April 9, 2024
A Path Forward for Beverage Alcohol Retail Expansion
A Made-in-Alberta Framework for Convenience Stores
The Convenience Industry Council of Canada (CICC) is a national, not-for-profit council that represents more than 23,000 convenience retailers nationwide. Our sector employs more than 190,000 Canadians and generates an estimated $53 billion in economic impact from coast to coast to coast. In Alberta, the CICC represents nearly 2,400 retail locations, directly employs 20,000 people and collects over $1.4 billion in provincial taxation annually. Alberta is also home to many head offices for our members such as Parkland Fuel Corporation, Petro-Canada, Cenovus Energy and Shell Canada. Our members are active in the community and are essential to healthy neighbourhoods.
Introduction
The Alberta Advantage has put Alberta first in adopting free-market principles in highly regulated sectors. As the first province to modernize the sale, licensing, and distribution of alcohol in Canada, Albertans welcome choice and convenience.
This plan is a set of guiding principles recommended by the Convenience Industry Council of Canada (CICC) to expand beverage alcohol retailing in Alberta to convenience stores, following on Alberta’s 2021 pilot project. This has the support of our members and the CICC Board of Directors.
Convenience stores are a key part of local communities and the provincial economy. Alberta is home to 2,394 stores, employing over 20,588 Albertans and bringing in combined sales revenues of over $7.1 billion in 2022. Alberta’s convenience store industry contributes over $1.4 billion in annual tax revenues to provincial and federal governments through a combination of tax revenues.
During the recent 2023 provincial election, the United Conservative Party (UCP) responded to CICC’s election issues survey, stating on expanded liquor in convenience stores that:
- “We believe in treating law-abiding adults like adults, including the right to enjoy alcoholic beverages responsibly. We’re proud of the pilot project we launched in 2021, allowing convenience stores to serve wine and beer. We’re open to continuing to expand it, as long as it’s well received by customers and communities.” (UCP response, May 11, 2023)
In the fall of 2023, Maru Public Opinion polling revealed that 64% of Albertans were supportive of allowing beverage alcohol sales in convenience stores. The time for choice and convenience for beverage alcohol sales in Alberta is now.
In recent years, the Government of Alberta has been working constructively to limit the amount of red tape faced by businesses and consumers. Thousands of pieces of red tape have been cut and the government has removed some unnecessary restrictions to the sale of alcohol. These changes have opened new ways for Albertans to consume alcohol safely and responsibly while giving Alberta businesses more ways to serve their customers.
The plan outlined herein follows commitments put forward by the Government of Alberta and safeguards put in place by AGLC for responsible sales and consumption. We recognize that Alberta’s landscape is unique compared to neighbouring provinces and have sought to present a plan that allows convenience stores to operate within the existing framework. The focus of this plan is to increase choice and convenience for Albertans while operating within an established framework.
This document proposes a framework for beverage alcohol sales in the province and builds out the following areas of consideration:
- Licensing/Operating Agreements
- Pricing
- Purchasing
- Available Products
- Distribution
- Recycling
Earlier this year, the Convenience Industry Council of Canada engaged Cascadia Partners to forecast the economic impacts of selling alcoholic beverages in convenience stores in Alberta. The January 2024 study found:
- Over 2,400 new jobs across convenience stores, alcohol producers, and logistics providers,
- An expected $57.0 million in annual wages, approximately half of which will go to positions that hire young people, new immigrants, and retirees in Alberta,
- In tax revenue, $112.6 million for the provincial and federal governments in the form of excise duties, sales taxes, and liquor board revenues,
- Continued leadership on red tape reduction through “increased consumer choice, convenience and satisfaction in the alcoholic beverage retail model and the convenience store sector,
- Growth and maturation of Alberta’s wineries and craft breweries, increasing their capacity, profitability, and ability to reach consumers across the province through increased availability,
The Québec Model: Adapting what works for Alberta
There is no need to reinvent the wheel. Quebec’s beverage alcohol retail system has been in place for decades next door and has worked well for the government, producers, convenience stores, and most importantly consumers. That said, Alberta has a different framework than Quebec does, and CICC is not recommending diminishing AGLC’s role and responsibilities. Here is a brief summary of the Quebec vis a vis an Alberta proposal:
| Principle | Québec | Proposed Alberta model |
| Licensing | Régie des alcools, des courses et des jeux (RACJ) issues the liquor permitsauthorizing the sale of alcoholic beverages to the public RACJ also requires distribution and storage licenses | AGLC can license convenience stores authorizing the sale of alcoholic beverages to Albertans. |
| Pricing | Pricing set by retailers, ability to purchase wholesale and a social reference floor price. | |
| Purchasing | Contracts negotiated directly with producers | Purchased through AGLC just as liquor stores currently do. |
| Available Products | Beer and WineNo minimum order for craft producers Minimum orders for major producers | Full product offering and selection.Craft, local and independent manufacturers can negotiate directly. |
| Distribution/Delivery | Product is delivered direct from vendors for major producers and through a third- party from craft brewers | Ability for retail chains to consolidate shipments from Connect Logistics to retailer warehouse and re-supply as required. |
| Recycling | Stores participate in the recycling program and collect returns | Convenience stores do not have the space to receive empties and would interfere with sanitation protocols. |
We believe that elements of the Québec model for liquor in convenience stores can be adapted to Alberta’s framework, working with the Alberta, Gaming, Liquor and Cannabis Commission (AGLC), to have convenience stores operate within AGLC’s parameters, operating under AGLC’s existing oversight as liquor stores currently do.
