Key Principles

The following sets out the non-binding key principles (the “Key Principles”) agreed between Labatt Brewing Company Limited (“Labatt”), Molson Canada 2005 (“Molson”), Sleeman Breweries Ltd. (“Sleeman” and, together with Labatt and Molson, the “Representative Owners”), Brewers Retail Inc. operating under the name “The Beer Store” (“TBS”) and His Majesty the King in right of Ontario, as represented by the Minister of Finance (the “Province”, and together with Labatt, Molson, Sleeman and TBS, the “Parties”) concerning the intended features of the modernized marketplace for beer sales in Ontario (the “Modern Beer Marketplace”) to be introduced no later than the expiry of the New Beer Agreements (as that term is defined in the Master Framework Agreement (the “MFA”) between the parties, made as of September 22, 2015) on January 1, 2026.

Certain additional defined terms are set out in Schedule A to this document.

The intent of these key principles is to identify and facilitate the use of TBS and its efficient recycling and distribution systems for the benefit of Ontario on terms acceptable to the Parties and to recognize TBS’s role as a significant employer, a lower price option for consumers and a responsible retailer of alcohol in communities across Ontario. To enable this, the Province intends to direct, authorize and agree to a modernized beer retail and distribution system for Ontario that will retain certain elements of continuity with the existing system for TBS, the Representative Owners, their employees, suppliers and consumers, and facilitate a smooth transition from the current system governed by the MFA to the Modern Beer Marketplace. The Parties intend that these elements of continuity will persist for a period of at least five years (the “Term”) in order to give the Parties the certainty needed to make any necessary investments in the operations of TBS and LCBO, and to operate efficiently in the Modern Beer Marketplace.

To achieve the above objectives, the Province intends to undertake certain amendments to the regulation and governance of the wholesale and retail distribution of beer in Ontario to implement the Key Principles, and the Parties intend to enter new or revised agreements among themselves as needed to implement the Key Principles.  

The Key Principles are as follows:

1. Improve Consumer Choice and Convenience

  1. Grocery stores, including big box grocery stores, and convenience stores will be permitted to sell beer.
  2. There will be no restrictions on pack sizes by retail channel or by retailer and no pack sizes will be exclusive through any retail channel or retailer.
  3. For the Term (and the 7-year period provided for in paragraph 8.7(b)(i) of the MFA which period expires on January 1, 2033) TBS will continue to be permitted to sell the same products as it does today as a retailer and for the Term TBS will also be permitted to sell cider, and a wider variety of non-alcohol products.

2. Support a Stable Transition to an Open and Competitive Market

  1. LCBO will be the sole wholesaler of beer to all liquor sales licensees and to all retailers except for TBS. The Province agrees with the principle that the LCBO’s wholesale cost of service fees, if any, should be set on a cost-recovery basis for the Term.
  2. LCBO will operate a single order-taking system for all alcohol, including beer. The Province commits to facilitate and participate in open dialogue between experts in TBS and LCBO in advance of the implementation of the Modern Beer Marketplace to ensure effective system integration, and a smooth transition to the new system, reflecting the Province’s support for modernization efforts that reduce burden for businesses and that optimize processes that have benefits to retailers and consumers.

Promoting price stability

  1. The Province is committed to reviewing LCBO cost-of-service fees as part of its future review of wholesale pricing.
  2. For the Term, retailers will continue to be prohibited by regulation from receiving supplier monies, promotional material or other trade inducements – i.e., the current Ontario regulations around trade spend will be maintained.
  3. The Province intends to establish and authorize a wholesale and retail pricing model for alcohol sold by retailers to consumers that will enhance competition between retailers and maintain and enhance competition between suppliers. The Province intends that the model will include the following features, and will maintain a model consistent with these features for the Term:
    1. Suppliers and retailers will not negotiate wholesale prices with each other.
    2. The wholesale price to all retailers will be determined by a formula that adds applicable taxes, mark-ups and fees to the supplier’s set price.
    3. Retailers can add margin on top of the wholesale price in their price to consumers.
    4. The Province will continue to authorize suppliers to charge differential prices for beer wholesaled to liquor sales licensees and beer wholesaled to retailers.
  4. The Representative Owners commit to work with the Province to ensure value-priced beer will be available to Ontario consumers at TBS.


