TORONTO – As the Ontario government prepares to move ahead with its plans to overhaul the province’s 92-year-old beer distribution system, experts say it should heed lessons from retail sales systems in other provinces.
Doug Ford’s Progressive Conservatives have made it clear that their goal is to give Ontarians more choice and convenience when it comes to alcohol sales, but details are scant as to how they hope to achieve this.
The PCs have the option of adopting the systems used in Quebec, Alberta or British Columbia, or they can develop something unique.
“The lack of detail suggests that they just have this principle of liberalizing but they haven’t got a vision of what kind of system they want,” says Dan Malleck, a beer expert and associate professor applied health sciences at Brock University.
The B.C. model uses provincially owned and private liquor stores but doesn’t allow purchases in supermarkets. Alberta’s system is entirely private with no limit on the number of stores. Quebec allows sales in grocery stores, convenience stores and big box outlets like Costco in addition to government-run liquor outlets.
Most provinces restrict beer sales to provincially owned stores but Newfoundlanders can pick up a cold one from corner stores and gas stations, while New Brunswickers will be able to buy beer in select grocery stores starting in October.
Ontario retail groups are pushing the province to adopt a system similar to Quebec where distribution is widespread and retailers can set their own prices after negotiating directly with breweries. That allows them to pass along any savings to consumers instead of being constrained by a universal selling price set by producers.
“Our preferred model is essentially the Quebec model,” says Karl Littler, the council’s senior vice-president, public affairs.
That would not be as financially beneficial for the owners of The Beer Store, he acknowledges, but they would still prosper.
“It doesn’t seem like they’ve had any difficulty selling in the province of Quebec or in the province of Alberta or indeed in any province,” he said in an interview.
The Beer Store, which is owned by the foreign brewing giants that control Labatt, Molson and Sleeman, accounts for almost 70 per cent of beer sales volume in Ontario, which generated $3.3 billion in sales in 2017-18, according to a recent report by consultant Ken Hughes which recommended changes Ontario should adopt.
Littler said the Beer Store is looking to defend a system that gives its owners substantially greater margins in Ontario than they enjoy in Quebec because of the way that they control both wholesale and retail prices.
Expanding the number of points of sale is sure to increase distribution costs as it has in Quebec where beer is delivered to about 8,000 locations instead of Ontario which has the fewest per capita retail locations in the country, says Dave Bryans, CEO of the Ontario Convenience Stores Association.
“Right now the extra savings go to the beer companies, not to the consumers,” he said in an interview.
Bryans said minimum prices need to be set to protect craft brewers from predatory prices by the global brewers, but he has no problem with beer prices being a little more expensive in convenience stores than at grocers or The Beer Store.
Craft beer sales represent less than two per cent of sales at The Beer Store but more than 10 per cent at government-run LCBO locations and more than 15 per cent at grocers.
Allowing sales of beer, especially craft selections, in family-run independent corner stores can help to save a sector that’s been losing five stores a week in the province for the last decade, said Bryans.
“I actually think the craft beer business will bring more millennials into the sector as well and really help shore up the future business model in every community.”
He thinks Ontario will select an open and competitive market like Quebec’s, but with a bias towards craft beer because it is more developed in Ontario than Quebec where the dominance of the big breweries has long controlled shelf space.
The future of Ontario’s beer distribution system remains a mystery because the law that rips up a 10-year agreement with the Beer Store signed in 2015 by the previous Liberal government has yet to be proclaimed more than a month after receiving Royal Assent.
Industry observers believe the provincial government is using the threat of rescinding the legal rights of The Beer Store to compensation as a hammer to force a deal with the retailer.
The Beer Store declined to comment but said after the law was introduced that it would “fight this legislation vigorously through the courts.”
A spokeswoman for Ontario’s new finance minister, Rod Phillips, said the government plans to stick with its campaign promise despite a cabinet shuffle and threat of legal action, but declined to provide any details about the how the system will change or answer questions about the timing of implementing a new law.
“We will continue to work towards getting the best deal possible for Ontario consumers and businesses, and at this time cannot speculate on the outcome of this process,” said Emily Hogeveen in an email.
Canada’s retail council expects the Beer Store will remain a viable competitor even though it estimates that grocery and convenience stores might get about half of the current Beer Store retail business following the changes.
“I think the story that they’re just going to somehow wither on the vine is a little strange,” he said. “Obviously it would be significant or they wouldn’t be spitting bullets like they are currently about the prospect of change.”
OpenText snaps up cloud security firm Carbonite in $1.42 billion deal
OpenText, the Waterloo-based enterprise cloud information management company, announced Monday that they have reached a deal worth US$1.42-billion to acquire Carbonite, Inc, a Boston company that does cloud data protection and endpoint management.
OpenText chief executive Mark Barrenechea said that part of the reason why he likes Carbonite is because it gives an opportunity to sell to 300,000 small businesses and 7 million individual professionals.
“This acquisition will further strengthen OpenText as a leader in cloud platforms, complete end-point security and protection, and will open a new route to connect with customers, through Carbonite’s marquee SMB/prosumer channel and products,” Barrenechea said in a news release.
The deal of US$23 per share for the Boston-based Carbonite is a 25 per cent premium to the close of trading Friday. OpenText will pay $800 million in cash with the total transaction including debt valued at US$1.42 billion.
OpenText shares were up 2.3 per cent and Carbonite were up 24 per cent in morning trading.
Historically, Opentext has focused most of its efforts on the largest enterprise clients.
Speaking to investment analysts, Barrenechea said it will likely take around 18 months to fully integrate the company into OpenText.
The company has a long history of growing through acquisition; OpenText spent nearly US$3 billion between 2013 and the beginning of 2017, including the US$1.62 billion acquisition of Dell EMC, the company’s enterprise content management division.
