February 14, 2013
Microsoft Excel: the most dangerous software on Earth?
I’ve made this case in conversation several times — usually after having to forensically determine just why someone’s spreadsheet produced an unlikely answer — the greatest strength of spreadsheets is also their greatest weakness. Anyone who’s built a spreadsheet knows how easy it is to make a mistake, and how hard that mistake can be to detect after the fact. Spreadsheets are free-form: you can set up relationships on the fly, pull data from one place to plug into a different formula somewhere else. It’s literally empowering to gain that much control over your data without having to learn a full programming language.
But that flexibility and power comes at a cost: there’s no built-in error checking of your assumptions. Oh, it’ll alert you to practical problems like mis-matched data types or mechanical errors in your formula, but can’t tell you whether the operation you’re attempting makes sense. The program can’t read your mind and can’t sanity check your work.
Do a spreadsheet for your family budget and you’ll almost certainly make a minor error or two.
Make a set of inter-linked spreadsheets and you probably double the chances of error for each new spreadsheet in the set.
Make a set of inter-linked spreadsheets that require manual copy-and-paste updates and you exponentially increase the chances of error.
Then, make that manually updated set of spreadsheets have a real-world impact on vast amounts of money:
To give you and idea of how important this is here’s a great tale from James Kwak:
The issue is described in the appendix to JPMorgan’s internal investigative task force’s report. To summarize: JPMorgan’s Chief Investment Office needed a new value-at-risk (VaR) model for the synthetic credit portfolio (the one that blew up) and assigned a quantitative whiz (“a London-based quantitative expert, mathematician and model developer” who previously worked at a company that built analytical models) to create it. The new model “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another.” The internal Model Review Group identified this problem as well as a few others, but approved the model, while saying that it should be automated and another significant flaw should be fixed.** After the London Whale trade blew up, the Model Review Group discovered that the model had not been automated and found several other errors. Most spectacularly,
“After subtracting the old rate from the new rate, the spreadsheet divided by their sum instead of their average, as the modeler had intended. This error likely had the effect of muting volatility by a factor of two and of lowering the VaR . . .”
To translate that into the vernacular, the bank, JP Morgan, was running huge bets (tens of billions of dollars, what we might think of a golly gee gosh that’s a lot of money) in London. The way they were checking what they were doing was playing around in Excel. And not even in the Masters of the Universe style that we might hope, all integrated, automated and self-checking, but by cutting and pasting from one spreadsheet to another. And yes, they got one of the equations wrong as a result of which the bank lost several billion dollars (perhaps we might drop the gee here but it’s still golly gosh that’s a lot of money).
And it’s not just JP Morgan: every financial firm, every bank, every brokerage uses Excel (or another spreadsheet program). Multiply JP Morgan’s experiences by the number of companies to get a rough idea of how much is at risk from un-audited (possibly even un-audit-able) financial models running on spreadsheets.
February 12, 2013
Rules for the masses, but not for the bureaucratic elite
The European Union’s rules on gender equality appear to apply to everything in the EU except the EU’s own bureaucracy:
Part of the aggrandised myth EU institutions like to propagate about themselves is that they are pioneers in promoting tolerance, gender equality, and diversity in the workplace. Read the promotional literature and you will find effusive descriptions of liberal workplace revolutions and the achievements of Soviet-style five-year plans. Yet, like the Soviet Union, there is an embarrassing mismatch between the trumpeted idealism and the reality.
Since its creation in 1967, DG Employment (Directorate-General for Employment, Social Affairs and Inclusion at the European Commission) has nominally been responsible for fair employment conditions in the European Union. Rising levels of workplace equality in member states (for which DG Employment take an undue amount of credit) are woefully incongruous with the situation of EU civil servants. Women occupy 19 per cent of senior management positions; compare this with the often decried 35.9 per cent of women in the top levels of the UK civil service.
Yet it is figures like the UK civil service’s that prompt EU proposals on affirmative action. One set of proposals has recently been discussed in the European parliament, for example, which if passed will introduce gratuitous and complicated legislation across the continent. That bureaucracy breeds bureaucracy is unsurprising, but it is hard to take seriously calls for equality from an institution endemically opposed to the concept.
The only European agency where women in management positions outnumber men is in the Institute for Gender Equality (the administration is 95 per cent female). Incontrovertibly, out of all the agencies, this is the one with the strongest prerogative for tackling equality in its workforce. But the message is clear: shout about equality to the world and create a dummy institute to anyone holding a mirror up to the EU bureaucracy itself. So far, the commission is on its fifth ‘action programme’ to tackle inequality within its institutions, taking the same form as every one that has come before it; vague guidelines forgotten until lobby group pressure becomes too annoying.
