Background Information

This segment focuses on the retail sale of alcoholic beverages in outlets for consumption elsewhere. This is called "off-premise" sales or package store sales, in contrast to "on-premise" sales where the alcohol is purchased for consumption at the premise where it is purchased. After prohibition, a number of countries introduced government run retail outlets, also known as alcohol retailing monopolies, although in most cases these were also parallel private systems. In Nordic countries, the United States, Canada and New Zealand, for example, there have been a number of campaigns to fully or partially discontinue government alcohol retailing systems, and transform them into private networks. There has been much research, debate and discussion of the pros and cons of such initiatives. In Ontario specifically, such changes have been proposed at least five times in the past four decades, and, in each case there have been wide range of responses.

A number of questions pertaining to privatization are considered: What is the context for such deliberations with regard to alcohol consumption and damage from alcohol? What are the dimensions of a change to full privatization, e.g. for density of outlets, hours of sale, days of sale, retail prices, and prevention of sale to minors or to intoxicated patrons? What is public opinion of these types of changes? What are the implications for consumers and business interests? What are the implications for health and safety? To what extent have the effects of such changes been evaluated? Are there any indications that there will be any modifications after implementation, based assessment of their impacts? What are the likely longer-term implications of privatization for alcohol policy?

Introduction

Alcohol is not just another consumer product. It contributes to a wide range of social consequences such as drinking and driving incidents, violence, and other acute hazards, and health consequences including the chronic conditions of liver cirrhosis, cancers, and addictions. At the same time, it provides commercial benefits to private industries, employment for citizens, and revenues for governments.

Governments have established legal frameworks to balance the interests of the consumer, the commercial benefits from the production and sale of alcohol, and the public health and safety concerns associated with alcohol use. In Canada, these potentially conflicting interests have led to the establishment of government-run monopolies for the retail distribution of alcohol. In Ontario, the Liquor Control Board of Ontario (LCBO) is the only off-premise retailer (package store) of liquor and imported wine. These products are sold through its regular stores and its agency store system of smaller outlets located in outlying communities. The Ontario Government, through the Alcohol and Gaming Commission of Ontario (AGCO), also controls the sale of beer through privately run outlets, and domestic wine through Ontario wine outlets operated by individual manufacturers. In addition, the AGCO regulates the sale of alcohol at licensed establishments (e.g., bars and restaurants) through Special Occasion Permit events and home delivery services.

In recent years, government alcohol monopolies have come under scrutiny in many Canadian provinces for a variety of reasons, including:

• Pressure from the business community to privatize retail alcohol monopolies;
• A general orientation to privatize government services and agencies;
• Perceived consumer pressure to expand access to alcohol and increase consumer choice;
• International free trade agreements, which tend to erode the ability of governments to control their domestic alcohol markets or to have government-run retail systems¹.

Depending upon their orientation, alcohol policies can have a positive or negative influence on personal, social, economic and environmental contexts. Healthy public policy is widely recognized as a key goal of health promotion^{2 3}. In this context, the key goal of a healthy approach with regard to alcohol is to encourage risk and harm reduction strategies in the management of alcohol distribution. Research in other areas for example, tobacco control, ^{4 5} also demonstrates the impact of healthy public policies on changes in behaviour.

Alcohol policies are an essential cornerstone in balancing health and safety risks with the commercial aspects of alcohol distribution and sales. This approach is consistent with a health promotion framework, which emphasizes the determinants of health, protective factors and risk factors within the social, political and cultural contexts in which people live.⁶ This approach is also congruent with the principles of harm reduction and risk avoidance. An alcohol retail monopoly system — with strong control and regulatory agendas — is central to promoting these principles with regard to alcohol.⁷

A review of the international evidence — with a focus on Canadian experiences — indicates that retail alcohol monopolies, with a strong public health agenda and combined with alcohol regulation, have the potential to contribute significantly to the prevention of alcohol-related problems.⁸ Government-run alcohol monopolies are uniquely positioned to play this important role,⁹ and, as is indicated below, there is broad public support for them. A public health and safety rationale for a strong control system builds on these health promotion and harm reduction principles, noted about, and also on the substantial and growing evidence of the associations between alcohol consumption and damage.

