Quotulatiousness

August 20, 2014

New report calls for Ontario to break up the LCBO

Filed under: Business, Cancon, Economics, Wine — Tags: , , , , , — Nicholas @ 13:33

In the Toronto Star, Richard Brennan reports on a new study by the C.D. Howe Institute calling for the province to join the modern era:

The “quasi-monopoly” LCBO and The Beer Store have hosed Ontario consumers long enough, a C.D. Howe Institute report says.

The right-wing think tank said the Ontario government should strip them both of their almost exclusive right to sell beer, wine and spirits, suggesting the report proves that opening up to alcohol sales to competition will mean lower prices.

“The lack of competition in Ontario’s system for alcoholic beverage retailing causes higher prices for consumers and foregone government revenue,” states the 30-page report, Uncorking a Strange Brew: The Need for More Competition in Ontario’s Alcoholic Beverage Retailing System, to be released publicly Wednesday.

The report includes tables comparing Ontario beer prices to other provinces with greater private sector involvement, particularly with Quebec, where a case of 24 domestic beers can be as much as $10 cheaper and even more for imported brands.

Since 1927, when the Liquor Control Act was passed, the Liquor Control Board of Ontario and the privately owned Brewers Warehousing Company Limited have had a stranglehold on alcohol sale in the province.

“The Beer Store’s quasi-monopoly of beer retailing is … an anachronism,” the report says, referring to the foreign-owned private retailer that is protected by provincial legislation.

May 29, 2014

The “Pairs Perfectly” campaign

Filed under: Cancon, Wine — Tags: , , , , — Nicholas @ 09:03

Just as the Ontario election writ was dropped, the small wineries of Ontario started pushing the Pairs Perfectly campaign, to move the province toward a more mature wine retailing model (like British Columbia’s). While I’d prefer a full privatization model (like Alberta’s), at least the move to allowing some private wine stores would be an improvement. Despite the quick work to launch the campaign, Michael Pinkus says it’s already being forgotten on the hustings:

Ontario is deep into an election campaign and the best thing done so far is a little initiative from the Wine Council called “Pairs Perfectly”. They’ve backed it with radio and television promos and in truth they make a lot of sense. Ontario is one of the only provinces not to have some sort of private system in place, either along with their provincial monopoly (a la British Columbia) or fully privatized (a la Alberta). This initiative seemed to be already formed and waiting in the wings: no sooner had an election been called than the “Pairs Perfectly” slogan was in my inbox (with its twitter handle @PairsPerfectly, hashtag #PairsPerfectly and website PairsPerfectly.com), articles were written to explain the notion, social media seemed abuzz from wineries to writers to the average-Joe, all were tweeting, re-tweeting, blogging, tumbling, gramming, hooting, hollering, casting, accosting and I initially thought, “Wow, the buzz is really out there, this just might have legs, or at least more legs that that ‘My Wine Shop’ that seemed to go nowhere.”

But 6 weeks is a long time in the political realm, just ask Rob Ford, so much can happen over the course of 6 weeks that can turn the tide on a well-thought-out, well-organized plan of attack. Instead of the Ontario booze media jumping whole hog onto the initiative and writing piece after piece after piece about the benefits of privatization to keep the idea in our collective consciousness, a new issue has come along to polarize: the VQA, which I have repeatedly said is a sham of a system, most notably because of its tasting panel. Now there’s a new horse to ride, a newer and shinier issue to get all worked up about. The VQA is easy pickings because it is so wrong, crushes creativity and stymies’ our winemakers making them think “will this pass VQA”. Every winery has come into conflict with it at least once in its existence and it needs an overhaul (radical? Maybe not, but definitely a big tweak).

[…]

I believe this: Ontario is a mess and is destined to remain that way long after this election season has been put to bed. We already know the Liberals position on privatization of any sort (over their dead body); the NDP seem in lockstep with the Liberals train of thought because it would disrupt union jobs. And the Conservatives, before the campaign the only party willing to talk privatization, have somehow gone mute about the whole issue – as if someone told them not to rock the boat; which makes them the wild card. But if history shows us anything it’s doubtful it’ll get past committee if it ever does come up.

And don’t even get me started on the asinine things happening on the beer side of the ledger. The Beer Store’s cockamamie campaign against corner stores carrying the product that they have a duopoly to sell (with the LCBO), is as misguided and ill-conceived as any I can think of. Does beer not also get sold in corner stores in other provinces? Are all those owners corrupt-minor-sellers? It seems to have galvanized the public against them; especially when people find out they aren’t government controlled; which a vast majority of the province was under the false notion it was. This also took focus away from the larger issue of an open and freer market for all in the alcohol industry (craft brewers, craft winemakers, etc.)

