Bringing Ontario Up-To-Date

Despite the LCBO mandate to encourage responsible consumption, it must have crossed someone’s mind to launch a “Drink ‘til you forget” campaign. Forget the narrowly-averted strike that threatened to ruin many a May Two-Four long weekend. Turn your mind off to those massive in-store lineups that happen on the eve of every holiday and big game. While you’re actively not remembering, also try to overlook the fact that the Auditor General called out our Control Board in 2011, for not using its vast bargaining power to get better deals for the population it’s mandated to serve. Mostly though, stop thinking about how your own government suppresses a private sector that would create more jobs, a better retail environment for consumers and a broader tax base.

Please don’t do any digging around or you’ll find a liquor store in Edmonton that has more kinds of beer than this entire province. Don’t go price checking either, or you’ll learn that those stats that show Albertans pay more for booze aren’t supported by shopping around.

Another rumour that doesn’t hold up: the one that says privatization will harm the craft beer market because individual outlets will only buy from the bigger breweries. Step into Québec or Alberta and you’ll quickly learn that in a competitive environment (what Ontario isn’t) entrepreneurs actively seek ways to stand out from the shop down the street. What you get is more selection, more convenience and staff that have incentives to make sure your shopping experience is a positive one.

In my current job I travel a lot within Canada; so much so that I was recently able to talk with my father-in-law in Calgary, about four different Pumphouse beers, not because I’ve tried them here – three of the four aren’t available in the Centre of the Universe – but because I’ve parked myself at the New Brunswick brewpub where those beers were produced.

I know a thing or two about shopping for beer in this country.

I also know about the business of government. In 2005, I packed away my necktie collection and resigned my position as a Business Analyst at the Ministry of Consumer and Business Services. After working with IBM specialists to architect a children’s portal for the province (which was then poorly maintained and ultimately unplugged) and leading a push to get government services delivered on reserves, the day-to-day head bashing got to be too much. I have a lot of respect for the well-intentioned people that stick with it, but after three years fighting through various shades, strengths and tactilities of red tape, enough was enough.

Ontario’s system is outdated and that is the result of a government that is either lazy, incompetent or both. The current leadership doesn’t understand that “leadership” is more than a title. This government, rather than making any meaningful reforms to an unpopular crown corp, took the easy route in its recent labour negotiations and found a loophole in its own policy. Instead of holding the line on public sector raises, Queen’s Park rewarded thousands of cashiers and stockpersons with generous signing bonuses.

Just last month the province’s former Finance Minister, Dwight Duncan (he who so vigorously defended the current model just last year), came clean to reveal even a partial sale of the crown corporation could net the province billions of dollars right away, without diminishing long term revenues. There’s no way the new administration hasn’t seen the same evidence.

This isn’t just about money however. It’s also about serving the population. In December, the Toronto Star’sMartin Regg Cohn offered up an opinion piece that stated Albertans discovered privatization did not lead to better service. Interesting, but not at all accurate. Aside from 18 months in Saskatchewan, I lived in Wild Rose Country from 1985 to 2001. Allow me to tell you how things actually are.

Albertans, who saw the shift away from government controlled liquor stores twenty years ago have since realized related growth in employment, revenue, selection and convenience. Sure there were some sacrifices, like less bureaucracy, but most of the population seems open to fewer jobs on the government books and less strike votes.

Prior to 1993, I had to drive to the nearest government shop, pick from whatever the board deemed saleable, then stand in line for whichever clerk wasn’t on her or his break. Sound familiar? There were 208 Alberta Liquor Control Board Stores prior to privatization. As of April 2013, there were 1,312 retail liquor outlets.

Today, you can go to the Real Canadian Liquor Store if you want a small savings on your beer. It’s competing with the Co-Op liquor store, which has a bit more local selection, and Safeway Wine & Spirits if you want your Air Miles. They’re all within blocks of each other, and between them is a smaller independent that specializes in craft beer and prides itself on customer service and more consumer friendly hours.

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Weekly flyers increase competition in Alberta. Source: Sobey’s Liquor (June 18, 2013)

What about all the money liquor sales used to generate for Alberta’s public coffers? Revenue to government actually climbed from $405 million in 1993, to $687 million in 2011. That’s an increase of 69%. In context, the province’s population rose from 2.6 million to 3.6 million, or 37%, in the same period.

Not only does the Alberta government continue to syphon its share from all the alcohol sold in the province, it also collects more in income taxes and more in business taxes by virtue of all the private sector jobs created. Thousands of government salaries at the retail and administration level dropped from the books, along with the upkeep on more than 200 crown properties.

Consider this: the Ontario government, Monday, announced the LCBO brought in $1.71 billion in annual revenue in its most recent fiscal year, for a province of 13.5 million people. The Alberta government draws $687 million in a province of 3.65 million.

While in Montréal, I typically frequent by a rather ordinary looking depanneur in Mile End that stocks more than 250 kinds of beer from Quebec alone. This particular shop – Depanneur A/S, in Mile End – is only a few blocks from another impressively stocked convenience store. If the lineup is too long at one location I can easily walk to the other. Even though A/S usually only has one employee working when I’m in, that person is generally quite happy to help me navigate their vast inventory. Why? It might just be they really like unilingual Anglos in Québec, but I suspect it’s because competition breeds better service.