Alcohol: Not Just Another Consumer Product

Drinking alcohol is associated with both acute and chronic health and safety problems, but the extent of the damage is not widely known by the general public. Alcohol has been associated with intentional injuries (e.g., assaults) and unintentional injuries (e.g., automobile crashes, fractures, fires) and organic conditions such as fetal alcohol effects, cancer, neuropsychiatric disease, diabetes, cardiovasular diseases, and gastrointestinal disease.^{10 11} A 2002 study sponsored by the World Health Organization (WHO), with major input from scientists at the Centre for Addiction and Mental Health (CAMH), showed that alcohol is one of the leading risk factors for cumulative damage, disease and death.^{12 13 14} In developed countries such as Canada, the alcohol risk factor is just below that for tobacco and high blood pressure, and higher than cholesterol, body mass index, low fruit and vegetable intake, physical inactivity and illicit drugs in terms of its contribution to the burden of disease.¹⁵ On a global basis, almost half of the overall burden of alcohol consumption does not come from alcohol-related chronic problems, but from unintentional or intentional injuries.¹⁶ In one study it was estimated that 50% of alcohol-related costs were associated with drinking by people who were not classified as dependent and who did not have a diagnosis of alcohol abuse or harmful use.¹⁷ Therefore, even persons who may typically drink moderately, with occasional heavy-drinking episodes, can experience alcohol-related harm, whether to themselves or others.¹⁸ One Ontario-based community survey showed that during the previous 12 months over 70% of respondents had experienced a problem due to another person's consumption.¹⁹

Although many people drink at low-risk levels, even moderate levels of alcohol use — such as having a few drinks a day over a number of years — are not risk-free, and are associated with an increased risk of certain cancers²⁰ and other chronic conditions.^{21 22 23} Alcohol-related harm is associated with a variety of drinking behaviours, including alcohol dependence, regular consumption over longer periods of time, or with moderate drinking mixed with occasional heavy-drinking episodes. Higher rates of alcohol consumption are associated with a higher incidence of injuries, increased risk of certain diseases, increased fetal alcohol syndrome/effects, increased risk of mental illness, more crime and reduced worker productivity^{24 25}. In Canada, alcohol plays a role in thousands of deaths each year through heart and liver disease, cancer, suicide, traffic crashes and other accidents. In Ontario, the estimated annual cost of alcohol-related lost productivity, health care and enforcement services was $2,861,926, 000 in 1992.^{26 27}

Extensive research over the past thirty years shows a strong positive relationship between per capita consumption and levels of drinking-related harm in the population.^{28 29 30} More recent research using Canadian and European data provides current new support for these key findings. These studies found strong associations between population level drinking rates and death rates from all causes,³¹ and acute events ^{32 33 34 35 36} and chronic conditions associated with alcohol.^{37 38 39} Of particular relevance is recent research focusing on several Canadian provinces that examined alcohol consumption rates and damage indicators from the 1950s to the late 1990s. This work demonstrated that there was a positive association between population level drinking rates and mortality from all causes,⁴⁰ liver cirrhosis,⁴¹ alcohol-related mortality,⁴² violent deaths, ⁴³ fatal crashes⁴⁴ and suicides ⁴⁵. Therefore, recent research focusing on Canadian data from 1950 to 2000 has shown that changes in our overall rates of consumption are associated with changes in total mortality, traffic fatalities, alcohol-related mortality, and liver cirrhosis deaths. As we drink more as a province or nation, and engage more in heavy or high-risk drinking, our societal rates of damage are also likely to increase.

A main conclusion from this research — which is also in line with earlier work noted above — is that if there is more drinking in a population, the risks of serious consequences increase. Therefore, public health and safety policies that regulate accessibility to alcohol have beneficial implications for people with a wide range of drinking experiences and practices, and for others in the community who drink very little or no alcohol. Damage from alcohol is likely to increase in Ontario if the recent trend in rising consumption⁴⁶ continues and if high-risk drinking does not decline. There is a well-established association between easy access to alcohol and overall rates of consumption and damage from alcohol.^{47 48}

The following example will illustrate why alcohol retail policies are centrally important to health. Recent research by CAMH scientists examined factors affecting mortality rates from alcoholic liver disease in Canadian provinces⁴⁹. The results demonstrated that the rate of alcohol outlets in the population affected alcohol consumption levels, and that alcohol consumption levels affected liver cirrhosis death rates. A 1% increase in the rate per capita of retail alcohol outlets resulted in an increase of about 1% in the chance of the average person dying of cirrhosis, through its effect on alcohol consumption levels. To put this observation in perspective, some of the proposals discussed in the context of this review of the alcohol distribution system, such as allowing corner stores to sell alcohol, could increase the number of outlets by several hundred percent.