May 10, 2014

Former head of the LCBO at the Ontario Wine Awards

Filed under: Business, Cancon, Humour, Wine — Tags: , — Nicholas @ 13:17

Michael Pinkus attended last night’s award ceremony and found the star of the proceedings was the master of ceremonies, former LCBO head Andy Brandt:

The 20th Annual Ontario Wine Awards were held Friday night at the Queen’s Landing Inn in Niagara-on-the-Lake hosted by former head of the LCBO Andy Brandt; who had to be one of the unintentionally funny MC I’ve ever experienced. Between the butchering of words (Pinot “Griss”, Cabernet “Frank”, “Sara” for Syrah, “Ca-lom-us” for Calamus and “Toss-e” for Tawse) and the total omission of names he did not want to pronounce like Musque and Viognier during the presentation — he seemed uncomfortable giving out the awards, but was good at puns and for a few stories. All-in-all Brandt was a train-wreck, but at least you knew the room was listening for his next faux-pas and he was the talk of the room over beers and desserts at the after-party (the most talked about host I can remember). One person commented to me, “He’s my favourite MC at [The Ontario Wine Awards] ever, I just never knew what was going to come out of his mouth from one moment to the next. Obviously pronunciation has gone out the window tonight, it’s a free-for-all.” Others could not believe that the once head of the LCBO could not pronounce grape varieties correctly.

May 4, 2014

How to start a wine cellar (not applicable in Ontario)

Filed under: Business, Cancon, Wine — Tags: , , — Nicholas @ 10:21

In rational jurisdictions — where you don’t have a government-mandated monopoly supplier — following the advice of Will Lyons makes a lot of sense. For obvious reasons, wine fans in Ontario can only stare in envy at the concept of competitive pricing for wine and not being limited to what the government chooses to bring in for sale:

IF YOU ENJOY WINE, are starting to take more than a passing interest and have perhaps bought the odd reference book about vino varieties, it might be time to think about beginning your very own wine cellar.

The worst habit you can get into is to stop off at your local wine shop once a week and pick up the odd few bottles. A much better approach is to buy by the dozen or a six pack, as most wine merchants will offer a discount on a mixed case. Better still is to select two or three wine merchants, order their catalogs or look online and, when you’re in the mood, spend some time selecting your favorite wines and comparing prices. I like to do this on the weekend, with a cup of tea and all the catalogs spread out over the kitchen table.

But a cellar isn’t just a few cases of your favorite wine. It may sound like a cliché but a good cellar requires a bit of forethought and planning to provide pleasurable drinking over the long term. I like to break wine collecting into three categories: wines for immediate drinking, wines to lay down that will improve with age, and investment wines — those special bottles whose value will steadily increase year on year.

I started my own cellar soon after I left university and began working in the wine trade. I well remember buying a case of northern Rhône Syrah to lay down — I still have four bottles — and six bottles of a well-known New Zealand Sauvignon Blanc producer. I now buy most of my wine twice a year: during the bin end sales at the beginning of the year, when merchants are unloading old stock at discounted prices, and when a wine is offered En Primeur (wine futures). This is where the wine is put up for sale from the barrel, months before it is bottled and shipped. The advantages are that you can guarantee an allocation of your chosen wine, you can choose the size of the bottle it is shipped in and also secure it at a discounted price. However, the latter isn’t always guaranteed — Bordeaux 2010 being a case in point. Many of the wines are cheaper now than when they were when released En Primeur.

January 9, 2014

Selling Ontario wine at a farmer’s market? Must be a by-election in wine country coming up

Filed under: Business, Cancon, Wine — Tags: , , , , — Nicholas @ 10:34

Michael Pinkus on the Ontario government’s latest cynical ploy to shore up electoral support in a wine-producing riding just in time for a by-election:

There was a certain amount of optimism over the holidays coming out of the wineries of Ontario as the Wynne Liberals, who lead this province, announced a new initiative to get Ontario wines into the hands of more Ontarians … or at least that’s how they are selling it.

In case you missed it, Kathleen Wynne and the Corrupt Liberals (sounds like a great 90’s band) have released their latest McGuffin on the land, an announcement that Ontario VQA wine is to be sold at farmer’s markets throughout the province. It’s all part of their 75 million dollar plan to support the local wineries and help them grow. The timing couldn’t be better, for them anyway; this announcement comes just before a soon-to-be scheduled by-election in Niagara. Funny, how it is only now the Premier and her troops have decided to finally help the wineries of Ontario … seems rather convenient. I starting to experience a little déjà vu about this though; didn’t they use this same technique to grab a couple of seats in the last election?

Now, before you accuse me of being anti-Liberal, I’m not. Before this government completely let me down I would have counted myself among them, but my personal politics aside, I’m not anti-Liberal, I’m pro-Ontario Winery — and anything that can help these hard working, passionate folks get their wines into more hands of the Ontario populace, the happier I am.

[…]

If they truly want to help the wine industry in this province stop handcuffing them as to where they can sell their wines. Give them actual retail space like the Wine Shoppes and Wine Rack stores that Peller and Vincor hold onto like gold (because they are). Let them sell their wines not just at Farmers’ Markets but at festivals and events where you can sample the wine before you buy. Nothing makes attendees of festivals more annoyed than our prohibition era laws, that keep them from buying bottles of their favourite wines tasted at expos, festivals or events. It’s mind boggling and baffling to any who have attended wine shows in other countries. Let wineries actually sell their wines at these events … I promise, no one is going to open the bottle in their car on the way home; no more so than they would after purchasing it at an LCBO store.

