The Beer Store recycling program could be casualty as Ford puts beer in corner stores

The future of an "advanced and effective" recycling program run by The Beer Store is up in the air as negotiations between the consortium that owns it and the Ontario government heat up. 

In 2018, The Beer Store diverted approximately 1.9 billion bottles and containers from landfills. Through a voluntary recycling program in place since its inception 92 years ago, it has recycled tens of millions. 

It's one of the most advanced and efficient recycling programs in the world.- David Soberman, University of Toronto

The company makes sure to highlight its social conscience on its website and in videos online. It has won awards and has been lauded by environmental groups for its efforts, including the David Suzuki Foundation. 

"It's one of the most advanced and efficient recycling programs in the world," said David Soberman, marketing professor at the University of Toronto. 

But it could quickly become a casualty as negotiations continue with the Ontario government, which wants to end a 10-year-old agreement it has with The Beer Store, which is predominantly owned by Molson-Coors, Labatt and Sleeman.

Signed by the previous Liberals government, it's dubbed a "sweetheart deal" by Premier Doug Ford and Finance Minister Vic Fedeli.

Breaking a contract

Refunding deposits on beer containers for recycling has always been a part of The Beer Store's business. 

In February 2007, it expanded refunds for all alcohol containers, including those from the LCBO, which is enshrined in an agreement with the government called the Ontario Deposit Return Program (ODRP). 

The finance minister's office confirmed new legislation it just passed to end the Liberal deal will provide for a "continuation" of the ODRP recycling program and the Ontario Convenience Stores Association says it supports recycling. 

However, industry sources say that may not be as straightforward as simply legislating it.

Lower profits

In part, the ODRP is contingent on The Beer Store operating physical locations. There are about 450 today in the province, and every one of them acts as a proxy recycling location — they take back empties from customers and do some container crushing in the back. 

But expanded beer sales would likely chip away at The Beer Store's profits. The latest figures show a 2.3 per cent drop in revenue in the year after the province allowed some grocery stores to sell beer. Throw convenience stores into the mix and we could see a bigger drop. 

While warning other forces could be at play (including a lower appetite for beer, compared with wine and spirits), Soberman said stores could be shut down.

"If the volume of product going through The Beer Store drops substantially, they may close some of their outlets," he said.

Worst case scenario? Beer in convenience stores puts The Beer Store out of business, effectively ending the recycling program altogether.

• U.S. Chamber of Commerce calls on Ford to honour contract with The Beer Store
• Ontario Chamber of Commerce warns axing Beer Store deal could deter investment

Soberman says this is technically possible, but unlikely, because consumers are creatures of habit. 

At the very least, there could be fewer places for people to bring their empties.

"We shouldn't be doing anything that jeopardizes existing recycling programs," said Keith Brooks, programs director at Environmental Defence.

A 2016 report from the organization cited only 50 per cent of bottles are recycled through municipal blue bins. 

The Beer Store's recovery rate is 96 per cent for beer bottles, and 81 per cent for everything else, according to its website. 

A 'black eye' for the Ford government?

Sandford Borins, professor of public management at the University of Toronto, said if terminating a contract with The Beer Store early means jeopardizing an effective recycling program, it will look bad on the province. (Keep in mind, the beer bottle recycling is completely voluntary and revenue neutral.)

"It's a black eye for the government," he said. 

While there could very well be a valid business argument for "modernizing" the way the province sells alcohol, the Ford government might not want to further damage its image when it comes to environmental policies.

On the other hand, the Progressive Conservatives have proven to be determined in forging ahead with campaign promises.

If they hold their ground, The Beer Store could be forced to leverage its recycling record, especially when hundreds of millions of dollars are at stake.