February 11, 2013
Senate report calls for tariff cuts
In the Financial Post, Terence Corcoran looks at the good and not-so-good aspects of a recent Senate report on the reasons Canadians pay so much more for goods than Americans (even when the goods are identical and the currencies are trading at par):
Retail prices in Canada, seemingly across the board, are higher. Even with the Canadian dollar at par, the price of everything from running shoes to televisions and Chevy Camaros to books is said to be above U.S prices. One bank report once put the Canada-U.S. price gap at 20%.
Somebody’s gotta do something, everybody agrees. Enter the Senate committee with one of the most hard-nosed, market-driven overviews of how and why Canadians pay more for goods at retail. The report dodges and fudges some key issues, especially farm product supply management, which was seen by the committee and the retail industry as too politically hot to handle.
[. . .]
Even in this, however, the committee pulls its first punch. The recommendation to “review” such tariffs — watery phrasing in itself — also suggests “keeping in mind the impact on domestic manufacturing.” Sorry, folks, but you can’t have it both ways. Tariffs are protectionist devices for manufacturers that consumers pay for. If you want to reduce the price to consumers, the $3.9-billion in protection for manufacturers has to go. End of discussion.
What makes The Canada-USA Price Gap even more valuable is its compact insights into the many causes of higher retail prices in Canada. The economy is a complicated and often unfathomable series of market and price relationships beyond the power and even understanding of policy makers. The report recognizes that fact time and again.
February 3, 2013
Bureaucracy and the would-be small business owner
It took me less than a day to start my own business — and it was all done online. We have it good: Canada is at the top of the league table for ease of starting a new business. Americans don’t have it as easy as we do:
Last week, having read my own writing about how it’s cheaper to buy a house than rent one in most markets, I decided to take my own advice. My wife and I bought a new place, and instead of selling our old condo, we’re going to rent it out. And thus I became a small-business man.
Or, rather, I’m becoming one. Entrepreneurship — even on the smallest and most banal scale — turns out to be a time-consuming pain in the you-know-what. My personal inconveniences aren’t a big deal, but in the aggregate, the difficulty of launching a business is a problem and it may be a more important one as time goes on.
[. . .]
The striking thing about all this isn’t so much that it was annoying — which it was — but that it had basically nothing to do with what the main purpose of landlord regulation should be — making sure I’m not luring tenants into some kind of unsafe situation. The part where the unit gets inspected to see if it’s up to code is a separate step. I was instructed to await a scheduling call that ought to take place sometime in the next 10 business days.
Not that I expect your pity. I don’t even pity myself. Going through the process, I mostly felt lucky to be a fluent-English-speaking college graduate with a flexible work schedule. But the presence of a stray pamphlet offering translation into Spanish, Chinese, or Amharic seemed like it would be only marginally useful to an immigrant entrepreneur. A person who needs to be at her day job from 9 to 5 would have a huge problem even getting to these offices while they’re open.
The bureaucratic hassles of entrepreneurship turn out to vary pretty substantially from place to place. The World Bank has a fairly crude measure of how easy it is to start a business in different countries and ranks the United States 13th. North of the border in Canada (ranked third), there’s typically just one “procedure” — a paperwork filing, basically — needed to launch a business. In America, it takes more like six.
February 1, 2013
Nicely played, Samsung
At Techdirt, Timothy Geigner tries to talk about something to do with football or advertising:
It’s almost that time of year again, when many of us lesser beings will gather together to watch super-human men on all manner of PEDs and deer antler urine sprays smack each other around while an oblong leather ball sits somewhere in the background. We’ll leap for the pizza and chili like salmon during mating season while, between whistles, obligatory commercials with Avatar-like production budgets glow at us. That’s right sports fans, it’s [editor redacted] time!
Wait, hey! What the hell? I said it’s [editor redacted] time! Oh, come on. I can’t say [editor redacted]? Fine, what about a euphemism, like [editor redacted]? No, can’t say that either? Maybe [editor redacted]? Damn it, this is stupid. I’m talking about something that rhymes with “Pooper Hole” (heh, got you, editor!).
Fortunately for our entertainment sensibilities, Samsung decided this year to combine a distaste for trademark stupidity and our concept of advertising being content in this gem of a spot.