And so that it’s not just my voice of dissension you hear, allow me to bring winery owner Daniel Lenko into the conversation, as he posted his thoughts on Facebook: “Ok, this could get long winded. I think in general wine producers in Niagara are supportive of this olive branch being offered. Why not? This is the start of something, and anything is better than nothing. Here are the pitfalls: 1) You can’t sample wine before 11am legally, and farmers markets primarily occur in the early morning hours. 2) Can I have a stand-alone store in the “PATH” and call it “The Farmers Market”. I will offer produce as well. Or is this too civil? 3) I can’t warehouse anything offsite so that means that I must drive pallets of wine back and forth daily to Niagara, how environmentally irresponsible. 4) And hold on a second … Why is it that [Cellared in Canada] wines can be sold ANYWHERE in private stores and wines grown and vinified in Ontario can only now, 25 years later, be available at farmers markets. It really feels like I am a second class citizen here”.

September 19, 2013

The LCBO’s new “Ontario Boutique” outlets – doing a Wal-Mart to Ontario wineries

Filed under: Business, Cancon, Wine — Tags: , , , — Nicholas @ 09:13

In the latest Ontario Wine Review, Michael Pinkus talks about the opening of three new “Ontario Boutique” LCBO stores. These stores are the LCBO’s response to rising demand for quality Ontario wines … opening stores to directly compete with the wineries.

Well it happened; the LCBO opened their Ontario Boutiques to great fanfare on September 12, in three cities: Niagara Falls, St. Catharines and Windsor … three places that have wineries nearby. Three places where the local populace could hop in their cars and within 15 minutes be at any of a dozen wineries in the area. The way we should all view this is the LCBO utilized the Wal-Mart approach to competition: get in there and fight it out with already established businesses. According to reports, they are beautiful, well-stocked and something to see. Now, I’m not questioning whether or not the LCBO was going to do a nice job on these in-store boutiques, heck they have the money to sink into them (yours and mine), I question their location and I question why the Wal-Mart tactics?

[…]

Someone who did get it (Bob) emailed me directly, putting it very succinctly: “The Wine Council’s information shows that the majority of VQA wines are still sold at the wineries. I asked one of their staff why they were putting a new VQA [boutique] in the Glendale store in St. Catharines rather than Toronto, and was told that it was because they sold more VQA wine in that store than any other in their system. Obviously, they are intent on trying to steal as much business away from the local wineries as possible, and therefore to deny the wineries (for the most part Canadian small businesses) as much profit as possible.”

While another reader, Gaye, admitted she has finally seen the light: “I always took your rants re: the LC mildly, as I like being able to shop in the “biggest” importer of wines in the world (sic). But I love Ontario wines, and living in Toronto always bemoan the difficulty of going to Niagara wineries and driving back … for obvious reasons. So I thought these boutiques were inevitable and of course would be in the place most Ontario wine was drunk, Toronto. As your excellent wife said, “a no-brainer”. This is incredible, opening in Niagara Falls? As if our wine was just something to be sold to tourists. Now I’m totally on side.”

September 5, 2013

LCBO to offer expanded Ontario wine displays starting next week

Filed under: Business, Cancon, Law, Wine — Tags: , , — Nicholas @ 10:57

Sounds like a reasonable thing, doesn’t it? The LCBO is the primary distribution channel for all Ontario wine, so making the best of the province’s wines more accessible is a good thing, yes? Well, sorta, as Michael Pinkus explains:

The LCBO must think we’re all stupid … that or they are run by a bunch of nincompoops – or maybe it’s a combination of both. On September 12, 2013 the Ontario wineries are finally going to see the fruits of their labours sold in special, larger and more prominent sections in some LCBO locations. Now if you were running the LCBO (more apropos to say: if you ran the circus), but if you ran the LCBO and you had some extra money kicking around and deemed it time to (finally) help Ontario wineries, show pride in the wines this province makes, and get the word out that Ontario is making world class wines, where would you put those new locations?

I asked my wife, an American, who can’t seem to grasp the concept of the LCBO, that very same question: “if you were opening up new sections within existing LCBO stores to promote Ontario wines where would you put them?” Her answer was immediately, “Toronto, it’s a no-brainer,” she said, “why where are they putting them?”

London, Ottawa, Kingston and Kitchener also all come to mind as potential locations for these new “boutiques” before the three locations the LCBO has chosen: Niagara Falls, St. Catharines and, you guessed it, Windsor; if they added Belleville to the mix they’d really hit the quad-fecta – but I shouldn’t give them any ideas – who knows, maybe that’s already in the works.

