Well, here's a different take

[Kel Varnsen]

The LCBO is also great for smaller craft breweries that get their products into stores. Hops & Robbers and Augusta Ale would not get the same distribution with privatization. Yes, we as consumers would probably benefit, but that's not the same as saying that breweries would benefit. There would have to be other changes to our liquor laws in order for them to fully realize the potential of any privatization.

How much does LCBO distribution benefit NAC when they still have to drive around convincing store managers at LCBO outlets across the province to carry the brands they represent and own? Would it be any easier to convince an LCBO manager to add a new SKU than a convenience store owner?

I think it would be easier to convince a LCBO store manager. I mean yes the store manager wants the store to be profitable, but if he orders a bunch of Black Oak from NAC, it's not like he is spending his money to order it, so he has a lot less to lose if the product doesn't sell. Where as with the convenience store owner you actually have to convince him to spend his money to order a product that might not sell as well as the product already on the shelf.

[georgemilbrandt]

I mentioned this last year, after I made this deputation to the government but it seems topical again:

Liquor Laws

The changes that are truly needed

The Ontario government recently announced some changes to the regulations that will make life a little easier for outdoor festival promoters, resort managers, and restaurants considering summer patios. While these changes are welcome they don't address the issues that really matter. If we are to truly leave the era of prohibition in the last century we have to treat adults like grown-ups when it comes to the consumption of beer, wine, and spirits.

C'est What was recently invited by the government to comment on potential changes to the liquor laws. This is a summary of what we had to say:

Change #1: Craft Brewers’ Access To Market

Locally owned and operated breweries do not have equitable access to the marketplace. They must rely on a 100% foreign-owned company (The Beer Store) that is owned by their competitors to sell their products. Prohibitive listing fees at The Beer Store discourage widespread distribution of Ontario breweries offerings. It costs well over $100,000 just to get a product listed province-wide. The alternative is the LCBO, which does not have the infrastructure to properly warehouse and sell the typically all-natural, unpasteurized products that local breweries produce.

The idea of allowing beer and wine sales at “corner stores”, as is the case in our neighbouring province, has many supporters. However, detractors point out that there is a risk of a loss of control over preventing sales to under-age age and intoxicated people and is a business for which they are not trained or licensed.

The solution to unlocking the economic potential of Ontario’s beer industry is largely already in place. There is an existing network of nearly 17,000 outlets that are licensed for the sale of alcohol, Ontario’s restaurants and bars. Allowing these outlets to re-sell wine and beer that is currently delivered direct from the manufacturer under the same rules as tied-house off-sales would open up the marketplace to local producers. It would also provide a needed boost to the beleaguered hospitality industry while keeping the distribution of alcohol in responsible hands.

Proposal:

Allow take-home sales of Ontario beer and wine through licensed bars and restaurants.

Benefits

Equitable access to market for Ontario producers.

Economic benefits for the producers, hospitality industry, their employees, and the provincial economy. The dollars spent in Ontario will stay in Ontario.

Change #2 Wholesale Pricing

Ontario licensees have long been at a disadvantage internationally because they largely pay the same price for the products they re-sell as the end consumer. This pricing structure encourages the consumer to stay at home and restricts the positive social and economic benefits of going out to a restaurant.

Increased sales tax revenue from the value added sales price at licensed establishments would far exceed the reduction in LCBO revenue on the sale of the wholesale product.

Proposal

Wholesale pricing to bars and restaurants from the LCBO and direct-to-licensee-delivery manufacturers (Ontario beer and wine).

Benefits

Increased economic activity in the hospitality industry, more jobs, more tax revenue.

Change #3: Legal Drinking Age

The legal drinking age should be the same as the Age Of Majority, eighteen.

The age was raised in 1978 “to remove liquor from high schools” when high school included grade 13. Now that grade 13 is no longer in the high school curriculum, this reasoning no longer is valid.

Especially in light of recent changes in alcohol and driving legislation, there is no “public good” to be served by restricting the rights of adults who are eighteen years old. If you can vote, serve liquor, and die for your county in armed conflict you certainly should have the right to have a glass of wine with dinner.

Proposal

Legal drinking age set the same as Age Of Majority.

Benefits

Aligns the right to serve liquor with the right to consume it. It is the fair thing to do.