January 30, 2013
“The only people [DRM] annoys are the ones who have [acquired] legal copies”
At Techdirt, Glyn Moody explains why the attempt to add DRM to the HTML5 standard is doomed to failure:
You would have thought by now that people would understand that DRM is not only a bad idea, but totally unnecessary: Apple dropped DRM from music downloads in 2009 and seems to be making ends meet. Despite these obvious truths, the stupidity that is DRM continues to spread. Here, for example, is a particularly stupid example of DRM stupidity, as revealed by Manu Sporny:
A few days ago, a new proposal was put forward in the HTML Working Group (HTML WG) by Microsoft, Netflix, and Google to take DRM in HTML5 to the next stage of standardization at W3C.
After all, this is exactly what Web users have been crying out for: “just give us DRM for the Web, and our lives will be complete….”
[. . .]
That clearly implies that when people are not sharing their own content with family and friends, then they are indeed adversaries:
This “user is not an adversary” text can be found in the first question about use cases. It insinuates that people that listen to radio and watch movies online are potential adversaries. As a business owner, I think that’s a terrible way to frame your customers.
Thinking of the people that are using the technology that you’re specifying as “adversaries” is also largely wrong. 99.999% of people using DRM-based systems to view content are doing it legally. The folks that are pirating content are not sitting down and viewing the DRM stream, they have acquired a non-DRM stream from somewhere else, like Mega or The Pirate Bay, and are watching that.
This is the fundamental reason why DRM is doomed and should be discarded: the only people it annoys are the ones who have tried to support creators by acquiring legal copies. How stupid is that?
January 28, 2013
Let’s get real reform at the CRTC: eliminate “mandatory carriage” altogether
In the Toronto Star, Michael Geist calls for the CRTC to stop the “mandatory carriage” provision that forces cable providers to carry certain channels on their “basic” packages:
Canadians frustrated with ever-increasing cable and satellite bills received bad news last week with the announcement that the Canadian Radio-television and Telecommunications Commission will consider whether to require cable and satellite companies to include nearly two-dozen niche channels as part of their basic service packages. If approved, the new broadcast distribution rules would significantly increase monthly cable bills with consumers forced to pay for channels they may not want.
Two issues sit at the heart of the broadcast distribution rules. First, whether the CRTC should grant any broadcaster mandatory distribution across all cable and satellite providers such that all subscribers are required to pay for them as part of their basic packages. Second, in the absence of mandatory distribution, whether broadcast distributors should be required to at least offer the services so that consumers have the option of subscribing.
[. . .]
While the financial benefits for broadcasters are enormous, the policy represents a near-complete elimination of consumer choice for the channels at issue. Rather than convincing millions of Canadian consumers that their services are worth buying, the broadcasters need only convince a handful of CRTC commissioners that their service meets criteria such as making “an exceptional contribution to Canadian expression.” That is supposedly a high bar, yet it is surely far easier than convincing millions of people to pay for your service each month.
Last year, CRTC chair Jean Pierre Blais emphasized that the Commission’s top priority was to “put Canadians at the centre of their communications system.” The mandatory distribution rules do the opposite. Rather than focusing on consumer interests and choice, the rules place broadcasters at the centre of the communications system by offering up the prospect of millions in revenue without regard for what consumers actually want.
There are few, if any, broadcasters that can be considered so essential as to merit mandatory distribution. Niche cultural broadcasters have a myriad of distribution possibilities and should be forced to compete like any other content creator or distributor. In fact, even broadcasters that position themselves as “public services” can often be replicated by Internet-based alternatives.
I always find it interesting how cable providers usually manage to group their offerings so that you can’t get the group of channels you actually want in the same package. I doubt that this would change even if the regulator allowed the change from “must carry” to “must offer”, however: there’s too much potential profit to the cable companies in crafty packaging strategies. You’ll almost certainly not see the opportunity to pay for just the individual channels you want, as that would be too consumer friendly (and, we’re assured by cable company reps, would kill off lots of niche channels because they wouldn’t get enough subscribers).
Of course, if a TV channel can’t attract enough subscribers, that’s usually a pretty strong economic signal that they shouldn’t be broadcasting anyway.
January 24, 2013
Is the media’s love affair with “extreme weather” just an elaborate insurance scam?
Terence Corcoran in the Financial Post:
All it takes these days is a little normal January Canadian cold spell and all of a sudden the nation is plunged into a frenzy of chatter about “extreme weather.” The CBC led the way, aided and abetted by climate alarmists in the Canadian insurance industry, with help from an apparently leaked data point from an Environment Canada report that supposedly will show that Canadian winters are now 3.2C warmer than they used to be. Get it? It’s really cold, but that’s because of climate change, which is making Canada’s winters warmer.