Why these locations matter is because they are smack dab in the heart of wine county; where wine already exists. There the locals have access to drive to their favourite wineries to buy their wine. As we all should know by now the LCBO can’t have you shopping at the competition, can they? Not when their unwritten mandate is to rule the province with an iron fist where booze is concerned … big sister Wynne doesn’t want to take her eye off the bottle, not for a second. Why you might ask would the LCBO put their stores in these locations? Think about it this way: when Wal-Mart comes to town where do they park their stores? Right next to the Canadian Tires and the Zellers locations (or as close as possible anyway) – they want to take on the competition directly. The LCBO is placing these new expanded Ontario sections in St. Catharines, Niagara Falls and Windsor – I trust you see the similarity.

June 4, 2013

LCBO intransigence triggers constitutional challenge

Filed under: Bureaucracy, Business, Cancon, Law, Liberty — Tags: , , , , , — Nicholas @ 11:02

This is kinda fascinating:

What started out as a simple privacy commissioner complaint has turned into a constitutional challenge of the validity of the Liquor Control Board of Ontario (LCBO) — and this time the Board has only itself to blame for the brouhaha, proving once again that Ontario’s LCBO is so far out of touch with the realities of today’s world, it’s downright scary. At a time when they should be thinking about transitioning out of the alcohol business, the Ontario provincial government and the LCBO seem to be clinging to its very existence with even more tenacity and verve than before. They’re like the old boxer clinging to past glories who just has to show you the right hook he can still throw — yet only ends up throwing out his shoulder. In the LCBO’s case, the word “Control” won’t be pried away from its “cold dead hands” anytime soon… or will it? In its most recent fight, the LCBO is proving it is a government entity most in need of being on the chopping block — if not the auction block — of government institutions that should be moved over to the private sector.

[. . .]

Why the LCBO has chosen to play hardball over such a trivial matter is incomprehensible; according to reports, the LCBO has decided to appeal the order and has asked that the records be sealed in the process. This seems to contravene common sense. “A government entity has chosen to spend hundreds of thousands of taxpayers’ dollars to fight an order by the Privacy Commissioner whose sole purpose is to make these decisions,” Porter says.

Now fed up with the collection of information, Porter and his team have decided to question the entire existence of the LCBO as it contravenes the Constitution Act of 1867 by challenging the Importation of Intoxicating Liquors Act (IILA) itself — which bans the free flow of goods (including alcohol, wine and beer) between the provinces. The argument hinges on Section 121: “All articles of Growth, Produce or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.” This challenge could, and would if successful, lead to the downfall of the LCBO. Social networks were abuzz with the news about the challenge. Alfred Wirth, president and director at HNW Management Inc., applauded the news on Facebook: “Any progress towards competition among merchandisers is to be appreciated – even if it’s for domestically-produced products. Several years ago, when I questioned why Ontario couldn’t privatize the LCBO, the then Minister of Health said that alcoholic beverages were a crucial health matter which the province had to control. Despite the risk of people (including underage youth) freezing to death during our cold Ontario winters, he did not explain why the sale of crucial winter coats could be entrusted to Sears, the Bay, etc…” While Porter himself posted an analogy to cigarettes: “How about this one. Cigarettes are so dangerous that you cannot advertise them on TV, print, billboards or even display them behind a counter… but they can be sold at any store. Alcohol is so dangerous that it has to be sold at a government store with specially-trained people… but the government itself floods the market with advertising and even publishes a free magazine where 50 per cent of the content is about consuming the product.”

Energy lawyer Ian Blue has joined the Vin de Garde team for the action. I interviewed Blue in 2010 about the IILA, which is now under fire. Here’s what Blue had to say: “The law that gives provincial liquor commissions a monopoly and the power they have, is federal law, the Importation of Intoxicating Liquors Act; it’s highly arguable that the law is unconstitutional. It’s also pretty apparent to government constitutional lawyers, who are knowledgeable in these matters… [If the Supreme Court of Canada] takes a hard look at the IILA, and if they do an intellectually honest interpretation, the IILA probably cannot stand up to constitutional scrutiny.”

In 2009, lawyer Schwisberg commented to me when speaking about the IILA: “The very underpinning of Canada’s liquor regulatory system is unconstitutional. Isn’t that a mind blower?” Blue said: “There is nothing natural or logical about the existing system. It bullies, fleeces and frustrates wine producers and the public… If the IILA were to fall… wine producers could probably make quantum leaps of progress towards a fairer and more rational system of liquor and wine distribution in Canada.”

May 9, 2013

Let ‘em strike!

Filed under: Business, Cancon, Government — Tags: , , , — Nicholas @ 09:00

We’re in the final week before the LCBO is threatening a strike. Michael Pinkus suggests we should let ‘em walk:

For the third time in a decade the LCBO is holding Ontario hostage — and just like they did in 2005 and 2009 when the threat of a strike was on the table, they’ll be an 11th hour (more like on the 11th hour and 59 minute mark) resolution where the LCBO employees get everything they want because the province does not want to lose the revenue the LCBO brings into the province. Screw the teachers, they take money out of the system, but the LCBO brings it in, so they should get whatever they ask for, right? It’s the approach taken by every government who has “stared down” the LCBO, and lost. Not that I’m necessarily for the teachers, but if it’s a choice between educating our youth or feeding our appetite for liquor I know which side I fall on … and so would any right minded Ontarian — it’s the booze that wins out every time.