Adapted to Alberta, convenience stores can purchase beer and wine from AGLC similar to private liquor stores.
Supporting a pro-growth environment
The 2024 study from Cascadia Partners shows how limited alcohol in Alberta’s convenience stores can support a pro-growth environment in the province. Convenience stores, which have a history of selling products with age restrictions, play a crucial role in many neighborhoods. However, their profits have been decreasing even before the pandemic, dropping from 4.1% of revenues in 2014 to 3.7% in 2019. This decline is due to various factors such as massive proliferation of contraband tobacco, increasing credit and debit fees, higher minimum wages, and longer operating hours, which pose particular challenges for smaller independently owned stores, making up only half of Canada’s convenience stores. These businesses see responsible liquor sales as an important opportunity for boosting sales.
In Alberta, there has been a notable shift towards privatization in liquor sales, with the province transitioning from 208 government-owned outlets, 530 hotel off-sales locations, and 65 private retailers. Today, this system has 2,418 private liquor retailers. This transformation has led to a significant growth in the liquor industry, now valued at $2.8 billion annually, contributing $866 million to the provincial revenues and supporting over 15,000 jobs, the majority (80%) of which were created post-privatization.
The introduction of limited alcoholic beverage sales in Alberta’s convenience stores is expected to have a positive impact in two main ways. Firstly, it is projected to boost the sales and profitability of existing convenience stores, as liquor stores generally yield higher profits (around 27% of sales) compared to convenience stores (under 5% of sales). Secondly, it is likely to stimulate the opening of new convenience stores, especially in areas with limited access to liquor retail, thus addressing gaps in service availability.
Customer Profile
Per the 2024 Cascadia Partners study, the customer profile, target purchases, and value proposition of convenience stores are expected to remain distinct from existing outlets, offering small quantities at slightly higher prices for quick and convenient purchases.
Convenience store customers are different than private liquor store customers. Convenience store customers typically prioritize convenience over value or seeking specialized products, accepting higher prices for the sake of efficiency, and typically making smaller, grab-and-go transactions. It is anticipated that alcohol purchases in this channel would follow a similar pattern, with sales limited by factors such as cost, packaging size, and the selection of local products.
This channel is not intended to replace large purchases that are better suited for private liquor retailers in Alberta.
The evidence gathered throughout the Cascadia Partners report suggests that privatization has the most significant positive economic impact for private liquor retailers and this will not be diminished by a limited product selection in convenience stores.
Safety
The convenience industry has a long and proven track record as responsible retailers of age-gated products. According to the Ontario Government’s data, convenience store
operators were passing age-verification checks at a rate of 96% in 2018, better than the provincial government-run liquor stores. International brands in the convenience industry, such as 7-Eleven, have already developed substantial experience in the sale of beer and wine in convenience stores through their United States operations.
The Convenience Industry Council of Canada (CICC) offers members the new national responsible retailing program ID Please. Convenience stores take their responsibility concerning age verification very seriously.
The ID Please program educates members and their staff about the legal requirements of asking for identification on age-restricted products. Customers must prove their age before they can purchase any age-restricted products from a convenience store.
Alberta currently requires certification under AGLC’s ProServe program for all full and part-time positions where liquor is provided under the authority of a Class A, B, D, E, F or Duty-Free licence. CICC strongly supports all AGLC priorities regarding preventing underage drinking, over-consumption of alcohol, impaired driving, and other alcohol-related harms.