If you find this confusing, well, get used to it. That may even be part of the objective, which, judging by the sudden extreme flood of media reports, seems to be keep Canada’s population agitated about global warming, a cause that has so far failed to ignite voters.
If the theory of climate change doesn’t grab people, maybe “extreme weather” will. The media certainly love it. All News Radio in Toronto now has an “Extreme Weather Centre” that rouses itself every time weather happens — snow storms, cold spells, heat waves, rain, temperature anomalies. Alarmist weather forecasting and reporting is a media staple, but the concept now appears to have reached a new level of hypedom.
[. . .]
The insurance angle was cleverly juxtaposed with a leaked bit of data from an Environment Canada report that will not be released until May. It supposedly will show that Canadian winter temperatures have risen 3.2C since Canada began keeping systematic records in 1948. As a standalone bit of data, not much can be made of it. Even less can be made of it for popular consumption if current temperatures are approaching record cold. How can we have record warm and record cold at the same time?
That’s where “extreme weather” comes in. It’s also where the Canadian insurance industry, through a front group called the Institute for Catastrophic Loss Reduction, is actively promoting extreme weather as a major vehicle for business and policy development. With offices in Toronto and the University of Western Ontario, the institute’s membership is almost exclusively insurance companies, its eight-member board is stacked with five insurance executives, and the executive director is Paul Kovacs, is former head of the Insurance Bureau of Canada.
Sun TV’s about-face on “making us all pay for it”
Andrew Coyne makes some good points about Sun TV’s hypocrisy, he could have made a stronger case for getting the CRTC entirely out of the business of deciding what Canadians can watch on TV:
When the Sun News Network first loomed on the national horizon two years ago, before it had even begun broadcasting, sections of the Canadian left reacted as they do to most things: with hysterics.
A petition was launched — from the United States, as it happens — demanding the CRTC deny Sun the licence it sought, claiming “Prime Minister Harper is trying to push American-style hate media onto our airwaves, and make us all pay for it.”
[. . .]
Well, that was then: much has happened since. Teneycke lost his job, briefly, after questions were raised about how the bogus signatures found their way onto the petition. The network has mostly avoided peddling hate, unless you count that business about the Roma. And, less than two years since its launch, Sun is back before the CRTC, asking to be put on basic cable.
Well, asking is not quite the word. The network, never shy about self-promotion, seems almost an infomercial for itself these days. Network personalities have been drafted to explain the urgent public necessity of making Sun mandatory carriage, that is of taxing everyone with cable or satellite service. Viewers are directed to a website, where they can send an email to the CRTC in support of its application.
[. . .]
But if fairness is what we’re after, there’s another way to go about it. Rather than give every channel an equal chance to stick their hands in the public’s pockets — to force viewers to pay for channels they would not pay for willingly — it is to grant that privilege to no one: to leave viewers free to decide whether or not to subscribe to each channel, on its own merits. And yes, in case anyone’s wondering, that includes the CBC. (Notwithstanding the princely $500 a pop the corporation pays me to bloviate on At Issue, I have been rash enough to argue, publicly and often, for defunding the CBC.)
For goodness sake, it is 2013. The circumstances that might once have justified such regulatory micro-managing, in the days when there were only three channels and barely room for more on the dial, are long gone. Then, a new or special-interest channel might have made the case for market failure: since it was impossible for viewers to pay for channels directly, there was a built-in bias to the biggest audience, and the programming that tailored to it.
January 20, 2013
Corporate welfare — it’s the American way
Sheldon Richman on the amazingly inefficient US tax code and some of the ways it got that way:
When Congress and President Obama came up with their beyond-the-last-minute deal to put off addressing the coming fiscal crisis, The Wall Street Journal turned the spotlight on a little-noticed, yet too typical aspect of Washington’s machinations: “The bill’s seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout,” the Journal reported.
So a bill that was represented as the first steps toward fiscal responsibility (try not to laugh too hard) contained billions of dollars in corporate welfare. And it was a bipartisan affair.
[. . .]
Manipulating the tax code to benefit particular interests has obvious appeal for politicians — it’s a source of power and influence — and a code that did not permit such manipulation would be much less attractive to them. Outright cash subsidies from the taxpayers, while not unheard of, smacks too much of cronyism and is more likely to alienate taxpayers. But complicated exceptions written into the tax laws can be presented as creative governance on behalf of the public interest. But it is cronyism as offensive as outright subsidies.
[. . .]
Corporate welfare is not primarily about lowering taxes. That would be a worthwhile goal, of course, and could be achieved simply by slashing tax rates and simplifying the code. But when taxes are lowered selectively by writing complicated exceptions into the law, the goal is to bestow privileges on cronies, not to reduce the burden of government on all. Corporate welfare, among its many sins, violates equal protection under the law.