Drinking patterns are also of concern. A substantial proportion of the population still drinks in a risky manner. There is a link between high risk drinking patterns and traumatic and chronic damage from alcohol.⁵⁰ A national study released in November 2004 included preliminary results from people surveyed in Ontario. About 20% drank heavily once a month, 23% exceeded the low-risk drinking guidelines, and 17% were considered to have been drinking in hazardous ways in the past year. This figure rose to 30% for those under age 25. In addition, 32% of respondents reported that in the past year they had experienced harm due to other people's drinking. ⁵¹

Privatization, Deregulation, and Alcohol Consumption

Experiences in other jurisdictions demonstrate that a privatized system with little government regulation and open competition among private retailers typically leads to an increased number of outlets, longer opening hours, and increased consumption.^{52 53 54 55} These outcomes are of concern in light of their links with higher rates of acute and chronic problems related to drinking.^{56 57 58}

Two examples from Canada provide preliminary information on the impact of partial or full privatization on alcohol consumption and other variables. In Quebec, wine was introduced into grocery stores in 1978 but restricted to wines bottled by the Société des alcools de QuÈbec (SAQ) or manufactured in Quebec. This arrangement was expanded in 1983 to include imported wines, and in 1984 larger grocery store chains were allowed to sell wine as well. These policy changes were analyzed by Adrian et al.⁵⁹ who found a non-significant and temporary increase in wine sales in 1978 but no effect from the 1983 change. The estimated effect of the 1978 policy change is rather modest in comparison with studies of privatization of wine sales in other non-Canadian jurisdictions. This is likely because the 1978 change impacted only a limited number of wines, and their volume accounted for a fraction of the total alcohol sales market in the province. A more recent analysis by Trolldal⁶⁰ found a significant and permanent effect of the policy change of 1978. He reports that sale of wine increased by 10 percent in Quebec, although the effect was not large enough to affect total sales.

The other Canadian example comes from Alberta, where retail alcohol outlets were privatized between the fall of 1993 and spring of 1994, generating a number of changes, including increased density of outlets, longer hours of sale and higher prices, particularly among the more popular brands.⁶¹ The change in retail prices is one effect of privatization also found in other jurisdiction.⁶² In the short run, prices generally go up, although this typically does not generate more revenue for the government.

The experiences in Alberta illustrate these divergent patterns: higher average prices, which tend to deflate consumption, and greater access through higher outlet density and other changes that tends to stimulate consumption. For example, privatization led to an average 8.5% increase in the price of all alcohol between 1993 and 1996⁶³ due primarily to a government-imposed flat tax and higher wholesale costs associated with the purchase of smaller quantities by some retailers.⁶⁴

This pattern of relatively higher prices for beverage alcohol — noted by West^{65 66} Laxer et al.⁶⁷ and the Consumers' Association of Canada⁶⁸ — is also evident in comparing real price basket indices, by beverage, for four provinces: British Columbia, Alberta, Ontario and Quebec, for 1994 to 2000. For beer, Alberta had the highest index per year for five out of seven years, for wine all seven years, and for spirits six of the seven years. While higher prices on alcoholic beverages would be expected to deflate their consumption, there were several factors, noted below, that likely stimulated alcohol sales.

It is noteworthy that in fiscal 1993-94 when privatization was introduced in Alberta, it was the only province of the jurisdictions examined — B.C., Alberta, Ontario, Quebec, and total for Canada — that experienced an increase in the per adult consumption rate compared to 1992-93 just prior to privatization.⁶⁹ In Alberta the rate went from 8.5 to 8.7 litres of absolute alcohol per adult (aged 15 and older), whereas the other jurisdictions experienced a decline: B.C. — 8.9 to 8.8, Ontario-7.5 to 7.3, Quebec — 6.9 to 6.8, and Canada overall stayed at 7.5.⁷⁰ In recent years, Alberta has had the highest per adult consumption rate among the Canadian provinces, between 8.5 and 8.7 litres of ethanol alcohol per adult for fiscal years 1997-98 to 2001-2002.^{71 72}

A number of factors contribute to the rise in the alcohol consumption rates. For example, in the early 1990s, several provinces, such as Alberta and B.C., had strong economies and growing populations, but their alcohol consumption experiences differed, as noted above.⁷³ Thus while general economy and workforce changes cannot be fully ruled out as partial explanations for changes in per adult consumption rates at that time, they do not offer the full story. Based on experiences in other jurisdictions with privatization it would appear that particularly pertinent factors were the three-fold increase in density of retail outlets and longer hours of sale that accompanied privatization of alcohol retailing in Alberta.

