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CanadaThe Beer Store recycling program could be casualty as Ford puts beer in corner stores

13:50  13 june  2019
13:50  13 june  2019 Source:   cbc.ca

End of Beer Store deal has 'huge economic upside' for Ontario craft brewers, alcohol adviser says

End of Beer Store deal has 'huge economic upside' for Ontario craft brewers, alcohol adviser says The Progressive Conservative's proposed termination of The Beer Store deal has a "huge economic upside" for Ontario's craft brewers, says the province's top adviser on alcohol. Ken Hughes vows that reforming beer sales will "free up" the market for smaller craft operations, which he says are a cornerstone of Ontario's identity. "Today the craft brewers in Ontario are disadvantaged by the way The Beer Store operates. Only two per cent of the beer sold through The Beer Store is from craft breweries," he said in an interview with CBC Radio's Metro Morning.

The Beer Store recycling program could be casualty as Ford puts beer in corner stores© Cole Burston/Canadian Press Ontario Premier Doug Ford, left, and Ontario Finance Minister Vic Fedeli, stack cases of beer during a photo opportunity at a brewery in Toronto.

The future of an "advanced and effective" recycling program run by The Beer Store is up in the air as negotiations between the consortium that owns it and the Ontario government heat up.

In 2018, The Beer Store diverted approximately 1.9 billion bottles and containers from landfills. Through a voluntary recycling program in place since its inception 92 years ago, it has recycled tens of millions.

"It's one of the most advanced and efficient recycling programs in the world."- David Soberman, University of Toronto

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Doug Ford should cancel Highway 407 contract Doug Ford has shown a willingness to rip up contracts with business. But why is the premier wasting time on small-fry deals like the province’s contract with the Beer Store, when he could be bold and discard the mother of all Ontario’s bad deals with business — the privatization of Highway 407. Ontario Attorney General Caroline Mulroney, along with other Conservative cabinet ministers and MPPs, have been busy tweeting smiling selfies from corner stores to hype how happy we should all be now that the Ford government has tabled legislation enabling us to pick up a case of beer whenever we stop to buy chips.

The company makes sure to highlight its social conscience on its website and in videos online. It has won awards and has been lauded by environmental groups for its efforts, including the David Suzuki Foundation.

"It's one of the most advanced and efficient recycling programs in the world," said David Soberman, marketing professor at the University of Toronto.

But it could quickly become a casualty as negotiations continue with the Ontario government, which wants to end a 10-year-old agreement it has with The Beer Store, which is predominantly owned by Molson-Coors, Labatt and Sleeman.

The Beer Store recycling program could be casualty as Ford puts beer in corner stores© Chris Young/The Canadian Press Beer products on display at a Beer Store outlet in Toronto.

Signed by the previous Liberals government, it's dubbed a "sweetheart deal" by Premier Doug Ford and Finance Minister Vic Fedeli.

Ford government announces expansion of alcohol sales to hundreds of new stores

Ford government announces expansion of alcohol sales to hundreds of new stores Ontario Finance Minister Vic Fedeli said the province will allow 87 more grocery stores to sell alcohol, as well as over 200 new "LCBO Convenience Outlets." The announcement came after the government passed a bill Thursday to further its efforts to end a 10-year agreement with The Beer Store that limits the number of stores that can sell alcohol. "By opening up more alcohol retail outlets across the province, we are not only making life easier for people, we are enabling economic opportunities for hundreds of new businesses," Fedeli said.

Breaking a contract

Refunding deposits on beer containers for recycling has always been a part of The Beer Store's business.

In February 2007, it expanded refunds for all alcohol containers, including those from the LCBO, which is enshrined in an agreement with the government called the Ontario Deposit Return Program (ODRP).

The finance minister's office confirmed new legislation it just passed to end the Liberal deal will provide for a "continuation" of the ODRP recycling program and the Ontario Convenience Stores Association says it supports recycling.

However, industry sources say that may not be as straightforward as simply legislating it.

Lower profits

In part, the ODRP is contingent on The Beer Store operating physical locations. There are about 450 today in the province, and every one of them acts as a proxy recycling location — they take back empties from customers and do some container crushing in the back.

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Municipalities in Alberta struggle with changes in curbside recycling demands After China banned Canadian exports of recyclables, municipalities like Lethbridge have had to secure other buyers with sometimes more stringent requirements, including demands for materials that aren't mixed with shards of glass. Adapting to Chinese ban Lethbridge recyclers drop their bottles and jars off at depots, so they can be stockpiled, rather than take them to the curb, where the glass often breaks and reduces the market value of all the other waste. "We just wanted to make sure we had materials that can be marketed," said Joel Sanchez, Lethbridge's waste and recycling general manager.

But expanded beer sales would likely chip away at The Beer Store's profits. The latest figures show a 2.3 per cent drop in revenue in the year after the province allowed some grocery stores to sell beer. Throw convenience stores into the mix and we could see a bigger drop.

The Beer Store recycling program could be casualty as Ford puts beer in corner stores© Provided by Canadian Broadcasting Corporation

While warning other forces could be at play (including a lower appetite for beer, compared with wine and spirits), Soberman said stores could be shut down.

"If the volume of product going through The Beer Store drops substantially, they may close some of their outlets," he said.

Worst case scenario? Beer in convenience stores puts The Beer Store out of business, effectively ending the recycling program altogether.

Soberman says this is technically possible, but unlikely, because consumers are creatures of habit.

At the very least, there could be fewer places for people to bring their empties.

"We shouldn't be doing anything that jeopardizes existing recycling programs," said Keith Brooks, programs director at Environmental Defence.

Heather Mallick: Doug Ford’s year of flipping pancakes

Heather Mallick: Doug Ford’s year of flipping pancakes The Ontario government is taking nearly five months off and will not return until around Halloween, a week after the Oct. 21 federal election. That is not a summer break, that is a sabbatical, and it was news to Ontarians that such a thing was possible. NDP leader Andrea Horwath pins it on the federal election. “The way I see it either Mr. Ford wants to be available to campaign for (federal Conservative Leader) Andrew Scheer, or Andrew Scheer’s asking Doug Ford to hide under a rock during the federal campaign,” It’s hard to believe that either Scheer or Ford would react in quite this way.

A 2016 report from the organization cited only 50 per cent of bottles are recycled through municipal blue bins.

The Beer Store's recovery rate is 96 per cent for beer bottles, and 81 per cent for everything else, according to its website.

A 'black eye' for the Ford government?

Sandford Borins, professor of public management at the University of Toronto, said if terminating a contract with The Beer Store early means jeopardizing an effective recycling program, it will look bad on the province. (Keep in mind, the beer bottle recycling is completely voluntary and revenue neutral.)

"It's a black eye for the government," he said.

While there could very well be a valid business argument for "modernizing" the way the province sells alcohol, the Ford government might not want to further damage its image when it comes to environmental policies.

On the other hand, the Progressive Conservatives have proven to be determined in forging ahead with campaign promises.

If they hold their ground, The Beer Store could be forced to leverage its recycling record, especially when hundreds of millions of dollars are at stake.

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