October 27th, 2025
The Liquor Control Board of Ontario (LCBO) is overhauling its beverage alcohol wholesale pricing model, moving from the long-standing “LCBO retail minus discount” approach to a new, industry-standard “cost plus” formula, effective January 1, 2026. These changes are part of a broader shift that will see the LCBO become the exclusive wholesaler of beverage alcohol in Ontario.
For Ontario’s restaurants, bars, and other hospitality licensees, this change introduces a new, streamlined pricing structure while maintaining some flexibility for beer purchases. Here is what Ontario restaurant operators should know before these changes come into effect.
The new pricing formula is designed to simplify the current model, which was complex, involving various mark-ups, levies, and fees that tied the wholesale price to the fluctuating LCBO retail price. The new wholesale price will be calculated using a cost-plus formula: Landed Cost + LCBO Wholesale Mark-up + Cost of Service Differential (COSD, if applicable) + HST + Container Deposit.
The Landed Cost is the supplier quote plus Federal excise tax, import duties, and freight.
The shift to the “cost plus” wholesale pricing model on January 1, 2026, marks a fundamental change in how beverage alcohol is priced in Ontario. By moving away from the retail-minus discount structure, the LCBO is implementing a system that aligns with industry best practices and aims to streamline the wholesale business.
For Ontario’s restaurants and bars, the new model introduces a highly categorized and transparent formula based on landed cost, fixed mark-ups, and COSD, while maintaining flexibility for brewers to set differing quotes for hospitality beer sales. As the deadline for supplier quote adjustments approaches, all stakeholders must familiarize themselves with the new categories, mark-up rates, and calculation methods to successfully navigate this modernized marketplace.
The new “cost plus” model replaces the former “LCBO retail minus discount” structure. The old model tied the wholesale price to the final LCBO retail price. The new model calculates the wholesale price based on the product’s Landed Cost (supplier quote + duties/freight) plus a fixed wholesale mark-up, a Cost of Service Differential (COSD), HST, and container deposit.
The new pricing structure and mark-up rates are uniform and will apply to all wholesale customers, including grocery stores, convenience stores, The Beer Store, and hospitality licensees. However, the documentation notes that for sales to hospitality licensees, brewers may set a different supplier quote, which can result in a different final wholesale price for beer.