[chris_schryer]

I only just caught up on this thread now, but I'll weigh-in with some thoughts.
First, from way back regarding distribution: A brewery can choose whether to use the LCBO distribution system, or delivery direct to the stores. Obviously there is a cost involved either way, but a small brewery in Toronto with a staff of four people, but enough liquid to sell in Ottawa, probably wants to use the LCBO system. A big brewery with multiple trucks and drivers can probably handle it on their own. TBS distribution is totally separate. While I know TBS is "easy" (if you have the money) to get your product into, I find it so completely offensive that brewers will pay their competition to (badly) sell their products I won't say any more about it here. Jordan, as far as management at the LCBO goes, it actually varies (having done this exact job for a few months this past winter/spring). Some stores you know the beer person/manager over a long term, some stores change management/staff monthly (it seems). In a mom n pop convenience shop, you would likely be selling right to mom n pop, who would only change when they sell or die. Where they would be the same, is that in the vast majority of cases, neither sides knows or cares much about the beer. They want something that sells well. They don't care how long it was in a bourbon barrel, or how many kiwi hops it has. They want to hear "you will sell eight flats per week, guaranteed".

I think it's obvious that if we relied on convenience/grovery stores for beer distribution, many micros would be screwed. But as noted, I don't think anybody believes the LCBO would be shuttered the day after private sales came in. I can't imagine them not running the systems side by side, at least for a few years, if not indefinitely.

I find it funny that nobody has brought up the province in this argument. One of the biggest reasons the only private sales we have in the province are TBS, or at the brewery, is because the government makes a shitload of money from the sales. Not just taxes, but profit. The LCBO (so including wine, spirits, etc) sold $4.55 billion in product last year, of which Ontario got $1.55 billion. Let's pretend for a moment that you can break that number into thirds (beer, wine, spirits), what reason can you give them to take $1billion annually, and give a big chunk of it to private retailers? They would make the same in tax, whether the product is sold at the LCBO or Mac's Milk, but all the profit goes to the private seller, and only a bit comes back in business taxes.

I'm all for having beers/wine available at private stores (though I would expect them to look more like TBS than the LCBO in terms of big-brand coverage, save for a precious few, a la Montreal), but you're going to have to find a few hundred million somewhere to make up the balance. Until we do that, it's a non-starter.

[JerCraigs]

The LCBO (so including wine, spirits, etc) sold $4.55 billion in product last year, of which Ontario got $1.55 billion. Let's pretend for a moment that you can break that number into thirds (beer, wine, spirits), what reason can you give them to take $1billion annually, and give a big chunk of it to private retailers? They would make the same in tax, whether the product is sold at the LCBO or Mac's Milk, but all the profit goes to the private seller, and only a bit comes back in business taxes.

In which case one's interest as a consumer of alcohol may be in conflict with their interests as a taxpayer... If prices go up, AND we have to start paying more taxes as a result... well that's not awesome!

[Belgian]

Chris and George,

It's scary that we're relying on archaic, long-extinct justifications for alchol policy, and that the province is relying on exclusive sales of alcohol for money it needs to function. Not a pretty picture.

Also in honesty, would wholesale buying for bars really create lower prices for customers? Ontarians are now used to overpaying. With soaring gas prices the official excuse for not lowering painful gasoline taxes was that the re-sellers would pocket the savings (not that this was proven to be true...)

[Tapsucker]

It's scary that we're relying on archaic, long-extinct justifications for alchol policy,

Won't SOMEBODY please think of the children!

Also in honesty, would wholesale buying for bars really create lower prices for customers? Ontarians are now used to overpaying. With soaring gas prices the official excuse for not lowering painful gasoline taxes was that the re-sellers would pocket the savings (not that this was proven to be true...)

Good point. I can't think of a single province or state where there are no state sales taxes and the consumer prices are actually lower. In many cases, prices are higher obviously benefiting the supply chain, not the consumer or the treasury.