  1. TBS will be maintained as the primary distributor to existing channels and new stores, subject to the table enclosed as Appendix A, for the Term. TBS would be able to distribute all alcohol without restriction, and TBS would be permitted to distribute non-alcoholic beverages along with alcohol.
  2. In order for TBS to operate on a self-sustaining basis as a low-cost, efficient distributor of beer, TBS will be permitted to adopt distribution practices to advance these aims, including:
    1. setting its own reasonable distribution charges; and
    2. setting minimum delivery volumes for orders placed by individual retailers and liquor sales licensees for deliveries performed by TBS.
  3. The Province recognizes the need for fairness for brewers of all sizes, including small brewers, especially as it relates to any preferential role in the marketplace for TBS. TBS will operate its distribution activities in accordance with the conditions enclosed as Appendix B, but will otherwise not be restricted by the Province in its distribution operations or its governance in a manner different from restrictions imposed on other licensees under the LLCA.


  1. TBS will be responsible for handling reverse logistics and the collection of empty beer containers as part of its role as primary distributor of beer. This includes leveraging TBS's existing retail locations, where possible, to facilitate easy returns of eligible recyclables.
  2. TBS will continue to be the service provider under a renewed ODRP Agreement. The Parties will discuss what adjustments, if any, may be required to the current levels of service and recycling rates under the ODRP Agreement to take into account changes in the Modern Beer Marketplace.
  3. Except for LCBO’s retail stores (other than LCBO convenience outlets) and an exemption for certain retailers, all retailers will be required to adhere to the revised ODRP Agreement and accept ODRP containers and TBS empty containers. The Parties will work together on establishing criteria for retailers that will be exempt from accepting empty containers.
  4. The Parties will discuss what adjustments, if any, may be required to the current financial terms under the ODRP Agreement to take into account changes in the Modern Beer Marketplace and additional costs for TBS as the ODRP operator, including as a result of inflation.
  5. Alcoholic beverage product and packaging will continue to not be included in the definition of blue box material under O. Reg 391/21: Blue Box under the Resource Recovery and Circular Economy Act, 2016 or any successor legislation or regulations.
  6. The term of the revised ODRP Agreement will be at least as long as the Term.

3. Support Economic Development for Ontario’s Businesses and Local Communities

  1. Brewers will remain permitted to work directly with retailers with respect to demand planning, forecasting and category management.
  2. The Province intends to provide information and make support available to TBS, TBS employees and Ontario-based employees of the Representative Owners who may be affected by changes to the beer retailing and distribution system in Ontario.
  3. During the Term, the Province will ensure the existing requirement for grocery stores, including big-box grocery, convenience stores, and liquor sales licensees to sell beer products from manufacturers with a variety of annual production amounts will apply to new retailers – i.e. the current Ontario regulations will be maintained and applied to new retailers.

4. General matters

  1. The Province intends to maintain its high standards for the responsible sale and consumption of alcohol. Similarly, TBS will maintain its strong commitment to social responsibility in its distribution and sale of alcohol.
  2. The Parties will work together to negotiate and sign any agreements necessary to implement certain elements of these Key Principles.
  3. After the Term the protections detailed in clause 8.7 of the MFA will continue to apply (for certainty, paragraph 8.7(b)(i) will still expire on Jan 1, 2033 as provided in the MFA).
  4. In advance of January 1, 2026, the Province intends to propose any laws or other approvals deemed necessary or desirable to implement, authorize, monitor and enforce these Key Principles. Any statutory amendments proposed would be subject to approval by the Legislative Assembly of Ontario. Nothing in the Key Principles would derogate from current or future legislative or regulatory authority under the LLCA, the Liquor Tax Act, 1996 (Ontario) or any other statute or regulation of Ontario.

