WHALEN and FUSS: Smith government should allow alcohol sales in grocery/convenience stores

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Earlier this year, the Smith government confirmed that a panel of MLAs has been exploring the idea of allowing grocery and convenience stores to sell alcohol. Since then, there’s been no new developments. But despite misleading claims from some groups resisting the move, greater retail access would benefit consumers.

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Alberta’s fully-private retail market for alcohol is unique within Canada. Following privatization of alcohol retail in 1993, consumers in Alberta have benefitted from greater choice and convenience in the absence of government-owned retail outlets. However, the provincial government still controls which private operators can sell alcohol, and generally prohibits the sale in convenience and grocery stores.

But expansion into grocery and convenience stores simply makes sense. Individual retailers should decide where to sell (or not sell) alcohol to cater to consumer preferences rather than have terms dictated by government. As the footprint of government has expanded in Alberta, policymakers should remember what are the core functions of government, and what’s best left to the private sector. And there’s no good reason for government to dictate which stores can sell alcohol.

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Again, some groups including the Canadian Centre for Policy Alternatives claim Albertans pay higher prices for alcohol under privatization, yet this claim simply doesn’t add up.

First, these groups typically use average prices across Canada to support this claim. But average prices across Canada — which includes provinces with strict government controls of alcohol sales — are meaningless because the mix of products in Alberta has changed. In post-privatization Alberta, retailers and consumers come together in a market to set prices. Consumers may willingly pay more for alcohol in Alberta because they find higher quality products, more convenient locations and/or better store hours than in other provinces.

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Rather, what matters are not “average prices” but minimum prices and the ability to find the product you desire at the lowest available price. One comparison of nearly 2,000 products between Alberta and B.C. (which maintains a more government-controlled system of retail) using minimum prices estimated 83% of beer, wine and spirits were available at cheaper prices in Alberta.

Moreover, liquor store locations have also become more convenient for Albertans. In 2018 (the latest year of available data), 64% of Albertans lived within a kilometre of a liquor store — by far the highest percentage of any province in Canada and much higher than the 26% in Ontario, which has government-operated liquor stores. In the U.S., three-quarters of Americans are served by a private liquor retailing system, and privatized states have 50% more liquor stores per capita than those where government controls sales.

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And Alberta’s liquor product selection has expanded from 2,200 in 1993 to more than 31,000 varieties of beer, wine and spirits today. By comparison, Ontarians have at least 6,000 fewer products available.

Finally, critics claim privatization leads to increases in social problems that arise from alcohol consumption. However, the leading study of Alberta’s 1993 privatization found no evidence of increased social problems such as impaired driving or other alcohol-related offences.

Alberta has led the way in promoting consumer choice in what is otherwise a strictly controlled market for alcohol in Canada. To strengthen this advantage, the Smith government should continue to remove unnecessary restrictions for the benefit of Albertans.

Alex Whalen and Jake Fuss are analysts at the Fraser Institute.

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