Ontario Premier Doug Ford’s obsession with getting six packs into corner stores is now officially killing his Progressive Conservative government’s “Open for Business” agenda.
The populist Premier picked a fight with the world’s biggest brewers last week by threatening to tear up a deal that grants the Beer Store, a 445-outlet chain primarily owned by the foreign brewing giants behind Labatt, Molson and Sleeman, a near-monopoly on retail beer sales. The PC government plans to rip up a 10-year agreement with the Beer Store, signed in 2015 by the previous Liberal government, in order to pave the way for beer and wine sales in convenience stores and big-box retailers.
It’s the latest faceoff between the Ford government and corporations over broken contracts. Since coming to power a year ago, the PC government cancelled plans for wind farms owned by a German company and meddled in Hydro One Ltd., scotching a planned $4.4-billion cross-border takeover. Partly privatized Hydro One and German energy company wpd AG opted to avoid a public fight. In contrast, Big Beer has pulled out the big guns – deploying corporate lobbying groups to make their case.
“There are few factors more critical to investment and economic growth than the legal certainty and predictability fostered by respect for the rule of law,” Neil Herrington, senior vice-president of the U.S. Chamber of Commerce, said in an open letter to the Premier on Wednesday.
The U.S. group, which recently played host to Mr. Ford at its Washington office, said terminating the Beer Store contract “could undermine … the case the Ford government has made that the province is open for business."
“Our strong concern is that terminating an existing contract, and doing so without compensation … risks sending a negative signal to U.S. and other international investors about the business and investment climate in Ontario,” Mr. Herrington said.
He speaks for an organization with three million members, including Anheuser-Busch InBev SA, which owns Labatt and is the world’s largest brewer, and Molson Coors Brewing Co., home to politically connected chairman Peter Coors.
The same closed-for-business sentiment is coming out of Mr. Ford’s home turf. Ontario Chamber of Commerce chief executive Rocco Rossi wrote an open letter to the government last week, saying: “Cancelling a contract sends an alarming message to the business community in Ontario and beyond, which could potentially deter investment.”
Making it easier to get beer and cannabis is the bright, shiny object Mr. Ford seems intent on waving in front of voters. The government recently introduced legislation that allows booze during tailgate parties at sports events and served up “buck-a-beer” to consumers by lowering the minimum price.
The Ford government is expected to announce as early as Thursday that up to 80 additional grocery stores will be stocking beer and wine, and approximately 200 new provincially supervised retail outlets known as agency stores will open their doors. Both moves can take place under the existing contract with the Beer Store. The government will soon announce plans for at least 50 new cannabis outlets, according to sources close to the government, after giving permits this spring to 25 privately owned shops across the province.
A flurry of booze and cannabis store openings may win fans among Mr. Ford’s voter base, but corporate leaders are shaking their heads. In his letter, Mr. Rossi said, “Our members believe the government of Ontario must take a strategic – rather than a piecemeal – approach to alcohol policy.”
The Ford government’s preoccupation with booze is also handing the opposition a club they can use to beat on the PCs’ image as business friendly.
“Nobody wants to see the government blow possibly hundreds of millions of dollars to break a contract,” NDP Leader Andrea Horwath said on Wednesday. “No businesses are going to want to invest in a province where the climate is such that the government is indicating that they have no interest in the rule of law.”
The Beer Store is warning Ontario will face hundreds of millions of dollars in penalties if contracts are broken, including potential lawsuits anchored in the North American free-trade agreement. The retailer’s union is telling the government that its confrontational approach will alienate workers.
Labatt, Molson and Sleeman collectively contribute $4-billion annually to the provincial economy. For a government that considered stamping “Open for Business” on Ontario licence plates, there’s a rich irony in these battles with some of the province’s biggest consumer-products companies.