[chris_schryer]

I think "scary" is subjective regarding the province's dependence on liquor sales. I'm about to weigh in to a fight I really don't have the depth of experience or knowledge to justify, but on the Internet we're all experts, so here goes:

My "perfect solution" is thus. The LCBO continues to purchase all liquor in the province (either actually, or technically through licensing via AGCO for breweries/wineries/distillers to sell their product on-site). But the LCBO sells the product to any licensed retailer, including themselves at a fixed price. The retailer is then allowed to set any price on the product they like. The LCBO retail will be at an advantage, because of their existing infrastructure, but small retailers will be able to focus their market on, say, craft beer, or local wines only. They also can order non-listed brands through agencies or directly from the producer, and pay the licensing the same way a bar does right now.

Grocery stores would likely get on board with big brands, specialty ones like pusateri's (which my phone just auto-corrected to listeria, funny enough) might deal with smaller breweries and seasonal stuff. A few new private shops or existing convenience stores would become craft beer Meccas. Many convenience stores would just become easy places for folks to grab their six of bud or bottle of fuzion or whatever, like they are with soda, etc.

semi-related, the LCBO would start to use its enormous buying power to create more profitability for everybody, by better price negotiations.

While I'm further left than right, I think it's a hangover from a highly Prohibitionist culture that the government regulates liquor the way they do. Regardless of the why, our way of life is heavily financed by it, so without a different source of income or a significant change in provincial services, it's not something we can get away from anytime soon. Simply "privatising" and selling all the LCBO assets to one or many purchasers would give us a big shot in the short term, but would leave us on a difficult position long-term.


I guess this puts me in the "work with" (aka change moderately) group as opposed to the "get rid of" group when it comes to the LCBO.

[chris_schryer]

Oh, and I generally agree about wholesale cost. Not many bars would lower their prices if the beer suddenly got cheaper. I know at Castro's we have a fixed alcohol cost, so the price directly controls the price of the beer. The exception is if the beer is a bit too costly, we'll eat a bit of profit to keep it manageable. But if a $160 cask suddenly became $140, the sale price per pint would drop. I suspect the only bars where this is so, would be committed craft bars. The thousands of molson or abib tied houses would just soak up the benefit till inflation caught up.

[cmadd]

I like it!

[Bytowner]

I continue to support this idea above others:
http://www.ottawacitizen.com/life/Local ... z23EvfBxuQ

I think local brewing culture is important. While government protection and promotion of domestic industries may be abhorrent to many, I think the craft brewing industry has an important cultural element to it that really contributes to local communities.

I don't think there's anyone on here who has trouble getting a hold of more "exotic" offerings and I think there's a degree of unfounded optimism in what people believe would show up in Ontario stores if things were thrown wide open. As silly as some might find it, I enjoy finding different products when I travel.

[Belgian]

Oh, and I generally agree about wholesale cost. Not many bars would lower their prices if the beer suddenly got cheaper... I suspect the only bars where this is so, would be committed craft bars. The thousands of molson or (Annheuser-Busch/InBev-) tied houses would just soak up the benefit till inflation caught up.

Then let the fools pay. It sure creates the possibility to compete - bars like Only Café and Rhino Bar could drop prices relative to cost, and this would be quite a draw. How would even a MolBatt bar compete with a cheaper one just like it across the street?

People would hopefully get tired of overpaying and word would get around, especially among the younger generation who will slowly replace the rich boomers.

All hypothetical of course.

[JasonTremblay]

This being OntarioTheGood ...

If the province allowed convenience and grocery stores to sell beer and wine, the restrictions and reporting requirements placed on the vendors would probably be so noxious that few stores would bother.

But ... it's entirely possible that this change could be used as a wedge to further increase the liberalization of the laws.

Jason

[Swampale]

I live in a rural area far away from any convenience store. It wouldn't change anything if they were allowed to sell beer. I personally think that our provinical gov't has too much to say in how and where beer is sold. The "minimum price" thing really bugs me. I have to go out of my way to go to any LCBO and Beer Store. All this can be avoided if I move closer to town I guess. I solved that problem years ago. I brew my own beer and wine. I am totally off the grid as far as buying beer and wine goes. I do go to the LCBO the odd time to check out "new beers". I avoid TBS at all costs. If we had an OCB store loaded with Ontario beers ( go to NY state and check out how they do it ) I would be one of their best customers. I would love to see a new Craft Beer Store chain in Ontario to compete with those bastards called "The Beer Store" with their monopoly. The Big Ten? Who cares?

[Ale's What Cures Ya]

Not surprising. All revolutions have cowardly loyalists.