And just like in 2005 and 2009 the LCBO will make a ton of money in the days before the “strike”. It’ll be a feeding frenzy of mammoth proportions in the aisles, right up to the last hour. Shelves will be decimated as people stock up for what surely will be touted as long, drawn out labour strife … that’ll never come. And why do I say that? Because any right thinking Ontarian knows that if the LCBO goes on strike it means more than loss of revenue to the province, or an inability to get out of country booze … it means the end of the LCBO (and everyone involved knows that).

Take a peak around us privatization is today’s buzz-word and it’s all around us. In our own country, to the south, in Europe — at corner stores, in supermarkets and in specialty stores … heck even Pennsylvania is getting into the act of loosening their liquor laws (and nobody thought that day would come) — but not here in NO-FUN-Tario, a have not province … we sit under the rules and thumb of the Liquor Control Board. If they go on strike questions will be raised as to why we have a provincially run system, why we support unionized workers, or why we can’t be more liberal with our booze (plus you just know some idiot will want to declare it an essential service). So it does not behoove the LCBO to walk off the job and the government won’t allow it because they’ll be tough questions to answer. So don’t go betting the farm on a labour dispute and seeing picket sign toting employees at the local Board store — this one will end like all the others, with the LCBO threatening to walk out, a mass throng of buyers the day before, and the sun rising to a new dawn the next day with a new deal for LCBO employees … and all will be right in Ontario for another 4 years … when we’ll do it all again.

Update: A report in the Toronto Star claims that Ontario could earn a $1 billion windfall by allowing private liquor stores into the province:

“If the Ontario liquor industry mirrored ours in B.C., instead of $1.6 billion going to government, that number could be around $2.7 billion,” he states in his 15-page speech, which highlights the pluses for locally produced wines, beers and spirits.

With 635 stores and 219 convenience store locations in rural and northern Ontario, the LCBO last year reported net sales of $4.71 billion — up $218 million — and handed over to the Ontario treasury an all-time high of $1.63 billion, not including taxes.

“If Ontario allowed private liquor stores, consumers would have access to hundreds of new VQA wines, craft beers and spirits.”

His comments come at a time when the LCBO plans to spend $100 million on expansion, including express outlets in 10 large grocery stores and expanded VQA sales, and while Tory Leader Tim Hudak calls for the booze monopoly to be privatized and for beer and wine to be sold in corner stores.

“A bit of competition makes the world go round . . . I think now that we are (in) 2013 it’s time for some change,” Hudak told reporters at Queen’s Park.

B.C. has had a mix of private and public liquor stores “to create better choices for producers to sell and for consumers to buy,” Baillie said.

Ontario currently does allow a tiny number of private wine stores to operate, but under incredibly restrictive conditions. For one thing, they’re only allowed to be located in areas the LCBO has determined are “underserved”, they may only sell wine from a single winery or winery group, and the number of stores is limited to the licenses that were granted to certain wineries before 1993.

Oh, and the kicker to all those restriction? If you manage to put in a store in an “underserved” area and make a profit? The LCBO can then turn around and re-designate your area to invalidate your license or place one of their own stores in the area and take away the business you’ve built up. Catch-22.

April 11, 2013

Ontario’s LCBO workers vote in favour of a strike

Filed under: Bureaucracy, Cancon, Government — Tags: , , , , , — Nicholas @ 08:50

Michael Pinkus is looking forward to a potential LCBO strike:

Call me an anarchist but I want the LCBO to go on a nice, big, long strike. And by the time you read this newsletter I am 100% sure that the sheeple of the LCBO will have given their bargaining team the go ahead for strike action. Now the LCBO’s contract was up on March 31, 2013 — which means currently the guys and gals roaming, stocking and generally keeping track of the aisles are without a legal contract with the provincial liquor board. I’m not about to get into the nitty-gritty of the contract negotiations, but when I read in the Liquor Board Employees Division (LBED) Bargaining Bulletin: “The offer we received from management can only be described in one word: Outrageous!” — well I just felt that I had to look a little deeper to see how the LCBO was screwing their own people (which is a nice change from the people of Ontario they screw daily).

What outrage would I find on the pages of the LCBO’s proposal? Are they locking the doors and throwing employees out on their ears? Are they proposing actual punishment for selling to minors (like the sting David Menzies did in July of 2012)? Will there be repercussions for doing a bad job, breaking the law, real penalties?

Now I have met, had dealings with, and actually, once upon a time, worked alongside some very good LCBO employees, most of them casual part-timers — but I can tell you that for every one good one there’s two that are lazy, surly and just generally people you don’t want to deal with in a retail situation — and sadly, those are the one’s you are likely to remember. So from the LBED Bargain Bulletin dated March 1, 2013 here are 2 of the 9 crazy demands the LCBO is making of their employees and the Union’s response to those “outrageous” proposals (I highlight my favs, but you can read the full bulletin here):

[. . .]

