(Image: Sina Gorge)
Frequently, when I write articles about the province’s retail alcohol industry (i.e. my slew of recent Beer Store rants), I receive supportive comments in response along the lines of “Hear, hear! The Beer Store and the LCBO need to go!” or “Yes! The time for TBS and LCBO is over,” and while I appreciate your support, I encourage you to read my articles in a little more detail, please.
I never said I wanted to dismantle or sell the LCBO and I think it would be insane to lobby for such a change.
In fact, I love the LCBO.
It’s probably one of my favourite stores and rivals only bookstores for its ability to consume far more of my time and money than I anticipated every time I walk into one. And, while I share some of your concerns related to the way the LCBO conducts its business, if you’re lobbying to get rid of the LCBO, you need to give your fucking head a shake.
Yes, I’ll admit that there are some aspects of the Liquor Control Board of Ontario that are less than ideal. First and foremost of my beefs would be the fact that the LCBO fails to use its considerable monopoly to dictate better prices. What I mean is that, as one of the largest importers of alcohol in the world, the LCBO has more than enough negotiating power to demand better prices from beverage retailers, yet they don’t. In fact, as the 2011 Ontario Auditor General’s report pointed out, on occasion the LCBO actually asks alcohol producers to charge them more. Because the LCBO charges a fixed mark-up, the more they pay for a product, the more they can charge, and accordingly, the more they profit. Accordingly, as the Auditor General pointed out
The LCBO’s fixed-pricing structure gives it no incentive to negotiate lower wholesale costs – doing so would result in lower retail prices and, in turn, lower profits.
So the consumer gets hosed when, instead, the LCBO could be throwing their weight around to get Ontarians better prices. That is, admittedly, greasy.
Secondly, the LCBO has a bit of a reputation for bullying beverage producers. Since they are essentially the province’s only retail alcohol option, the LCBO gets to dictate a lot of the terms necessary to get a product on LCBO shelves including not only the price at which they’ll buy it, but the price they’ll sell it for, approval of the art and design of your product, and even the geographical location of the stores they think your product will sell the most. Given that there aren’t any other options for selling booze, it’s a little tough to say no to the LCBO’s demands.
Famously, as outlined in this op-ed from the Toronto Star’s Martin Regg Cohn back in 2012, the LCBO has been known to use that position to strong-arm beverage producers into taking out expensive advertising in their glossy “Food and Drink” magazine. Brewers, winemakers, distillers, and distributors are “asked” if they’d like to take out expensive ad space in the fancy flier and, for fear of angering the one place that sells their products, they pay up. As a result, according to Cohn, despite spending a whopping $20 million on slick promotional material, the LCBO still nets a tidy profit from the $31 million they charged their suppliers in the same year. Super greasy.
Having said all that, unless you’re a bullied small winery or distillery, or unless you’re a craft brewer who would like to sell products larger than six packs somewhere other than The Beer Store, or unless you’re a magazine editor who’d like some of that sweet advertising cash they’re basically hoarding, you’ve got to admit that the LCBO is really fucking awesome.
No, really, it is.
Do you realize how lucky we are, as a province, to have a government-maintained enterprise providing us with safe, reliable, varied access to so much sweet sweet liquor? Honestly, I understand the inherent distaste for a “government monopoly” but when that monopoly is one of the world’s largest importers of beverage alcohol, and we get to reap the rewards, what exactly are we complaining about here?
Lack of selection?
I just don’t see that argument. Yes, people like to point to products that are available in the US and the UK and lament the fact that they can’t be purchased here, but I assure you that those few items are the exception, not the rule. Because of the LCBO, the province has 634 different stores offering 18,000 different products. 18,000! You can probably just shut up about not finding that wine you had in Italy. You’ve got some other options.
Seriously. People point to privatization as some way to open up selection in the province, and short term, that likely would be the case, but once there’s no more big supplier here buying alcohol in bulk, you’ll see the selection go way down and the shelves will be filled with whatever generic big market shit that can afford to buy the shelf space.
And let’s talk about those shelves.
I’m not really sure how an alcohol-enjoying human might peruse the shelves of a nice LCBO and possibly argue that there could be a better way to buy alcohol. Have you ever been to the Summerhill LCBO? In addition to a great beer selection, large areas dedicated to specific wine regions, and frequent sampling opportunities, they have an entire room dedicated to scotch.
Just for scotch.
It’s a clean, well-stocked, marbled, mecca of booze–hell, you throw in a hot dog tree and and live round-the-clock performances from Louis CK and it’s pretty much a drawing from my dream journal.
And as for the whole “the Government shouldn’t be in the booze business” argument? Well…uh, why not, exactly?
People drink alcohol and governments require money in order to provide services. It seems fairly logical to me that our government opts to provide retail alcohol services in a manner that helps them collect significant revenue for Ontario coffers. If, for some reason, alcohol sales ever became privatized, you can bet that the government would tax the hell out of those sales. So why not just let them handle the entire system, like they already are, extremely well?
The government makes a lot of money through the LCBO (e.g. in fiscal 2010–2011, the LCBO paid a dividend of $1.55 billion to the Ontario government. It was the 17th consecutive record annual dividend, and it does not include the various taxes levied–a total of $749 million. [source]). It seems insane to me that those who think the government’s main business should be watching its own bottom line can, in the same breath, call for the privatization of the province’s biggest cash cow.
Essentially, I don’t understand much of the “anti-LCBO” arguments. We in Ontario have a well-oiled (though admittedly bureaucratic) machine that provides us with unprecedented access to a world-class selection of alcohol that’s all been stringently tested (the LCBO conducts 500,000+ tests annually) to ensure that all the products meet federal health regulations. The system nets provincial coffers vast sums of money and the actual stores themselves are, for the most part, nice places to shop.
Am I missing the part were this is a bad system?
I’m all for having some more options for purchasing and selling craft beer, and The Beer Store’s private monopoly seems blatantly unfair, but for god’s sake, leave our provincial retailer alone. I love the LCBO.