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Brewery gouging costs restaurants $75 million a year, says industry analysis


April 22, 2014
By Canadian Pizza

April 22, 2014, Toronto – Restaurants and
bars in Ontario pay $75 million more than consumers each year for 24-bottle
cases of beer, says Restaurants Canada, which represents Ontario’s $28-billion
restaurant and foodservice industry.

April 22, 2014, Toronto – Restaurants and
bars in Ontario pay $75 million more than consumers each year for 24-bottle
cases of beer, says Restaurants Canada, which represents Ontario’s $28-billion
restaurant and foodservice industry. A price analysis by the association shows
that brands such as Molson Canadian, Coors Light and Budweiser cost the
restaurant industry an average of 30 per cent more per case than the public.
For Labatt Blue, the cost increase is almost 50 per cent.

“Unlike all other business inputs,
wholesale beer prices for restaurants are actually higher than public retail
prices,” says James Rilett, Restaurants Canada’s vice-president, Ontario, in a
news release from the association. “Unfortunately, as with all costs to a
business, these excessive prices are passed on to the consumer.”

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Breweries take advantage of their unique
market position to arbitrarily charge restaurateurs more than the public, the
news release adds. Due to the flat-tax pricing of beer, the Ontario government
does not receive additional revenue from the higher licensee price. Instead,
the majority of these profits flow directly to the foreign owners of major
brands.

“Our industry has to ask that prices be
lowered to only the basic retail price, which is absurd and represents a market
aberration that shouldn’t exist in a free market economy like Ontario,” says
Rilett. “Breweries should immediately bring wholesale prices in line with
retail prices. If not, the government should step in to address this inequity.”

The association says the Beer Store further
discriminates against restaurant and bar owners by not allowing them to buy
products on limited-time offers or use credit cards for payment.

“The beers brewed by these major companies
are popular and our members want to carry them,” says Rilett. “But they are
exploiting our members for serving customers what they want.”