But who really suffers from an LCBO strike? California, Spain, Italy, France, Australia, Chile, in other words import wines and liquor producers, who can ONLY sell through the Province run monopoly, and they’ll be demanding the LCBO settle so their products get into the hands of Ontarians instead of sitting idly in warehouses collecting dust. Meanwhile local producers could see a boon as Ontarians thirst for wine is not met by the LCBO but instead by in-province wineries. Tourism to wine producing areas should also see an uptick; instead of visiting Grandma on a Saturday afternoon the family would pile into the car (with Grandma) to tour the highways and bi-ways of Ontario wine country. A long LCBO walk could mean that Ontarians finally get the taste for their homegrown wines en masse and will then demand greater access — one weekend away is quaint, but having to make the trek each and every weekend may prove too much. And with that kind of demand we could see movement in this province towards a freer market system with independent and corner wine stores. Maybe the government will get tired of having to pay all those wages, negotiating with an inflexible union and decide to sell off the LCBO — preferring instead to reap the rewards from taxes instead of paying the price of labour unrest … sigh, wouldn’t that be nice?!? As for the employees, the good ones will have no trouble finding a job in the public sector [I think Michael means private sector here], many in the same kind of newly created positions. The others? Well they’ll just go back to ditch digging where they belonged in the first place.

March 28, 2013

Challenging Prohibition-era federal laws

Filed under: Cancon, Law, Liberty, Wine — Tags: , , , , — Nicholas @ 09:57

Michael Pinkus updates us on a hopeful sign that we may soon see the end of one of Canada’s surviving Prohibition-era laws:

Almost two years ago I published in these very pages an interview I did with Ian Blue, a lawyer who had turned his focus to liquor laws, constitutional issues and even more importantly, the Importation of Intoxicating Liquors Act (IILA). Now, many think the law was struck down but in fact there was just an amendment made to the federal law that now allows you to carry a certain amount of booze for personal use across provincial borders without fear of being charged by your provincial liquor board. So why am I bringing up this “ancient history” — well it seems the constitutional challenge that Ian was hoping for has finally got a name and a voice in the form of Vin de Garde wine club, and the challenge is going forward — before you blindly blow this off as another soon-to-be failed attempt to challenge the power and might of the LCBO I suggest we revisit the interview, the article and the issues that surround it; there seems to be more relevance here than ever before. This is going to get very interesting.

    Have you ever been out to British Columbia and brought back a couple of bottles of wine? Better yet, have you ever driven across the border to Quebec and brought back a case of beer? If you have done either of these things then you my friend are a felon, capital F-E-L-O-N. That’s all according to the Importation of Intoxicating Liquors Act (IILA) of 1928, which is still on the books and very much in use by our liquor board (the LCBO). What it boils down to is, you can travel to Cuba and bring back 2 bottles of rum, go stateside and return with two bottles of wine, go to Mexico and carry back 4 cervesas; but you can’t cross Canadian provincial borders carrying any booze back with you. So, who’s ready to turn themselves in?

    Not so fast says lawyer Ian Blue, who has been looking into the matter for us. Ian is an energy lawyer who found himself in a conversation with fellow lawyer, Arnold Schwisberg, about the IILA and like an ear-worm (a song that won’t leave your head) Ian couldn’t stop thinking about the absurdity of the Act. “The constitutional issues around inter-provincial and international sales of energy have equipped me admirably to look at the IILA … it stuck with me until I wrote my paper on the subject ‘On the Rocks’.” Ian subsequently wrote a second article on the same topic (On the Rocks; The Gold Seal Case: A Surprising Second Look); both appear in Advocate Quarterly.

    [. . .]

    “Liquor boards would continue to exist, their power would just be diminished,” but they would definitely put up a fight, “You’re fighting entrenched interests, so if you’re diminishing their power they’re going to fight to try and keep it.”

    How big a fight? “I would be fighting 10 sets of lawyers one each from every attorney general’s department; probably 10 sets of lawyers from the provincial liquor commission; and probably lawyers from the police associations,” estimates Ian, but that’s just the tip of the iceberg. “What [a win] would mean is that if I wanted to have a private liquor store I could set one up and I could buy directly from the wineries in Niagara or British Columbia or foreign countries. Nova Scotia restaurants could order wines from Ontario. It would just loosen up the system. [It] doesn’t mean licentiousness; the province could still legislate standards for people who work in liquor stores, store hours, security, all safe drinking training, all that stuff; it’s just that you would not need to have liquor and wine sold through publicly funded liquor stores; being sold to you by unionized staff on defined benefit pension plans.”

    But what about those who claim a loss of provincial revenue as their argument for keeping the liquor boards as is? According to winelaw.ca, “The Provincial Governments make their money regardless of whether the sale is made in a government store or a private store. In fact, the revenue that government makes from liquor on a per capita basis for 2007/2008 was as follows: $192 for BC [a mix of private and government stores], $190 for Alberta [all private stores], and $139 for Ontario.”

