LCBO Online Exclusives

[Craig]

You're right about why we can't have more importers, but I think I'm right about why the existing ones aren't well suited for online. We're both right that this is all pointlessly self inflicted by the LCBO.

[S. St. Jeb]

Consignment is much easier, practical and cheaper than private order (which is an incredibly prohibitive process, and isn't compatible with online anyway).

For those (like me) who don't know the details of this, would you be able to provide a short "consignment vs private order 101"?

[biegaman]

For those (like me) who don't know the details of this, would you be able to provide a short "consignment vs private order 101"?

There's a number of things, but, in a nutshell, the main difference is this:

Private Order requires the agent to sell all the beer in advance, presenting the LCBO with a list of customer names and info, licensee numbers and, of course, down payments. All this before the LCBO will even look at the order. Then who knows how long until they get around to placing it. Consignment, on the other hand, allows the agent to order what they like and maintain an inventory in their "consignment space" (allocated space in the LCBO warehouse), thus having products on hand and readily available. It's a seemingly minor distinction but it amounts to huge disadvantages for private order:

-Prices inevitably change (freight costs, currency fluctuation) from when the order is placed to when it actually arrives. You tell customers it'll cost "x" then go back later and say "actually, it costs y. I need more money."
-Product availability often changes - "Sorry, I know we took your deposit for this beer but now there's none available."
-Agents can't provide a definite timetable for arrival - "thanks for the deposit, you'll get your beer....eventually?"
-Furthermore, agents can't ensure the freshness/quality of the product. Older BarTowelers will remember the Hair of the Dog private order we put together. When the beer arrived the caps weren't properly sealed. A lot of the beer was flat, oxidized, or infected.
-In rare instances, the product may arrive and fail lab test or labeling requirements. Then it gets "destroyed" (or mysteriously ends up in the clearance section at Weston & 401).

There's other distinctions. I mentioned agents with consignment licenses have their own space in the warehouse. This allows them to order in whatever quantities they have room for. Private orders, on the other hand, limits your order to how many bottles you can pre-sell - once it's gone, it's gone (even if people want to order more).

Not sure if it's still this way but it used to be that private orders had to be picked up from the warehouse within 48 hours of arrival.

For consignment agents with a regular, established catalogue and repeat business, it makes sense to hire delivery drivers, buy a van, hire a sales guy. That's your business. Distribution for private beer orders, however, where your margins are razor thin, don't always justify renting a van and driving all the way to, say, Peterborough to drop off a few cases, then Ottawa for a few cases, then Niagara to drop off a few cases, etc. Not to mention the hours and hours of paperwork and submission forms. From the agency side, private order in and of itself isn't financially viable.

And to echo what Craig said, also think of it like this: consignment agents can go to potential suppliers and say: "OK, we'll submit your beers to every LCBO tender to get you in retail, either seasonal release or general list. We'll import kegs so you have an on-premise presence. AND we'll put together "x" amount of consignment orders every year to support those retail/draft sales as well as make them available through the new e-commerce program". But for an agency putting together private order to simply go to a really popular brewery who's demand already outweighs production and asking for their best, most exclusive products for a small, one-time order in a market they have no real presence in... not going to happen (especially since it requires them to change their whole assembly line to meet LCBO labeling, palate requirements, etc).

From a brewery's standpoint it doesn't make sense strategically or economically. And this, absolutely, has to do with provincial regulations and LCBO policy. One quick example: the agency I work for imports Stone kegs and bottles. We've tried to compile private orders for rarer bottles as well (which the brewery was happy to do). Problem? LCBO won't allow us to consolidate shipping. We're not allowed to have kegs, LCBO bottles and private order bottles on the same truck. Why not? Because they say so. Anybody who's bought Stone in this province knows what this means for the cost. (Incidentally, we then tried to consolidate Firestone Walker and Stone private orders on the same truck but were again told we can't mix palates from different breweries.)

[Lukie]

For those (like me) who don't know the details of this, would you be able to provide a short "consignment vs private order 101"?

There's a number of things, but, in a nutshell, the main difference is this:

Private Order requires the agent to sell all the beer in advance, presenting the LCBO with a list of customer names and info, licensee numbers and, of course, down payments. All this before the LCBO will even look at the order. Then who knows how long until they get around to placing it. Consignment, on the other hand, allows the agent to order what they like and maintain an inventory in their "consignment space" (allocated space in the LCBO warehouse), thus having products on hand and readily available. It's a seemingly minor distinction but it amounts to huge disadvantages for private order:

-Prices inevitably change (freight costs, currency fluctuation) from when the order is placed to when it actually arrives. You tell customers it'll cost "x" then go back later and say "actually, it costs y. I need more money."
-Product availability often changes - "Sorry, I know we took your deposit for this beer but now there's none available."
-Agents can't provide a definite timetable for arrival - "thanks for the deposit, you'll get your beer....eventually?"
-Furthermore, agents can't ensure the freshness/quality of the product. Older BarTowelers will remember the Hair of the Dog private order we put together. When the beer arrived the caps weren't properly sealed. A lot of the beer was flat, oxidized, or infected.
-In rare instances, the product may arrive and fail lab test or labeling requirements. Then it gets "destroyed" (or mysteriously ends up in the clearance section at Weston & 401).

