CBC's Neil Macdonald on the LCBO

[tupalev]

tupalev: For the record I own zero MJ albums, have none of his songs on my comp and am not a fan of his style of music, but hey, if that comment made you feel good inside congratulations. Cheers.

Just having a little fun Dragon...you can dish it out here good enough, so take a little dig once in a while, ok? Thanks for bolding my name though, that really does make me feel pretty good!

[JerCraigs]

However is the LCBO retail arm didn't exist it would dramatically increase the amount of profit garnered from the sale of alcohol, and it's not as though private retailers would be exempt from having their alcohol taxed, and then the sales taxed again as part of income taxes, etc. My problem isn't with the existence of the LCBO, it is with its retail arm only. The retail aspect of the LCBO is inefficient and reduces the overall amount of profit that could be fed into our social services

Of all the flaws of the LCBO I do not think you can make a particularly good case that inefficiency is one of them. A single purchaser - means that our prices are probably better than just about anywhere pre-tax.

Can you explain how you are envisioning that the profit from alcohol will go up without also increasing the cost of buying it?

Current system:
Price = Product Cost + tax + LCBO markup
Government Profit = Price - product cost - LCBO staff costs + tax

Government gets the tax + the profit, I'm not sure how the mark up works or who gets it.

new system:
Price = Product cost* + tax + LCBO markup& - store staff costs - Store Profit

Government Profit = Price - staff - store profit - LCBO admin costs + tax

* (which may go up if theres not a single buyer negotiating price now)
& (unless you assume this will change/go away?)

Assuming there is still a government middle man of some kind then doesn't adding private stores simply add a layer of inefficiency?

All of which means the producers may have to add more staff to deal with the increased # of contacts (or maybe not I don't know).

That probably makes no sense but anyways... I don't think an efficiency gain is likely.

[Belgian]

What (to me) seems inefficient is trying to orchestrate hundreds of Ontario stores to sell exactly the same stuff, regardless of local demand, which forces ALL stores to carry a baseline expense of slower-selling stock, and probably selling less product overall than if they had more of what people liked and could even request.

Inefficient is spending money to elaborately select & organize an entire conceptually themed program of seasonal beer releases, ordering a tiny amount of them, releasing them in an amazingly unreliable fashion, and snatching them away a week later when they "just ran out" and oops, you missed them (ha ha.)
_

Pricing would fluctuate with private liquor sales, with some stores charging excessive prices but elsewhere pricing would also adjust downward to what value-conscious people are willing to pay. Competition and the desire to sell product to repeat customers makes this inevitable.

No way should new private stores or existing bars be forced to pay non-wholesale, LCBO 'shelf' prices - everything at bars is double the necessary cost because of this, and it creates an artificial lack of competition for the LCBO. The LC cannot remain the only entity with the privilege of paying wholesale. If bars and all stores here will ever all be paying the same wholesale cost, then store and bar pricing will all be naturally competitve, keeping prices reasonable.

I was surprised at Ginger Man NYC how close some of the bottle prices were to store retail, they were sometimes very close. Sure a few were much more costly than retail, but that's up to the customer to recognize as less competitve, so in those cases the customer may hold off on that bar purchase and the retail store may get his money instead. The bar owner still sells a volume of good value beer to this customer.

[icemachine]

Can you explain how you are envisioning that the profit from alcohol will go up without also increasing the cost of buying it?

Current system:
Price = Product Cost + tax + LCBO markup
Government Profit = Price - product cost - LCBO staff costs + tax

Government gets the tax + the profit, I'm not sure how the mark up works or who gets it.

new system:
Price = Product cost* + tax + LCBO markup& - store staff costs - Store Profit

Government Profit = Price - staff - store profit - LCBO admin costs + tax

* (which may go up if theres not a single buyer negotiating price now)
& (unless you assume this will change/go away?)

Assuming there is still a government middle man of some kind then doesn't adding private stores simply add a layer of inefficiency?

All of which means the producers may have to add more staff to deal with the increased # of contacts (or maybe not I don't know).

That probably makes no sense but anyways... I don't think an efficiency gain is likely.

Why would there be an LCBO markup on a private retailer? I think what we would see is

new system = Product cost* + tax + LCBO fee (testing/warehousing if required) + store staff costs + Store Profit = Final Product cost.

It would probably result in slightly lower costs for macro beers and wines, and slightly more expensive premium beers and wines, but with greater choice for consumers.

Government would still get its taxes, same as they currently do. It would likely loose a small portion of the 400 million profit the LCBO stores currently generates. I am assuming a private parallel system similar to B.C.'s

[The_Jester]

[quote="DragonOfBlood...However is the LCBO retail arm didn't exist it would dramatically increase the amount of profit garnered from the sale of alcohol..[/quote]

Don't get this. If private companies are selling booze, the province still gets the tax $$$, but loses the markup, no? Are you suggesting that the private companies would have "dramatically" more profit than the LC? 'Cause that ain't good either!? That means booze prices go up.

[esprit]

Gentlemen and ladies...look to Alberta. They rid themselves of unionized eomployees, real estate and leases and they only have a handful of people now who just count money. They went from 200 stores to over 600 stores demanding large amounts of money for existing stores and licenses for new stores. They charge a flat per case mark-up on all products unlike the LCBO's % charge..lower-priced products are sometimes more costly than in Ontario but higher priced products are not...for the most part, this small province has a competitive retail environment for alcohol and with far fewer people, a much better selection than is available in Ontario. The LCBO is not efficient...their ridiculously expensive stores and overpaid staff make it so. Alberta makes more today from alcohol sales than it did when it owned all the stores...it's a fact Jack! And last time I was in Edmonton I didn't trip over too many drunks on the street...not something I can say about Toronto. Having said that, just got back from 2 weeks in France where my local epicerie would sell me beer, wine & booze at 7AM in the morning...again, didn't trip over a single drunk in Bordeaux or Paris. We have governments which wish to control our every move as well as our morals....they should get of this business as they have no business being in this business.
On my last trip to Calgary I visited a private retail store (as they all are) and it was a former government store. There was a young lady hauling out a skid of product on a manual lift truck to fill shelves and she came the cash when I was ready to check out. It was Thursday afternoon...I asked here where the other employees were and she said she was it...2 more people would show up for the evening when it got busier...asked her what she was paid...minimum wage like pretty much any untrained, unskilled retail worker in the world...she didn't have a problem with it as it was a job....enough said.
...but then again, this only my opinion and I could be wrong.