February 14, 2013

The LCBO crowds out another private business

Filed under: Cancon, Economics, Media, Wine — Tags: , , , — Nicholas @ 09:50

In the latest Ontario Wine Review, Michael Pinkus writes an obituary for Wine Access magazine and hurls “J’accuse!” at the Ontario government’s liquor monopoly for the murder:

Now there are some of you out there who will be asking how can the Ontario Liquor Monopoly put an Alberta-based magazine out of business — well it’s actually quite simple, if you’re willing to connect the dots: if you only have a certain amount of advertising dollars to spend in Canada how much are you going to allocate to the largest population in the country (Ontario); even more to the point, how much do you put into the Liquor Board willing to buy more product if you’ll spend more of your ad budget with them versus a magazine that might (or might not) increase your sales.

I have long advocated for the LCBO to cease publication of this magazine. Don’t get me wrong, it’s a beauty of a publication — my wife fawns over the pictures every issue — but it’s a publication that competes against private enterprise, and the LCBO is after all an extension of the government — so what I, and many others have said is unfortunately true: the government in essence, taking thousands of dollars out of the hands of the companies that pay taxes, their own populace, and competing against them. Sure I hear many of you saying “finally my tax dollars hard at work”: but ask yourself this question: how would you like the government competing against your business?

People don’t see the problem with Food & Drink magazine because they aren’t in the publishing business and are not affected by its publication, but consider these numbers: in the Holiday 2011 issue of said magazine, an almost Sears catalogue sized edition, there were 308 pages total, 140 of those were advertising (not including product placement and promotions within editorial / advertorial which is no doubt paid for as well — and don’t forget the 6 hefty inserts included inside the plastic wrapper) … that’s money that was not spent with privately run magazines that could have, and most likely, would have. Here are some more numbers to boggle the mind. According to the Luxury Media Sales website a full page in F&D magazine is $20,588 (2012 rate) — that’s a lot of money the government of Ontario is taking from their tax paying private enterprise magazines (in a democratic, free market system — who would believe the government is competing against their own populace). Think about that kind of money funneling out of your business sector, your chosen profession or what you do for a living (it’s close to 3 million dollars – 140 x $20,588) … do you think you’d be making the kind of money you are now? Would you welcome that kind of competition? And before you crassly answer “sure, the government can’t do anything right” also put in the fact that they’re the biggest game in town and control what you sell. The nightmare scenario is the closing of your business due to unfair competition and lack of revenue (but it’s the government, so what can you do) — in the publishing game you just shuttered a magazine because of lack of revenue and unfair competition. If you’re RedPoint Media you close down Wine Access magazine.

So, in Clue fashion, who killed Wine Access? It was Colonel LCBO, in the wine cellar, with the government monopoly privilege.

January 24, 2013

The LCBO’s tentative, faltering steps to allowing wider sales of wine

Filed under: Bureaucracy, Cancon, Wine — Tags: , , , , , — Nicholas @ 09:39

In the latest Ontario Wine Review, Michael Pinkus pours scorn on the LCBO’s latest attempt to fend off an actual competitive market:

The LCBO is about money and profits — and about control. I know I will have people freaking out at me for saying this but I want you to ask yourself “why?” Why would the LCBO suddenly decide that grocery stores are the place to put locations? Doesn’t sound all that smart to me — and not what we asked for. We asked for the right to pick up booze and bread in the same place — the government has said fine but you’ll still have to visit two cashiers and wait in line. Heck, I could have gone across to the mall parking lot to the LCBO location, got a bigger selection than in that tiny kiosk they’ll most likely rent and I still would have had to stand in line at a different cashier — where’s the convenience?

Plus we already have Wine Rack and Wine Shoppe locations in grocery stores … and therein lies the rub (as Shakespeare would say). The LCBO already knows those stores are profitable, the “pilot project” is done, there’s no study needed, Vincor and Peller have already done the research (and if you don’t think the LCBO has had a look at those numbers you’ve got another surprise coming) — this is just another way for the LCBO to compete with those two companies — and by extension, the wineries of Ontario. [Ed. Note: just in case you don’t know Peller and Vincor hold the majority of private liquor store licenses in the province — something they acquired before 1988 when free trade came in].

“… and will also create new VQA boutiques for Ontario wines inside five of its own stores.” A novel idea? I don’t think so. They have one in St. Catharines already (of all places), and what do you want to bet the LCBO will place these new “boutiques” where they are most needed like Niagara, Prince Edward County and Windsor where wineries already exist — no better way to compete with your competition than on their own turf.

January 10, 2013

Recapping the awful legal conditions for Ontario wineries

Filed under: Bureaucracy, Business, Cancon, Law, Wine — Tags: , , — Nicholas @ 09:44

In the latest issue of Ontario Wine Review, Michael Pinkus explains why the outcome of the last provincial election dashed a lot of hopes in the Ontario wine industry:

Give an Ontario winery the chance to vent its spleen, especially about the recent provincial election and the future of the wine industry in the province, and you can sit back, pour a glass and listen to what has been described as “years of frustration”. Ontario remains one of the most backward places to make and sell wine and the rules and regulations are just so 1920s (the decade our monopoly was formed). One of the most telling problems about our system is how many winery principals are afraid to go on the record with their comments. “I will ask to remain anonymous as quite frankly I am afraid of LCBO backlash. We are spending more and more time getting to know the LCBO system [as one of the only ways to grow our business] … and I am sure with one phone call the buyers will drop us … without the LCBO we are screwed.” Now, you would think we were discussing selling forbidden information in communist Russia or talking against the state in Stasi-controlled Cold War Germany, instead of discussing election results in a “free” country like Canada. [. . .]