January 18, 2013
For your “protection”, some new smartphones are configured to hide “mature” content
Willard Foxton discusses some eye-raising configurations on new smartphones in the UK:
When you get a new phone, there’s a very good chance it comes with automatic filters enabled. For example, it’s very common for you have to explicitly request the ability to call premium-rate phone lines. This is long established, but now, a sinister new trend has started, whereby phone providers are automatically blocking access to certain websites for “mature content”, rather than “adult content”.
Mobile provider 3UK is blocking access to political satire as “mature content”; Orange is preventing access to feminist articles as “mature content” through its automatically applied Orange Safeguard service; several providers are blocking perfectly legitimate sites like Pink News because they deal with gay issues, or Channel 4’s excellent Embarrassing Bodies website, because of the graphic discussion of body parts and sexuality.
This was bad enough when these services were blocking porn (I for one wholeheartedly support the right of teenagers to watch smut on their iPhones), but now it seems overzealous providers are blocking access to anything a Catholic Bishop might consider for adults only. This carries not only the problem of “overblocking” caused by lazy filter design — notably, it’s hard to get your website read if it refers to Middlesex or Scunthorpe — but also as these filters are automatically applied, most people don’t even realise they are losing access to certain parts of the web.
January 16, 2013
The 9 iron-clad rules of business
Rosabeth Moss Kanter has the nine rules many businesses follow:
- Be suspicious of any new idea from below — because it’s new, and because it’s from below. After all, if the idea were any good, we at the top would have thought of it already.
- Invoke history. If a new idea comes up for discussion, find a precedent in a an earlier idea that didn’t work, remind everyone of that bad past experience. Those who have been around a long time know that we tried it before, so it won’t work this time either.
- Keep people really busy. If people seem to have free time, load them with more work.
- In the name of excellence, encourage cut-throat competition. Get groups to critique and challenge each other’s proposals, preferably in public forums, and then declare winters and losers.
- Stress predictability above all. Count everything that can be counted, and do it as often as possible. Sweep any surplus into master accounts, and eliminate any slack. Favor exact plans and guarantees of success. Don’t credit people with exceeding their targets because that would just undermine planning. Insist that all procedures be followed.
- Confine discussion of strategies and plans to a small circle of trusted advisors. Then announce big decisions in full-blown form. This ensures that no one will start anything new because they never know what new orders will be coming down from the top.
- Act as though punishing failure motivates success. Practice public humiliation, making object lessons out of those who fail to meet expectations. Everyone will know that risk-taking is bad.
- Blame problems on the incompetent people below — their weak skills and poor work ethic. Complain frequently about the low quality of the talent pool today. If that doesn’t undermine self-confidence, it will undermine faith in anyone else’s ideas.
- Above all, never forget that we got to the top because we already know everything there is to know about this business.
Yep, several of the companies I’ve worked for followed most or all of these rules … to suppress creativity and innovation. Worked a treat, too.
January 11, 2013
In praise of mergers and takeovers
In The Register, Tim Worstall points out that most mergers lose money, but that they’re good for the economy anyway:
The final one of the four is the vital part that takeovers play in the clean up of the economy’s failures. Take a company that goes bust. The whole point of bankruptcy proceedings is to make sure that its assets aren’t then left, orphaned, or chained to an unpayable debt. The idea is to get them off into someone else’s hands where they might be put to good use. This is true of contracts, or the workforce, of the land and any other asset. It might be that the machinery is worth most as scrap. Or the factory is worth most as a supermarket. Or it could be that the OS coders and their desks would be best put to writing games: but under different management.
And it’s this last part of the whole system that our economists think is the most important. When failure happens, the vital thing is to clean up the mess and quickly. Don’t leave potentially useful assets orphaned but auction them off and get them working again. The price that is realised doesn’t matter very much at all: from the view of the entire economy, getting people and assets back to work pronto is the vital part. So important is this that we’re urged to overlook all of the above problems with takeovers and mergers to allow this part of it to function as efficiently as possible.
Yes, most takeovers lose money for the shareholders of the company doing the buying. This is often because the interests of the management diverge from those of those owners. Similarly, many companies are kept running longer than they should be for those selfish management reasons. But we put up with all of that (although try to constrain it) so that the scavenging upon the assets of the bankrupt can be as efficient as possible. For this is the very heart of the success of capitalism: Not how the successful make profits, but how the system deals quickly and cleanly with failure.
January 10, 2013
Recapping the awful legal conditions for Ontario wineries
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.”