There's other distinctions. I mentioned agents with consignment licenses have their own space in the warehouse. This allows them to order in whatever quantities they have room for. Private orders, on the other hand, limits your order to how many bottles you can pre-sell - once it's gone, it's gone (even if people want to order more).

Not sure if it's still this way but it used to be that private orders had to be picked up from the warehouse within 48 hours of arrival.

For consignment agents with a regular, established catalogue and repeat business, it makes sense to hire delivery drivers, buy a van, hire a sales guy. That's your business. Distribution for private beer orders, however, where your margins are razor thin, don't always justify renting a van and driving all the way to, say, Peterborough to drop off a few cases, then Ottawa for a few cases, then Niagara to drop off a few cases, etc. Not to mention the hours and hours of paperwork and submission forms. From the agency side, private order in and of itself isn't financially viable.

And to echo what Craig said, also think of it like this: consignment agents can go to potential suppliers and say: "OK, we'll submit your beers to every LCBO tender to get you in retail, either seasonal release or general list. We'll import kegs so you have an on-premise presence. AND we'll put together "x" amount of consignment orders every year to support those retail/draft sales as well as make them available through the new e-commerce program". But for an agency putting together private order to simply go to a really popular brewery who's demand already outweighs production and asking for their best, most exclusive products for a small, one-time order in a market they have no real presence in... not going to happen (especially since it requires them to change their whole assembly line to meet LCBO labeling, palate requirements, etc).

From a brewery's standpoint it doesn't make sense strategically or economically. And this, absolutely, has to do with provincial regulations and LCBO policy. One quick example: the agency I work for imports Stone kegs and bottles. We've tried to compile private orders for rarer bottles as well (which the brewery was happy to do). Problem? LCBO won't allow us to consolidate shipping. We're not allowed to have kegs, LCBO bottles and private order bottles on the same truck. Why not? Because they say so. Anybody who's bought Stone in this province knows what this means for the cost. (Incidentally, we then tried to consolidate Firestone Walker and Stone private orders on the same truck but were again told we can't mix palates from different breweries.)

Perhaps if we all wrote in to the relevant parties, including politicians, the LCBO would move their butts and grant more consignment approvals to the agents on the waiting list. Seems the lack of sufficient consignment licenses (apart from LCBO's dysfunctional nature) is at the root of the problem here. If there was a lot more choices and if the inventory was refreshed frequently, the online store could be fantastic.

[S. St. Jeb]

For those (like me) who don't know the details of this, would you be able to provide a short "consignment vs private order 101"?

There's a number of things, but, in a nutshell, the main difference is this:....

Wow, thanks for the detailed answer. I appreciate it.

As for your last paragraph...well, it boils the blood. Sometimes "old" laws that seem stupid can be rationalized because times change, and there was a good reason for it back when, but it's hard to imagine what lead this. I believe this was the same for small Ontario brewers, that they could not get together and share a truck, but I think that changed recently. So....maybe this archaic law will get changed too.

[Craig]

Some of the stuff like not sharing trucks is actually just the LCBO caving to union demands. I don't mean to imply that makes it better.

[skootles]

Regardless....heard Cascade is coming. Probably via Keep6.

WHAT?!

Please tell me it's true.

[atomeyes]

Regardless....heard Cascade is coming. Probably via Keep6.

WHAT?!

Please tell me it's true.

Cascade just got into Buffalo (or is in the process. but it's signed up).
with Cascade coming here for Cask Days, i'd be willing to wager we see small runs of Cascade in Toronto within 6 months.
it won't be cheap, even at wholesale. just be warned

[skootles]

Oh, definitely. I've been to the brewery and brought bottles back with me and the cheapest one at the time was $25 USD. Bottles from other places like Calgary or Vancouver that I've bought ranged from $35 to $45 CAD. I can only imagine what the LCBO's minimum pricing and markup will do to that.

[Craig]

It shouldn't be too bad, the LCBO pricing and markup are actually very reasonable. They'll gouge you a lot less than private shops do.

The taxes, on the other hand, are a bitch.

[BakaGaijin]

It shouldn't be too bad, the LCBO pricing and markup are actually very reasonable. They'll gouge you a lot less than private shops do.

The taxes, on the other hand, are a bitch.

Agreed. I suspect it will be cheaper than in the US when exchange rate is factored in. Will definately be way cheaper than in BC and Alberta where some bottles are over $40.

[Andrenaline]

Bunch of Keep6 offerings showing stock again. Most notably DDC Moralite and Sentinelle and Evil Twin Low Life. I just ordered a dozen beers from Half Hours on Earth otherwise I would've partaken in this round of availability.

[IPA_Lover]

Bunch of Keep6 offerings showing stock again. Most notably DDC Moralite and Sentinelle and Evil Twin Low Life. I just ordered a dozen beers from Half Hours on Earth otherwise I would've partaken in this round of availability.

Just got my case of Moralite in. Not too happy with the bottling date of Aug 30th.

Really, we can't get this any fresher?

[CoolB]

Bunch of Keep6 offerings showing stock again. Most notably DDC Moralite and Sentinelle and Evil Twin Low Life. I just ordered a dozen beers from Half Hours on Earth otherwise I would've partaken in this round of availability.

Just got my case of Moralite in. Not too happy with the bottling date of Aug 30th.

Really, we can't get this any fresher?

Are you allowed to return an order? I'd be pissed.

[Craig]

Yes, you can return things.