Ontario Premier Doug Ford‘s “buck-a-beer” plan is set to be in place later this month. And those reading “buck-a-beer” may assume beer will automatically cost no more than $1 across the board.
But University of Toronto professor David Soberman told Global News that’s “absolutely not going to happen,” because breweries have the option of completely staying out of the so-called “buck-a-beer challenge.”
Here’s a breakdown of what Ford’s promise means.
What exactly is buck-a-beer?
Ford spoke at a brewery in Picton, Ont., on Tuesday morning, boasting that he is now fulfilling his campaign promise to bring back “buck-a-beer.”
“The day you’ve been waiting for is finally here,” Ford said.
How the plan will work:
Starting Aug. 27, the Ontario government will lower the minimum price of a bottle or can of beer to $1 from $1.25.
Breweries aren’t required to change their prices. And the lower price won’t apply to draft beer, nor will it include the bottle deposit.
What it will mean is that the government will offer “non-financial incentives” to brewers who sell beer for $1.
Brewers will be offered perks like prime spots at Liquor Control Board of Ontario (LCBO) stores or advertising in the store magazine’s inserts, among other possible rewards.
The province previously had buck-a-beer, but that was changed by the former Liberal government in 2008.
The current Progressive Conservative government has said going back to the old price would also increase competition in the beer market, without affecting the province’s revenues from beer and wine taxes.
Government documents show there was roughly $589 million in alcohol revenue in 2016-2017.
How much will it actually affect prices?
Soberman explained to Global News that not all brewers will take on the “challenge” — especially not companies with pricier products.
“It’s not an advantage that is uniform across the board. You may have some breweries react negatively,” he said, explaining that lower-priced brands are more likely to opt-in to the scheme.
WATCH: Ford counting on ‘responsible beer drinkers’ amidst price lowering
“A lot of it depends on how close you are [to $1 a beer],” he said, explaining that higher-priced companies won’t drop their prices that dramatically.
For example: Currently, with the minimum price for beer set at $1.25 for 5.6 per cent alcohol or less, a 24-pack of Molson Canadian will cost about $40 at the Beer Store.
Dropping that price to a buck-a-beer would mean it would fall to $24 — a price cut of $16.
“It’s basically a discriminatory promotion, in that it’s only going to be leveraged by brands that are sufficiently close to that price-point. If you are priced much higher, you’re actually at a disadvantage,” the professor explained.
Response from beer industry
Beer Canada, a trade association for breweries, isn’t on board with Ford’s “buck-a-beer” plan, and says high taxes are to blame.
“A buck-a-beer might be doable if there wasn’t so much hidden tax on beer,” the organization wrote in a statement emailed to Global News.
It added that the taxes make up “a large part” of beer prices, and affordability of beer has to take that into account.
“We want to talk about the affordability of beer. High taxes are hurting brewers and beer drinkers,” the statement read.
WATCH: Ontario government rolling out plans to bring back “buck-a-beer”
Breweries in the province have also been outspoken against the challenge.
Great Lakes Beer tweeted this week that it is not enticed by the incentives the government is offering. It added that lowering the costs of its product would hurt the company’s quality and employees.
“You definitely won’t see #FreshGLB take part in this,” it tweeted. “We believe in our brands, take pride in our quality and firmly feel that our current prices are very fair.”
People’s Pint wrote that they also won’t be participating.
“We are committed to making a quality product that we are proud to serve and that means it will always cost more. We firmly believe that you really do get what you pay for,” the tweet read.
News of buck-a-beer’s return was met with concern from safety groups and criticism from the opposition parties.
“Lowering the price of alcohol carries implications and risks for public safety,” MADD Canada said in a statement.
“Lower alcohol prices can lead to increased consumption, particularly among those with alcohol problems, and among young people, and that increased consumption can in turn lead to increased alcohol-related problems, including impaired driving.”
Ford responded to such questions Tuesday, saying: “I think people in Ontario are mature enough … to know when they’ve had one too many.”
— With files from The Canadian Press
© 2018 Global News, a division of Corus Entertainment Inc.