”

• Ontario Convenience Stores Association are happy.

• Ontario Craft Wineries posted that this puts in place “the right policies to ensure our wine and grape sector not only succeeds, but thrives and remains economically viable.”

• Restaurants Canada welcomed the commitment for consultation and wants to provide input on licensing, taxes, mark-ups and fees; and will “continue to press the need for wholesale pricing.”

• Retail Council of Canada applauded the announcement, saying “Ontario's retail system for alcohol has lagged other jurisdictions for far too long.” RCC is also pleased that private label products will be permitted (No Name brand wine, anyone?).

• WineAlign’s Awaiting New Year’s Day – 2026! provides an overview of what the changes mean for Ontario’s wine retailing landscape and how the “deluge of competition will surely reduce the relevance and the footprint of the LCBO.” It also offers comments on how this will impact wine fans (that’s you! hi!) and what we can expect to see from those 8,500 new shops.

• Wine Growers Ontario posted that the announcement “puts in place the conditions for our industry to grow like never before.”

And Corey Mintz’s opinion piece, Ontario wants to change how booze is sold. So let’s talk about restaurants, deserves a mention as he writes about the need for wholesale pricing for the hospitality industry, calling for a price reduction of between 25-35 per cent.

As long as Ontario is willing to open up discussions of how alcohol is sold, let’s talk about what would make the biggest impact on an industry that generates 1.7 per cent of Ontario’s GDP, yet employs 11.2 per cent of the workforce. Making this sector more resilient would have a knock-on benefit on so many lives.

Everyone gets a price break when buying in bulk. Why won’t Ontario give one to restaurants?