Making the Most of BevAlc's New Era in Ontario
The cork has popped on a new era of alcohol retailing in Ontario, Canada’s most populous province.
After almost 90 years, the Liquor Control Board of Ontario (LCBO) and The Beer Store (TBS) have been dethroned from their longstanding hold on the retail market. The LCBO, a Crown agency with 669 stores, and TBS, owned by brewing giants Molson, Labatt and Sleeman with more than 440 outlets, are no longer the major retailers (by number, anyway) for the province’s 13.6 million adults to pick up a bottle of wine or case of beer.
They’ve recently been upended by convenience stores, with 4,180 locations province-wide actively selling beverage alcohol for off-premise consumption, according to the LCBO.
The rollout to convenience retail started in September 2024, with the government of Ontario premier Doug Ford fulfilling a longstanding campaign promise to expand beer, wine, cider and ready-to-drink (RTD) beverage sales to the channel. Rapid adoption by the convenience sector has pushed beverage alcohol’s presence past 60% of all stores.
Previously, only convenience stores located in areas without nearby LCBO locations were eligible to apply to sell beverage alcohol under the LCBO Convenience Outlet Program. There are about 400 LCBO Convenience Outlets.
The province’s move to further break up what has long been a duopoly in beverage alcohol retail aims to increase consumer choice, improve product availability and lower prices. Ford’s decision to accelerate the rollout — originally scheduled for 2026 — has been challenging for the LCBO, requiring it to rapidly scale capability as a wholesaler to grocery and convenience.
C-stores have complained of delivery delays and unfulfilled orders caused by product shortages. In March, the LCBO announced plans to improve its online ordering platform, Grocery Management System (GMS), which supports more than 4,500 grocery and c-store customers, particularly around B2B returns and claims submissions.
Since 2020, up to 450 grocery stores, or fewer than 10% of Ontario’s 5,600-plus grocery stores, have been licensed to sell beer and wine under a previous expansion of alcohol retailing. Licenses are now available to all grocers, but uptick has paled in comparison to convenience.
Experts blame a requirement of grocers to accept, store and clean empty alcohol containers — including from product bought elsewhere, namely c-stores. For many, especially independents, that added cost and operational burden is hard to justify.
“The margins are miniscule on alcohol to make it worthwhile for a lot of grocers given the current state of regulations. Beverage alcohol isn’t going to reach its potential in grocery until the province renegotiates how they handle returns,” says retail analyst Bruce Winder. “And so, the bigger winner to date? Convenience stores.”
C-Stores Gain Momentum
“Consumers were not accustomed to purchasing alcohol in c-stores,” says Ivana Markham, senior director, omnishopper, at marketing agency Salt XC. “One of the primary challenges was quickly educating consumers about the availability of alcoholic beverages.”
This has included outside stores, with window decals and messaging wrapped around parking lot bollards, and inside at point-of-sale (POS). Most product is sold on the floor or shelves, but many have also devoted cooler space to single sales of beer and pack formats.
“Signage shelf displays and promotional messaging played a crucial role in making the category stand out,” says Markham. “By combining external awareness campaigns with strong in-store activations, brands ensured that shoppers not only knew about the change but also recognized alcohol as a key offering when visiting c-stores.”
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Figures show the sector has done well in building awareness and capturing sales. According to NielsenIQ, for the last 20 weeks ending Jan. 25, 2025, the convenience and gas channel accounted for 35.2% of all beverage alcohol sales at Ontario retail (excluding LCBO & Beer Store outlets), with grocery stores still accounting for the largest share.
C-store's take is quickly nearing the figure in Quebec, where beer, cider and wine have long been sold in convenience stores and supermarkets. The c-store channel accounts for 35.7% of all beverage alcohol sales in Quebec (excluding provincially owned SAQ outlets).
The future for the channel looks bright, too, given younger consumers are embracing convenience as a viable option for alcohol purchases. Already, 7% of Millennials consider it their “primary destination” for beverage alcohol purchases — ranking just behind mass merchandisers (21%) and grocery (15%).
An additional 22% view it as a “considered destination.” Both figures are significantly higher than those reported by Boomers, underscoring a generational shift in shopping behavior.
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While some beverage alcohol brands have yet to see incremental growth, with sales instead spreading across multiple distribution points, Henry of Pelham Family Estate Winery is seeing a different reality.
“The increases in sales we’re getting through convenience and grocery hasn’t come at the expense of LCBO sales, even though foot traffic is down in those stores,” says Daniel Speck, co-owner of the winery in Ontario’s popular Niagara region. “It’s straight growth, which is great. But it also tells me that we’re a little underexposed at the LCBO, meaning there’s still untapped potential in that channel.”
In addition to comparative analysis, an expanded retail dynamic is also creating new opportunities for product positioning. For instance, in Costco — which began selling wine in its more than 40 stores in Ontario late last year — Henry of Pelham Family Estate wines, which retail around $16 to $17 per bottle, “we’re selling more $20 bottles of wine than anywhere else, which is amazing. It has become the most premium channel for us.”