Nevertheless, several factors might have dampened the impact of privatization on alcohol sales in Alberta, including that alcohol was not available in supermarkets and grocery stores, that wholesale trade was controlled by the Alberta government, that uniform transportation charges were maintained, and that the store mark-up increased after privatization. A report by Trolldal⁷⁴ found that privatization had a significant permanent effect on the sale of distilled spirits, but the effect was not large enough to affect total sales, and the effect on wine and beer sales was not significant. He notes that continuing restrictions under the private system — such as continuation of a wholesale monopoly, and not allowing alcohol sales in grocery stores — might explain the lack of larger effects of privatization on alcohol sales in this context. Such factors may explain why Alberta's experience was not fully consistent with international literature, which associates privatization with increased consumption.^{75 76 77}

A reasonable hypothesis is that full privatization with associated greater access to alcohol in a jurisdiction with a strong economy and growing work force — as was the case in Alberta in the early 1990s — is more likely to result in higher consumption than partial privatization in a weak economic context — as was the case in Quebec. Despite the somewhat higher retail prices, overall consumption rose in Alberta, and the best explanation is that increased density of retail outlets plus longer hours of sale were primary factors. On balance, it appears that increased accessibility had a greater impact on stimulating sales than the increased average prices had on deflating sales. Thus, taxation or price policies and general socio-economic conditions can limit or enhance, in the short run, some of the effects of privatization.^{78 79}

In Alberta, there is also evidence that privatization has been associated with an increase in criminal offences, such as liquor store break-ins and more relaxed enforcement of laws pertaining to underage purchases.⁸⁰ Furthermore, within Canada, Alberta continues to have some of the highest rates of alcohol-related problems, such as drunk driving fatalities.⁸¹ In studies using data from the United States, Sweden, Finland, and Iceland, either full or partial privatization was shown to result in an increase in alcohol.^{82 83}

A simulation study — conducted several years ago — of the likely consequences of privatization in Ontario indicates that privatization could result in an increase in per capita alcohol consumption of between 11% and 27%.⁸⁴ International research demonstrates that an increase in consumption of this magnitude would result in an increase in alcohol-related problems.⁸⁵

Under a privatized system there are strong incentives to deregulate alcohol controls and focus on the business side at the expense of public health and safety considerations. In such a system, the owners of business emerge with common interests in selling more alcoholic beverages, and they often act as a lobby group in their contacts with public authorities. This lobbying focuses on removing barriers that restrict trade rather than raising and enforcing barriers that control the problems associated with sales. Furthermore, a strong orientation towards seeking competitive advantage and avoiding business failure is likely to encourage some owners to employ marginally skilled and low-paid staff. Owners may be less likely to arrange for time to train staff properly to refuse service to minors and intoxicated patrons. In the case of small family-run alcohol retail businesses that are open late at night, it may be easy for patrons to circumvent service regulations. It is feasible, in principle, to have a regulated and well managed private alcohol retail system that places high priority on public health and safety, but the dominance of the profit motive with the potential for business failure means a number mechanisms work against this possibility in a privately run system.^{86 87}

On balance, then, a privatized system of alcohol retailing is expected to increase risks of drinking-related harm. It will likely lead to increased consumption, it will erode or dismantle controls, it will make it more difficult to implement public health-oriented policies, and it will create new vested interest groups, such as private retailers, that are oriented to the commercial aspects of alcohol management and not to public health agendas.

In contrast, publicly controlled alcohol management systems with strong public health and safety agendas can moderate access to alcohol through legislation, regulation, and enforcement and thus are in a better position than other kinds of systems to have a positive impact on alcohol-related problems. As noted in the attached table, in principle, under a public system there is a counterbalance to profit and business-oriented agendas, and this counterbalance is supported by dedicated staff available to promote public health and safety.

