The Beer Store exclusivity will end (TAP)
Ontario Premier Doug Ford announced that sales of beer, wine, cider, and RTDs will be allowed in C-stores and all grocery stores by 2026. The changes to the province's alcohol sales are some of the largest in Ontario’s history. Ontario will be the second province to allow beer to be sold in corner stores and the first to allow RTDs. The exclusive rights that the Beer Store has in selling 12 and 24 packs of beer will end in 2025. All eligible retail outlets, which include 6,700 C-stores and 1,800 grocery stores, will be able to set their own pricing instead of adhering to the Liquor Control Board of Ontario’s prices. The Beer Store will retain a primary role in beer distribution and run the province’s recycling for five years. Opening up beer sales at convenience stores and lifting restrictions on grocery stores would significantly increase competition for the Beer Store. Ontario represents 40% of Canada’s population and a larger percentage of the country’s retail sales. In the U.S., convenience stores are the largest channel for beer sales.
No crying over milk (OTLY)
A court in the U.K. sided with Oatly in a lawsuit from Dairy UK over the use of the term “milk.” A High Court judge dismissed the lawsuit, stating that Oatly’s use of the term “did not deceive.” Oatly used the slogan “Post Milk Generation,” which was found to be “distinctive of” and “not descriptive of” the company’s goods. In the European Union and the U.K., the term “milk” can only be used to label products that originate from animals, but the judge ruled the slogan signified products for those who no longer consume dairy milk.
In the U.S., the FDA has issued draft guidelines saying plant-based drinks can continue to call themselves “milk.” However, the FDA recommends that plant-based beverage companies include a voluntary label that notes the nutritional difference between their product and dairy milk. The draft guidelines have not pleased the dairy or plant-based industries, so more guidance will likely be forthcoming. Oatly has continued to grow in countries where the term milk was no longer allowed.
Food disinflation north of the border (L.CN)
Canada’s CPI increased 3.1% YOY in November, flat compared to October. Retail food inflation increased 4.7% YOY, decelerating from 5.4% in October. November was the fifth consecutive month of slowing food purchased from grocery stores inflation. Despite being the slowest pace of food inflation in two years, it’s still outpacing the headline inflation.
- Meat prices accelerated 50bps from October to 5.0% in November.
- Potato prices decelerated from 7.1% YOY in October to 4.4% in November.
- Fresh fruit prices decelerated from 4.8% YOY in October to 4.5% in November.
- Pasta products accelerated from 10.5% YOY in October to 14.1% in November.
Mortgage interest costs increased 29.8% in the month while rent costs increased by 7.4%, putting pressure on household budgets in Canada despite the food disinflation. Groceries are less competitive in Canada than in the U.S. Five chains have a combined 80% share of the market. The Canadian government has been leaning on the industry to limit food inflation.
