FAO RELEASES REPORT ON THE FINANCIAL IMPACT OF EXPANDING ONTARIO’S BEVERAGE ALCOHOL MARKETPLACE
TORONTO, January 27, 2025 – Today, the Financial Accountability Office of Ontario (FAO) released a report that estimates the financial impact to the Government of Ontario (the Province) of the decision to expand Ontario’s beverage alcohol marketplace for beer, wine, cider and ready-to-drink alcohol beverages, including the cost to accelerate that expansion to begin in 2024.
The FAO estimates that expanding the beverage alcohol marketplace in Ontario will result in a net cost to the Province of $1.4 billion over the term of the Early Implementation Agreement, which expires on December 31, 2030. Of the $1.4 billion net cost, the FAO estimates that $817 million relates to the planned expansion of the beverage alcohol marketplace starting on January 1, 2026, and $612 million relates to the decision to accelerate that expansion to begin in 2024.
The projected $1.4 billion net cost consists of $489 million in support to Ontario’s wine industry and Brewers Retail Inc. (which operates as The Beer Store), $1,280 million in lower tax revenues, primarily for beer, wine and spirits taxes, and $14 million in other expenses. These costs are partially offset by a $353 million increase in LCBO net income, largely related to increased wholesale activity.
The actual financial cost to the Province will depend on how retailers and consumers respond to the expanded marketplace. The cost would be lower than projected by the FAO if the marketplace expansion results in higher per-capita alcohol consumption. The cost would be higher if more grocery and convenience stores participate and capture a larger than expected market share, or consumers shift their purchases to new retailers more quickly than projected. After accounting for these and other factors, the FAO estimates that the financial cost to the Province could range from $529 million to $1.9 billion to December 31, 2030.
For more information, read the full report here.
Quick Facts:
- On December 14, 2023, the Province announced that the beverage alcohol marketplace for beer, wine, cider and ready-to-drink alcohol beverages would be expanded to participating convenience, grocery and big-box stores across Ontario “no later than January 1, 2026”.
- On May 24, 2024, the Province announced that the beverage alcohol marketplace expansion would occur “earlier than planned” with a phased rollout to begin in 2024.
About the FAO
Under the Financial Accountability Officer Act, 2013, the Financial Accountability Office of Ontario (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy, and related matters important to the Legislative Assembly of Ontario. Visit our website and follow us on X and LinkedIn.
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For further information, please contact:
Sophia Zhu | 416 931 5498 | SZhu@fao-on.org | fao-on.org