Privatization and Government Revenue

As well as promoting public health, provincial/state alcohol monopolies are an efficient and powerful means of raising government revenue. Government retail monopolies generate high government revenues. In 2000, the Liquor Control Board of Ontario (LCBO) reported revenues of $2.7 billion of which $1.1 billion was transferred back to the Government of Ontario.⁸⁸

Privatization of alcohol sales, on the other hand, can result in a net loss for governments. While there may be short-term revenue gains with the sale of government property, once costs related to managing health and safety aspects of alcohol use are considered, they overshadow short-term profits.

Privatization can also result in a decline in government revenue from alcohol sales. In Iowa, privatization led to higher consumer prices and lower state revenue after a newly created interest group of retailers successfully lobbied to lower the taxation so that the private retailers could increase their profit. In Alberta, government revenue from the sale of alcohol has been 8%-15% below that of the last full year of the monopoly system in 1992. The drop in government revenue took place despite higher prices and increased sales.⁸⁹ Lobbying efforts of private retailers resulted in a change in Alberta's tax policies that reduced liquor taxes from $1.00 to $0.50 per bottle⁹⁰.

This decline in taxes from alcohol may not have been a concern to political leadership in a province, such as Alberta, which has had significant surpluses in recent years and is projected to have zero debt in 2005; however, it is of concern from a public health and safety perspective. International research over the past decades has shown that higher alcohol taxes are associated with controlling alcohol consumption and drinking-related damage.^{91 92 93} An increase in government revenue from higher taxes thus offers two advantages: as a policy lever to control drinking-related problems and as a resource to pay for some of the social and health costs related to the ongoing damage from alcohol consumption.

Generating government revenue is an important function of a monopoly system. However, if generating revenue becomes the primary consideration, it is likely that public health and safety considerations will be eroded or devalued, and costs related to alcohol-related problems will increase. Therefore, a more comprehensive perspective with regard to alcohol takes into account both revenue and costs of managing the health, social and public order problems related to drinking. Rather than seeking to increase revenue by selling more alcohol, a more responsible approach would either maintain revenue or seek to increase revenue from the same volume of alcohol sold - for example, by increasing prices and reducing operating expenses. For the greater social good, the health and safety considerations of alcohol monopolies must be balanced with the interest in revenue generation from alcohol.⁹⁴

Public Opinion

Alcohol is our most popular and widely used drug. Unlike tobacco, it provides some health benefits for some consumers if used in moderation. It provides personal and social pleasure for many. It is currently considered an integral feature of many cultural and social occasions. The alcohol trade generates substantial revenues, employment, and business opportunities.

Alcohol is currently widely available in Ontario with about 1,600 outlets for package (take home) purchases, such as LCBO stores, agency stores, beer stores, and Ontario winery outlets. There are also over 18,000 licensed premises in Ontario, and about 65,000 special occasion permits are given out per year.⁹⁵ Hours of sale are no longer as limited as some years ago, and there are countless promotions and marketing techniques, as well as extensive sponsorship of sports and cultural events. It is clear that consumers have easy access to alcoholic beverages in Ontario. A wide range of products is available in settings, that, for the most part, are attractive, clean, and staffed by knowledgeable and helpful employees and managers.

Given these developments, it is not surprising that our surveys show that 50% of adult residents of Ontario say they can get to the nearest beer or liquor store in 5 minutes or less, and 93% in 15 minutes or less.⁹⁶ Surveys conducted for CAMH by York University's Institute for Social Research in 1999 and 2002 demonstrated that 72% of Ontario adults were opposed to privatization of government liquor stores.^{97 98} In addition, 78% said they were opposed to selling alcohol in corner stores. On other related topics, such as the number of liquor or beer stores, hours of sale, and taxes on alcohol, the greatest support was for the status quo. Furthermore, the majority wanted to see increased efforts to prevent service to intoxicated patrons.⁹⁹ These surveys and others demonstrate that the majority of adult Ontarians are not in favour of greater access to alcoholic beverages.

However, among the minority who support such initiatives as privatization of alcohol retailing, corner store sales, lower prices, more outlets or longer hours, it is the heavier drinkers who are strongly over-represented.¹⁰⁰ It is indeed ironic that those who are most likely to suffer personal set-backs from alcohol consumption and cause problems for others are more interested in seeing further erosion of our alcohol control system.