Unseized Opportunity
During the same 20 weeks, beer was the most sold beverage alcohol in convenience, representing 67.6% of sales, followed by liquor (20.7%) and wine (11.8%).
The omission of low- and non-alcoholic beverage options reveals a massive opportunity being missed by c-stores. What began as a holiday reset or challenge tied to Dry January has evolved into a year-round lifestyle for drinkers looking to enjoy the taste of alcohol without the next-day headache.
“We are seeing more than 20% growth nationally for low-alcoholic products in Canada, following many years of double-digit growth,” Gabriel Moreau, VP sales, eastern Canada, NIQ, tells P2PI. “Non-alcoholic RTDs are performing particularly well but are almost fully excluded from assortment in c-stores with a 0% share when you round the number down. This presents an excellent opportunity for the channel, particularly since younger generations are the primary consumers of these products."
When it comes to marketing the category in-store, the key is eye-catching placement. “Non-alcoholic beer represents a high-growth opportunity, but discovery remains a challenge,” says Sherif Fahmy, VP, commercial strategy, at Inmar Intelligence. “Retailers and brands can remove barriers to trial by leveraging data-driven insights to optimize product placement and promotions.”
In the case of grocery, shoppers are highly responsive to in-store promotions (82%) — a strategy that should also work in c-stores. Fahmy suggests “personalized digital coupons and high-impact in-store placements, combined with bundled savings on complimentary snacks, to ensure that non-alcoholic beer is seen, considered and, ultimately, purchased.”
Promotional Pairings
Beverage alcohol brands need to rethink their promotional strategies for the c-store.
“In Ontario, buying alcohol has traditionally required more planning since it was only available at specific retailers,” says Salt XC’s Markham. “That meant spontaneous alcohol purchases were rare because it wasn’t something you could just add to your cart while grabbing other essentials.
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Now, with alcohol available in c-stores, brands have a unique opportunity to tap into impulse buying behavior. By leveraging in-store POS to connect with consumers via promotions, taste appeal and value-add offers, they can drive unplanned purchases and reshape consumer habits.”
She suggests “strategic product pairing promotions — like “grab beer and chips for game day” or “pair wine with chocolate for girls’ night” — encouraging larger basket sizes and inspiring occasion-based purchase.
Value-add items, such as a free hat with purchase of a 12-pack of beer, “are also a great way to incentivize impulse purchase in c-stores by increasing the perceived value.”
There are some categories that beverage alcohol can’t be paired with in convenience without running afoul of regulations, such as energy drinks (mixing the two can lead to increased health risks) as well as candy (which, of course, cater to children). But brands in permitted categories, such as meat sticks and salty snacks, and beverage alcohol are being partnered up.
Hasty Market, a convenience chain offering beer and wine in most of its 130 stores across the province, has been creating occasion-based promotional pairings to help grow awareness of its food service offerings beyond typical c-store staples. A Christmas campaign featured festive wine and cheese pairings, while a Valentine’s Day promotion paired chocolate-covered strawberries with a Peller Estates bottle of wine.
“That did really well in our stores,” says Marietta Cini, vice president of operations and development for Burlington, Ontario-based Hasty.
Hasty is now collaborating with brands to secure promotional pricing on product pairings with beer and wine. One current promotion pairs tall boy cans of beer with a bag of chips, and there are plans to roll out endcaps for BBQ-themed summer beer promotions.
“We want customers to see us as the go-to destination for BBQ essentials — things like hamburger buns, condiments, ice, and, of course, beer,” says Cini. “We see plenty of opportunities for cross-merchandising.”
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“We’ve noticed more pairings in convenience with food partners, be that meat snacks or grab-and-go salty snacks that pair great with beer,” says Bromlyn Bethune, president of Steam Whistle Brewing, a Toronto-based independent brewer. “We believe more partnerships will unfold across the big retail chains with known CPG brands that do well in the convenience channels.”
The expansion of alcohol retailing has seen Steam Whistle’s distribution increase to over 5,500 outlets, up from 1,400 just a year ago.
It’s currently working with other Canadian brands on pairings across other convenience categories for its premium beer, Steam Whistle Pilsner, to launch this summer.
With Ontario’s precious months of warm weather, the season is a high-impact window for promotion — as people jump in the car and escape for long weekends at the cottage or camping trips.
“Knowing that convenience is a big part of the ‘road trip’, as seasonal weather approaches, we’ll see more family pit stops that have people buying their favorite beer for the weekend and quick snack in the car headed out of town,” says Bethune, who started her career at the LCBO.
And of course, a feature about promotional opportunities would be remiss without a mention of the trade war and “elbows up” support of Canadian-made products. The LCBO has removed all U.S. product from shelves and its GMS ordering platform, but brands like Steam Whistle see opportunity to further capitalize on the patriotism.
“As Canadian consumers become more conscious of what they are buying or hunting for that true Canadian alternative, we all have an opportunity with the ‘Buy Canadian’ movement and nationalism as true Canadian brands,” says Bethune. “This is a real opportunity for craft brewers in Canada, given much of the American-owned beer brands are now domestically produced. Consumers seem to be thinking twice about that beer that was always in their cart.”
And, of course, thinking twice about where they might purchase it.