As of September 30, Carbonite had $405 million in trailing twelve-month revenue.
Keystone pipeline restarted after breach in North Dakota
The owner of the Keystone pipeline says the line has returned to service after a breach that leaked an estimated 1.4 million litres of oil in northeastern North Dakota late last month.
TC Energy Corporation says the move follows the approval of its repair and restart plan by the U.S. Pipeline and Hazardous Materials Safety Administration, which ordered the line shut until the Canadian company completed corrective action.
The company says it will operate the pipeline at a reduced pressure with a gradual increase in the volume of crude oil moving through the system.
The line, which began operating in 2011, is designed to carry crude oil from Alberta across Saskatchewan and Manitoba, and through North Dakota, South Dakota, Nebraska, Kansas and Missouri on the way to refineries in Patoka, Ill. and Cushing, Okla.
The spill affected about 2,090 square meters of land near Edinburg, N.D.
TC Energy says it continues to work closely with the U.S. Pipeline and Hazardous Materials Safety Administration and the North Dakota Department of Environmental Quality as it investigates the cause of the breach.
“We appreciate the cooperation and support from local officials, emergency response personnel and commissioners in Walsh County, as well as the landowner who has granted permission to access land for assessment, repair and clean-up activities,” TC Energy said in a statement on Sunday.
“We also want to recognize the continued efforts of our crews, contractors and businesses in the community for their around-the-clock support, which has allowed us to respond quickly and safely to this event.”
The company adds it is communicating plans to its customers and will continue working closely with them as it begins to return to normal operating conditions.
It said on its website that it has observed no significant impacts to the environment.
The pipeline spill and shutdown come as the company seeks to build the US$8-billion Keystone XL pipeline that would carry oilsands oil from Alberta to refineries in Texas.
Beijing wants Donald Trump re-elected because he is easy to read
China’s former chief trade negotiator says Beijing wants Donald Trump re-elected because he is ‘easy to read’
- China’s former vice-minister of foreign trade Long Yongtu says China wants Donald Trump to be re-elected because he is ‘easy to read’
- He said Trump’s vocal nature and unfiltered tweeting sprees makes him ‘the best choice in an opponent for negotiations’
- ‘We don’t need to spend so much time figuring out what Americans want any more, or search for real thoughts in the dark, like we used to,’ he said
- He also noted that Trump hasn’t confronted China with geopolitical issues like the country’s position in Taiwan and Hong Kong
- Yongtu’s stance offers insight into the thinking of Beijing’s policymakers as the two nations remain locked in a tariff trade war
Long Yongtu, the former vice-minister of foreign trade in China who aided in the country’s entry into the World Trade Organization, says Trump is easy to understand thanks to his daily, unfiltered Twitter posts.
Trump’s vocal nature makes him ‘the best choice in an opponent for negotiations’ because he’s transparent with his agenda, Yongtu said at the Credit Suisse’s China Investment Conference on Saturday in Shenzhen.
‘We want Trump to be re-elected; we would be glad to see that happen,’ Yongtu added according to the South China Post.
China’s former vice-minister of foreign trade Long Yongtu says China wants Donald Trump to be re-elected because he is ‘easy to read’
‘He makes the US decision-making process efficient and transparent, because he basically says what it is. The pros of [having Trump] outweigh the cons. We don’t need to spend so much time figuring out what Americans want any more, or search for each other’s real thoughts in the dark, like we used to,’ he said.
Yongtu, 76, has retired from active ministerial posts and does not speak for China’s government. However, many believe that his statements on Trump offer insight into the thinking of China’s policymakers and trade diplomacy stance, as the U.S. and China remain embroiled in a trade war.
Long said that Trump, to his credit, is a transparent and realistic negotiator who is focused on having China import more American products.
He says that Beijing is able to compromise on that front.
He also noted that Trump is unlike his predecessors because he does not pick fights with Beijing on geopolitical issues such as China’s grip over Taiwan or Hong Kong.
‘He makes the US decision-making process efficient and transparent, because he basically says what it is. The pros of [having Trump] outweigh the cons. We don’t need to spend so much time figuring out what Americans want any more, or search for each other’s real thoughts in the dark, like we used to,’ Youngtu said on Trump
‘Trump talks about material interests, not politics,’ Long said to the Post. ‘Such an opponent is the best choice for negotiations.’
As for the U.S.-China trade war, negotiators seem to be nearing a ceasefire. Both nations have agreed to roll back the tariffs they imposed on each other in phases, Chinese commerce ministry spokesman Gao Feng announced Thursday.
He added that the cancellation of tariffs is a key condition to any trade agreement, however it’s not clear when such a deal will take place.
The trade war, which started in July 2018, has grown into disputes over technology and global finance.
‘The trade frictions with China are just part of Trump’s global protectionist strategy,’ Long said, noting that the Trump administration withdrew from the Trans-Pacific Partnership, and imposed tariffs on the European Union, Canada and Mexico.
On Saturday Trump said that trade talks with China were moving along ‘very nicely’ but the U.S. won’t fold unless they make a deal with Beijing that is right for America.
‘The trade talks with China are moving along, I think, very nicely and if we make the deal that we want it will be a great deal and if it’s not a great deal, I won’t make it. I’d like to make a deal, but it’s got to be the right deal,’ Trump told reporters at Joint Base Andrews.
‘China very much wants to make a deal. They’re having the worst year they’ve had in 57 years. Their supply chain is all broken, like an egg, they want to make a deal, perhaps they have to make a deal, I don’t know, I don’t care, that’s up to them,’ he added.
Officials from both countries said on Thursday that China and the United States had agreed to roll back tariffs already in place on the other nation’s goods in a ‘phase one’ trade deal to end a damaging trade war.
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