Ontario residents are very supportive of a monopoly-based retail system and related control measures. Research focusing on public opinion over the past 10 years¹⁰¹ has indicated that Ontarians continue to be aware of and concerned about the social, health, legal and economic consequences of alcohol abuse and continue to support interventions and controls that will reduce alcohol-related risks and harms.^{102 103 104}

Of specific relevance are recent surveys of representative samples of Ontario adults, which showed that 73% of Ontario adults were opposed to the privatization of retail alcohol sales. Most felt there were already enough, or too many, places to buy alcohol in their communities and 79% of the public did not want alcohol sold in corner stores.^{105 106}

When responses to these and more recent CAMH surveys are considered together, the results indicate that the Ontario public strongly supports a balanced approach where access to alcohol is controlled by a government run monopoly. Results from a 2002 survey¹⁰⁷ showed that:

• 72% of respondents disagreed that the government should "close all LCBO stores, and allow privately run stores to sell alcohol."
• 80% of respondents believed that "the number of places where you can buy alcohol in your community" is "about right"; a further 9% felt there are "too many."
• 92% of respondents considered it "somewhat" or "very convenient" "to get to the nearest liquor or beer store"
• 73% agreed that "before making legislative or policy changes to the way alcohol is sold governments should be required to consult with health experts."

These public opinion trends are supported by another, more recent poll. A random telephone survey of 500 Ontario voters conducted in January 2005¹⁰⁸ indicates that citizens have important misgivings about allowing the sale of beer and wine at local corner stores:

• 70% believed the proposal would
  "likely increase" …"beer and wine being sold to underage persons"
  (fewer than 3% think it would likely decrease this);
• 64% believed the proposal would
  "likely increase" …"beer and wine being sold to intoxicated persons"
  (fewer than 3% think it would likely decrease this); and
• 53% of respondents believed the proposal would
  "likely increase" …"the number of drinking and driving incidents"
  (4% think such incidents are likely to decrease).

When opposing privatization, some respondents may be reflecting a positive response to public relations initiatives, but this is not the full story. When responses to several questions are considered together, it is clear that the Ontario public strongly supports a balanced approach where access to alcohol is controlled by a government-run monopoly. Furthermore they find current access to alcohol convenient and the majority are only are a few minutes away from the nearest alcohol outlet. In general, public opinion does not favour increased marketing of alcohol products or greater access to alcohol.

The available research provides scientific justification for public concerns about expanding access to alcohol. If implemented, each of the proposals noted above would likely increase alcohol consumption. For example, a fully privatized alcohol system would result in more outlets selling alcohol, longer hours of sale and, critically, more sales to underage individuals and higher consumption of alcohol overall.¹⁰⁹ Similar increases in consumption would result from the sale of alcohol in corner stores, the proliferation of LCBO franchise outlets, and the sanctioning of private profit imperatives in the sale of alcohol that an income trust would embody. In each instance, increased consumption would worsen the health, social and legal problems that alcohol creates in Ontario.

Alcohol Monopolies, Regulations and Public Health Concerns

Alcohol monopolies can provide an effective balance between public health and safety concerns, fiscal interests and quality customer service. However, the struggle between commercial agendas (e.g., product promotion) and health and safety considerations determines whether that balance is achieved. Under the current system in Ontario, the provincial government has the potential to control problems and reduce drinking-related harm. However, given the strong orientation to promotion and marketing agendas in recent years, there are concerns about how much priority is currently being given to the harm reduction agendas of alcohol control systems.

Over the past decades, Ontario has seen a number of changes involving greater access to alcohol, including, for example, an increase in the number of retail outlets, longer hours of sale, and sale of alcohol on Sundays in retail stores. In recent years there have been changes which have included, for example, bar hours extended to 2:00 a.m., liquor and beer store hours extended to include opening on Sunday, no restrictions on the amount of alcohol in a drink, stadiums allowed to have alcohol in the bleachers, and elimination of the pre-approval process for alcohol advertising. Considered separately, some of these changes may seem inconsequential, but together they send the message that alcohol is like any other commodity and that greater promotion of alcohol and drinking and easier access do not involve any significant health or social risks. These experiences in Ontario suggest a persistent shift away from health and safety considerations, as former control functions are downgraded and commercial and marketing agendas are increasingly more dominant.

Several underlying factors have contributed to these changes in Canada's alcohol monopolies: the perception that the private sector is a major competitor with the public sector in alcohol retailing and distribution; the threat of privatization; the assumption that customer demand for greater convenience and service is limitless; and the expectation that alcohol sales should generate more revenue each year.