ProServe currently costs $26.25 per employee, whereas CICC charges $7.00 for ID Please (reduced to $3.00 for members). To minimize red tape and overhead expenditures for small businesses, CICC proposes working with AGLC on increasing alignment between ProServe and ID Please to ensure that ID Please meets AGLC requirements, thereby making a more affordable pber-employee program for convenience stores that still meets all social responsibility requirements.
Perhaps most critically, the nature of convenience store purchases is by nature transactional: a customer makes a one-time purchase and departs. Convenience stores are not a lounge, there is no on-site consumption. ID Please as a program is designed with these one-time transactional purchases and is thus well-suited for this type of sale.
Licensing
The guiding principle for convenience stores in a new licensing framework is to ensure that it is as easy to access for independent convenience stores as it is for more prominent brands, such as recognizable chains. The market should not have any competitive disadvantages for operators, whether it be licensing or products. CICC remains open to discussions on best practices for implementation.
Allowing convenience stores to apply for Class D licenses, thus allowing convenience stores to sell liquor to the public to consume in another location like liquor stores, would allow smaller independent stores to participate even if they do not have the physical space for on-site consumption.
Pricing
The proposal to allow limited liquor sales in convenience stores is ultimately about increasing choice and convenience for Albertans within a responsible framework.
Under Alberta’s current regulatory structure, the wholesale price of products is the same for all licensees, including liquor stores, bars and restaurants, regardless of the actual quantity purchased. CICC is not looking to challenge Alberta’s framework wherein everyone pays the same wholesale price for a liquor product currently.
The current framework allows some flexibility, permitting products differently in multipacks and permitting price changes once per week using the price change schedule available on the liquor agency portal (LAP).
CICC is looking to increase choice and convenience for all Albertans, not to create challenges for private liquor stores operating in the province, which we welcome as part of an open marketplace. Our industry would prefer an open market with a legislated price floor that allows stores to set their own retail prices, which convenience stores can do within the existing Alberta framework.
The impact on standalone liquor retailers was limited in Colorado when convenience stores were permitted to sell regular beer starting January 1st, 2019. On average, 7-Eleven stores in Colorado sold 2.6 six-packs of beer per store per day. Additionally, the average store recorded 18.7 transactions per day involving single beers as part of the customer basket, with an average purchase of 1.8 single beers per transaction.
Purchasing
Under the existing framework, AGLC remains the legal importer of record for liquor in Alberta. Manufacturers and suppliers sell liquor products to licensees through AGLC, then sell liquor products to Alberta consumers. As licensees, convenience stores are seeking to be part of this arrangement.
Under the current framework, all liquor retailing, warehousing, and distribution are managed via the private liquor industry, and convenience stores are not looking to change this model. Currently registered suppliers and agents are responsible for ordering, marketing and shipping liquor. Convenience stores are seeking to
CICC is solely asking that the Government of Alberta and AGLC be open to a discussion about red tape reduction if there is feedback about difficulties in the process, particularly from smaller independent convenience stores.
Available Products
A measured and responsible approach to expansion is critical to public support and success. It is recommended that all licensed convenience stores be allowed to sell the following products:
- Beer
- Ready-to-Drink Coolers
- Wine
- Malt-based beverages
Our proposal is to allow these to be sold in convenience stores with guaranteed shelf space for local Alberta producers where permitted by interprovincial free trade agreements. The guaranteed shelf space requirement will help local Alberta craft producers of beer, wine, and coolers grow. Having the ability to sell their beer and seltzers in convenience stores and grocery stores will help craft producers recover lost revenues from the pandemic, and help their business grow, leading to more job creation across the province.
Distribution
As currently structured, Alberta’s supply chain through AGLC provides consistent delivery service of all products to retailers across Alberta. Convenience stores through this proposal are simply seeking to have access to this supply chain as licensees.
This would mean that convenience stores have access to Connect Logistics Services Inc. (CLS) warehouses, provided that the convenience store is able to meet Connect’s minimum 25 cases per order requitement. Where applicable, convenience stores could purchase from AGLC’s new warehouse that opened in 2019, as well as the three domestic beer warehouses (Brewers Distributor Ltd., Big Rock Brewery, and Sleeman Breweries).
Recycling
Similar to liquor stores, recycling fees can continue to be included in the wholesale price and ultimately passed along to the consumer. Convenience stores are not seeking any change to this model. CICC is not advocating for an Ontario-style on-site return program in Alberta.