“We are definitely one of the worst regulated wine industries in the world. No other jurisdiction has supply-managed grapes and government-owned monopoly distribution (a system designed to fast-track imported wine into Ontario). In fact, I am hard pressed to think of any other industry in Canada that has this type of anachronistic regulatory burden. Off the top of my mind, a list of products more dangerous than 100% grown Ontario wine that are less regulated: hunting rifles, cigarettes, pseudoephedrine, ATVs, fast food, pointy sticks, etc.” (AWP)

So what can you as a consumer do about this situation? First of all, you can of course become more informed, look into why you can’t order wines from other provinces, question, and why you can’t buy local wines at wine shows or farmers’ markets. Find out why wineries are limited to where they can sell their wines and why only a handful of wineries are making money hand-over-fist because of the ability to blend foreign wine with domestic wine (yet over 98% of wineries cannot use that practice) and why those same wineries can sell wine in off-site stores, while smaller un-grandfathered post-1993 wineries struggle to sell wines in one of three places: their cellar door, restaurants and the restrictive LCBO. Many wineries won’t go on the record against the biggest wine buyer in Ontario (so much for free speech).

[. . .]

Problem One are direct sales to restaurants and other licensee holders (banquet halls, etc). One AWP says OMAFRA (Ontario Ministry of Agriculture, Food and Rural Affairs) puts ridiculous regulations in place. “If I sell a bottle of wine at the winery for $10.00 (including all taxes etc), I get to keep $7.55 of that. If I deliver that wine to a restaurant, I get to keep $4.03, rather than $7.55. Although LCBO has not touched that bottle, I have to pay the equivalent of LCBO warehousing charges. This overhead is not warranted as cost recovery by LCBO, as its only responsibility is the audit of winery reports.”

Remember the LCBO had nothing to do with the sale, yet it makes money on it.

Problem Two is that market share is actually declining. According to numbers obtained by the Winery and Grower Alliance of Ontario (WGAO), Ontario’s market share of wine, in its own market place, is actually declining — although an agreement made years ago stated that the LCBO would work towards a 50% target for Ontario market share compared with imported wine. The numbers show a different story. In 2010/2011, imports had 61% of the market, while Ontario had only 39%, of which 29% were International-Canadian blends (the old Cellared in Canada) … leaving Ontario VQA wine (100% Ontario product) with a measly 10% (WGAO newsletter — August 2011) … Ontario is losing ground in its own market — and that’s not because of low quality wines, that’s because access to market is curbed. Says one winery principal on the subject: “The present situation is choking the wine industry in Ontario” while another says, “it is very apparent that the LCBO is unable or not interested in growing the VQA wine industry.”

November 28, 2012

Is Ontario finally “grown up enough” for private wine stores?

Filed under: Business, Cancon, Law, Wine — Tags: , , , , — Nicholas @ 11:38

In the National Post, David Lawrason talks about the push for changes to Ontario’s Prohibition-era laws regarding the sale of wine in private stores:

The Wine Council of Ontario has flipped the switch on a website called www.mywineshop.ca that allows citizens to create their own virtual wine shop. It is a very bold and clever marketing/lobbying idea. And it is the first time an industry association has initiated a public campaign aimed at creating private wine stores in the province. Gutsy stuff.

In less than a week it has painted an appetite-whetting tapestry of what privatization might look like in Ontario, complete with store themes, stock selections and locations across the province as designed by its citizens. And it is giving the public a very direct way to lobby their local MPPs for change.

One of the big reasons the Ontario wineries and wine writers fear pushing too hard for this modernization and liberalization of our drinking law is that the KGBO LCBO has a long history of retribution against dissenters:

The other theme is fear of LCBO retribution. (Talk about “the elephant in the room”). Even our braveheart John Szabo remarked at the end of his piece that “I hope I don’t get put on an (LCBO) interdiction list for writing this”. An importing agent replying to John’s article said he really wanted to talk about the issue ‘off the record’ as he was concerned that being put on an interdiction list would put him out of business.

This fear of the LCBO, whether justified or not, is another compelling reason to re-think the government monopoly. The fear shouldn’t exist within an otherwise free and democratic society; but it does. I have been writing on wine for over 25 years and during that time I have been involved in thousands of conversations with wineries, importers and consumers on shortcomings of the current system. Only once did an individual agree to be quoted.

When your livelihood depends on access to a product controlled by a monopoly, you dare not get on the wrong side of the powers-that-be controlling that monopoly. They may not break legs or leave horse’s heads in the beds of critics, but they can directly freeze the critics out of their profession. An excellent way to limit dissent. Just the hinted threat can be enough to make a would-be critic decide to toe the line and shut the hell up.

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