There are four linked risks associated with the shift in mandate and orientation toward commercial agendas. First, an increase in access to alcohol leads to the 'normalization' of alcohol use, thus increasing the perception that risks associated with drinking are modest and inconsequential. Second, an increase in access to alcohol is likely to lead to an increase in per capita consumption.^{110 111 112}. Third, as per capita sales increase there will likely be an increase in mortality and morbidity associated with drinking.^{113 114 115} Fourth, this shift in orientation erodes the attention due to an important agenda and function of the control system, devalues some of the prevention strategies noted above, and hampers the ability of the government and its partners to respond effectively to alcohol problems. Considered together, these changes promote higher rates of alcohol consumption and higher rates of drinking-related problems.

Commercially driven changes are likely to conflict with the goal of controlling rates of alcohol consumption in order to decrease alcohol-related problems. It is important to routinely review and revise monopoly policies and practices in light of this important goal. More attention and resources need to be directed to health and safety concerns at the population level, and innovative ways sought to provide consumer convenience without increasing alcohol-related problems. When involved in prevention and control initiatives, monopolies need to direct more attention and resources to those interventions that have a demonstrated potential to curtail overall consumption and reduce drinking-related harm, and less attention to those with little potential to reduce drinking-related harm. ¹¹⁶

What can be done to ensure that harm reduction and health promotion agendas are fostered by alcohol monopolies? First, it is necessary to note that alcohol sales and harm reduction are not necessarily divergent agendas. It is feasible to provide alcohol in a socially responsible way without increasing per capita consumption or increasing the risk of drinking-related harm as long as key principles are maintained. Second, it is important that the principle of balance between economic and health interests be central to alcohol management. Third, in order to reduce drinking related harm, it is essential that promotional, marketing and alcohol management strategies be assessed from a public health perspective as to whether they will increase or decrease the inherent risks of alcohol distribution.

Fourth, several options for enhancing health promotion and harm reduction, outlined below — using effective policies and a monopoly system - are recommended for higher priority than is currently the case. There are various strategies that are particularly accessible to an alcohol monopoly system that also fit in with their long-standing mandate. Some of these strategies include: (a) monitoring trends in per capita sales and taking steps to insure that they do not increase; (b) controlling the price of alcohol to insure that it does not decline relative to the cost of other goods and services; (c) limiting the number and location of retail outlets and on-premise venues such as bars; (d) limiting hours of operation; (e) curtailing and scaling down aggressive promotion and social marketing of alcohol products, and (f) preventing sale to minors, intoxicated persons and third parties who sell or give alcohol to minors or intoxicated persons. While there is some attention to the last point, in light of recent developments it is clear that greater attention needs to be devoted to all of these aspects of alcohol management.

Much of the harm from alcohol is preventable. A book sponsored by the WHO outlined those interventions considered to be the most effective.¹¹⁷ These include a government-run retailing system with a strong control mandate, low density of outlets, short hours of sale, prices that at least keep pace with the cost of living, and various drinking and driving control measures. Other research has indicated that Canada's per se law and activities by Mothers Against Drunk Driving (MADD) Canada have had significant and substantial beneficial effects on drinking and driving fatalities.¹¹⁸

These policy or regulatory interventions have been linked to lower levels of alcohol-related problems. Research has shown that as the price of alcohol decreases and the number of outlets and days and hours of operation increase, so do rates of problems such as alcohol dependence, liver cirrhosis, traffic crashes, arrests for public drunkenness and drinking-related violence ^{119 120 121 122 123 124}. Regulations that limit availability of alcohol and control prices play an important role in reducing alcohol consumption and related harm. A monopoly system has the regulatory power and orientation to promote these measures and to do it in an efficient way.

Monopolies can also contribute to social responsibility. Underage and young-looking adults have been shown to have a good chance (over 50%) of purchasing alcohol from private retailers in Wisconsin, Minnesota, Australia and Switzerland.^{125 126 127}. In the Swiss example, ¹²⁸ more than 80% of underage drinkers were served. In Ontario, every LCBO retail store employee and LCBO Agency store staff who serves the public takes a mandatory responsible service training program. Every challenge and refusal is recorded. In the fiscal year 2001-2002, store staff challenged 1.2 million potential customers and 76,000 were turned away because they could not provide valid proof of age or because they appeared to be intoxicated.¹²⁹

In principle, either a fully privatized system for alcohol retailing or a government-run system may serve social responsibility functions. In practice, this will depend largely upon the rationale for the system and how it works. As noted above, under a privatized system there tend to be fewer incentives and checks and balances to insure that high priority is given to control and social responsibility agendas.