It is understood that this document is a non-binding statement of the intention of the undersigned to proceed as outlined above, is not an offer, does not operate to amend or waive any existing rights or obligations and does not create any legally binding obligation of any party.

This document may be executed by the Parties in counterparts and the counterparts may be executed and delivered by electronic means, with all counterparts together constituting one document.

The undersigned confirm that this document accurately reflects their discussions.

Dated at Toronto, Ontario as of this 13 day of December, 2023.


By: ________


By: ________


By: ________


By: ________


By: ________

Schedule A – Additional Defined Terms

LCBO means the Liquor Control Board of Ontario.

LLCAmeans the Liquor Licence and Control Act, 2019 (Ontario).

ODRP Agreement” means the agreement executed and amended as of the 1st day of January, 2016 with effect from October 1, 2015 among Her Majesty the Queen in Right of Ontario as represented by the Minister, TBS and LCBO providing for the continued management of a province-wide deposit return program for program containers.

Appendix A – Distribution Proposal

Proposal: The Beer Store would be maintained as the primary distributor for large-scale distributions to existing channels and new stores for the Term. TBS would be able to distribute all alcohol without restriction, and to distribute non-alcohol beverages along with alcohol.

Proposed Definition of Eligible Brewer (“Small Brewer”): Definition to be revised to 300,000hL/year to align with Taxation Act, 2007; eligibility as small brewer based on previous year’s production.

Small Brewers (i.e., Eligible Brewers)

  • Can distribute their own products and affliates’ products in any quantity to all channels
  • Can decline distribution centres and distribute directly to grocery, convenience and big box stores
  • Can distribute themselves, or use any third-party distributor or other alcohol manufacturer (except large brewers) to distribute all products
  • Can use TBS for all distribution
  • Can distribute beer with other alcohol and non-alcohol beverages on the same truck

Large Brewers

  • Individual brewers can distribute their own products and products of their affiliates outside of TBS (self-distribute) subject to a maximum of 300,000 hL/year for distribution of beer to liquor sales licencees (e.g., bars and restaurants) (“LSLs”), and to grocery stores (including big-box grocery) and convenience stores
  • TBS primary distributor: anything above 300,000 hL/year must be distributed to these channels through TBS
  • Can decline distribution centres and distribute direct to grocery, convenience and big box stores
  • Can distribute themselves, or use any third-party distributor or other manufacturer (except large brewers) to self-distribute products, subject to the 300,000 hL/year limit on self-distribution to grocery, convenience and LSLs
  • Can use TBS for all distribution
  • No pooled distribution outside the Beer Store; no distribution of non-affiliated brewers’ beer
  • Can include non-alcohol beverages (including non-alcohol beverages of non-affiliated manufacturers) in self-distribution (including distributions subject to the 300,000 hL/year threshold)

Appendix B – Conditions on the Beer Store’s distribution

  • The Beer Store must publicly post a rate sheet that applies to all distribution activities and fees. Fees must be the same for all brewers that use TBS’s distribution services (subject to below).
  • The Beer Store must maintain its existing policy of providing 2 free listings in 7 stores (of which one can be a distribution centre) to brewers with less than 10,000 hL/year in worldwide production.
  • The Beer Store must not impose minimum order quantities on small brewers’ beer (although it can impose minimum order quanitites on the total volume of beer to be distributed to a specific individual retailer).
  • The Beer Store cannot penalize brewers for using alternative distribution services or joint delivery. However, TBS can require that small brewers opt in or opt out from distribution to the entirety of each of the following channels (small brewers opt in or opt out separately for each channel):
    • Retail (i.e., grocery stores (including big box), convenience stores and TBS)
    • LSLs (e.g., bars and restaurants)
    • LCBO and LCOs
  • The Beer Store must distribute any brewer’s beer even if not retailed in TBS.
  • The Beer Store must distribute to retailers, LSLs, LCBO and LCOs throughout the entire province, including Northern Ontario.
  • The Beer Store must ensure that any profits from its activities are shared fairly amongst the suppliers that use the TBS systems in a manner that is similar to how it operates today.