A system of government-run stores provides a readily available, cost-effective setting for distribution of health-related educational materials and campaigns about issues such as drinking and driving. In general, because of their centralized administration and ability to undertake initiatives that do not directly contribute to profits, provincial retail monopolies are in a better position than private-sector systems to undertake harm reduction activities.

Summary

• Alcohol is associated with over 60 disabilities and diseases.¹³⁰ In North America the burden of harm from alcohol is equal to that from tobacco and higher than that associated with several other major public health risk factors.
• Retail distribution of alcohol is centrally important from a health perspective. In general, increased access to, and availability of, alcohol results in increased consumption of alcohol, which in turn results in increased alcohol-related disability and disease. International experience indicates that government control of the retail distribution of alcohol is one of most effective means to control problem levels.
• Ontario has a modern system of distribution and retailing of alcohol, which has, in recent years, tended to favour promotion and marketing agendas over control agendas.
• The Ontario public supports the status quo and is opposed to privatization of the LCBO. The majority is also against the sale of alcohol in the corner stores. It is mainly among heavier drinkers that one finds support for increased access to alcohol.
• The rate of consumption in Ontario is growing. A substantial minority of Ontarians drink in a high-risk manner.
• Given these developments, one can expect the level of damage from alcohol to increase unless our response system becomes more effective in controlling alcohol availability and accessibility.
• Once privatization is under-taken it is highly unlikely that there will a return to a partial or full monopoly retailing system. There is no case, to date, where a privatization decision has been reversed.

The Future of Alcohol Monopolies and Regulation

Alcohol monopolies are likely to face continued pressure from economic interests. An emerging example involves concessions being contemplated by the World Trade Organization (WTO) to reduce or eliminate the regulation of domestic alcohol retail and distribution markets.¹³¹ Governments should, however, have an interest in preserving and even strengthening existing alcohol monopolies because they are uniquely positioned to prevent alcohol problems, provide customer service in a responsible way, and maintain tax revenue. Through regulation, controlling availability, establishing minimum prices and refusing to serve minors and intoxicated persons, monopolies are able to address public health concerns, while still providing alcohol in a way that is convenient to consumers.

It is likely that increasing alcohol availability and accessibility will increase alcohol consumption, which in turn will increase alcohol-related morbidity and mortality, as well as alcohol-related social problems.^{132 133} These relationships provide a sound scientific basis from which to propose and evaluate potential policy initiatives, including those that affect the sale and distribution of alcohol.

Because alcohol monopolies have a mandate to control the sale and distribution of alcohol, they offer an effective means for controlling accessibility for health purposes while providing customer service. However, alcohol monopolies may be losing sight of some aspects of their public health function and instead may be primarily oriented to generating revenue for governments or as protectors of the interests of the alcohol producers.^{134 135} Recent developments in alcohol promotion in Ontario would also suggest that commercial and market interests have outweighed public health and safety interests in influencing the decisions of regulatory agencies.

The evidence summarized above supports the position that retail alcohol monopolies with a strong regulation mandate are an important mechanism for the control of alcohol problems in society. The evidence also indicates that relinquishing those controls will lead to increases in alcohol-related morbidity, mortality, and social problems. Thus, alcohol monopolies provide an effective means to reduce alcohol problems in society and must be maintained. However, if their mandates of controlling consumption and reducing drinking-related risk and harm are eroded, the justification for a monopoly system is similarly eroded.¹³⁶ While modernization is occurring in monopolies, it is especially important for them to focus on an essential aspects of their function: reducing drinking-related harm through control of per capita consumption rates and promoting other alcohol policy measures that will reduce risks and harm associated with alcohol consumption.

Acknowledgement: This background document draws on several recent reports, including the following three: a CAMH (2004) report entitled "Position Paper Retail Alcohol Monopolies and Regulation: Preserving the Public Interest"; and two February 25, 2005, presentations to the Expert Panel to Review the Sale and Distribution of Alcohol in Ontario ‚ by CAMH "Addressing the Burden from Alcohol with a Harm Reduction Perspective on Retailng"; and a presentation by several Ontario public health organizations "Alcohol and Public Health: The Implications of Changes to Ontario's Beverage Alcohol System".