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Depanneur A/S — that’s ALL Québec craft beer.

These past few months I’ve been talking to people (beer people, mostly), about their experience with the LCBO. Some of the better craft brewers in Canada don’t sell their styles in Ontario because they feel the hassle of dealing with our liquor control board isn’t worth the return. So who loses there? The beer drinker.

Nicole Barry co-founded Half Pints in Winnipeg. The brewery she manages does have a presence in this province, but Barry’s assessment of dealing with our board goes like this: “So, Ontario is a pickle to deal with. A pain in the ass. And that is the major reason I stopped shipping beer out to that market a few years ago.” A CGA by training, she says she can deal with the bureaucracy, but her beer is not so patient. That’s why Alberta will enjoy Half Pints’ Weizenheimer (a Hefeweizen) next month, and we won’t. “The whole process of registering the product (in Alberta), shipping it and getting it to stores is about three weeks – with shipping and distribution about ten days total. Perfect. It is much longer when dealing with LCBO, and that’s why I won’t be sending out this beer – it begs to be enjoyed fresh.”

Although Half Pints is shipping other labels to Ontario through Keep Six Imports, nothing from Manitoba is listed on the LCBO website.

Edmonton’s Alley Kat Brewery has no plans to ship to Ontario. “From Alberta, the system looks overly bureaucratic and expensive,” says co-owner Neil Herbst.” Getting a listing in The Beer Stores would be exorbitantly expensive, the time frame for getting a listing and selling to the Ontario Liquor Board seems overly long, and selling through an agency listing seems overly vague. As well the Ontario pricing model is not at all transparent, so figuring out if our beer could be sold profitably into Ontario seems indeterminable.”

That last part is because the LCBO sets the prices in Ontario. If you compare beers available at both the LCBO and The Beer Store, you’ll see they retail for exactly the same price.

Not that Alberta’s system is perfect. What Barry calls the “Wild West” approach means that pretty much any company can send beer to cowboy country. Reps are in constant competition with one another to get taps and shelf space. The province, she feels, is flooded with beer, much of which dies on the shelves.

Herbst echoes that sentiment. “It is always a battle for shelf space. Many of the stores are small, so only have room to stock higher demand products.” However… “At this point there are no slotting fees in Alberta such as in the Ontario beer stores, so for the most part, we have decent access to shelf space. Could it be better? Yes. Do the multinationals throw their weight around? Yes.”

When asked if he would prefer a system more like Ontario’s, where a central purchasing body decides what gets in, Herbst says no. “In the current system, we can market and sell our beer to individual stores and to chain store head offices. Sometimes we get into a store, sometimes we don’t. If the system was controlled by the government, depending upon the rules, we might be shut out of stores that we now have the opportunity to be in. In the previous system in Alberta, as I understand it, small breweries were automatically listed in every government liquor store within a certain radius of the brewery. Outside of that area it was up to the manager to decide what to carry. In my experience, they generally didn’t want to take a risk on a product that might not sell. So I’m not sure that we would have fared any better under that system. “

“So, neither the public or private model works perfectly,” says Barry, however “based on my experiences of nearly ten years in this industry, the private model is much easier to deal with.”

Listen, I don’t want to see anyone thrown out of work. This is not about cutting government positions as much as it’s about creating far more private sector jobs, while reducing bureaucracy. Privatizing liquor distribution means more selection for the beer drinker. It means more locations from whence to purchase your beer. It means competition (read: better offers). It means more consumer-friendly hours.

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Lining up at the “competition” (Queen West & Markham, June 2013)

In essence, it means a reversal of what we [air quote] enjoy [air quote] now in Ontario. The market will react to what the consumer demands, rather than dictate what the consumer should expect. I’ve seen it, my friend, and it’s a better world where – no matter what your beverage of choice – you can get it either by stopping by a nearby outlet, or asking someone who cares about customer loyalty to order it for you.

Sure, I’m a beer writer, but I’ve also been a lover of Scotch since my first (and to date, only) divorce. In Calgary, I can walk into Kensington Wines & Spirits and pick up bottles that are unique within North America. Willow Park Wines & Spirits competes with Kensington in the same category. Want to see what a Scotch event can look like in a private liquor store? City Style & Living has a good photo reportage.

But if beer is your thing you really need to know about Sherbrooke Liquor Store in Edmonton, which carries 1,400 of ‘em. That’s not 1,400 bottles of beer, according to Director of Marketing & Communications, Anna MacLeod, but 1,400 different labels you can pull from its remarkable, walk-in beer fridge. When I typed “beer” in the LCBO’s search engine just now, it came back with 982 results in its entire database… and many of those are discontinued.

There are other arguments that have been tossed around to try to keep the LCBO solidly in place, like insisting that private retailers can’t be trusted to sell responsibly. Yet when held up to The Beer Store’s and convenience stores’ records for checking ID on age-restricted products, the LCBO appears to be the least responsible. It stands to reason that most small business owners tend to take those issues rather seriously when faced with losing their license and not having a union to prop them up.

Another reason some are sceptical about making beer more widely available is the possibility of increasing impaired driving rates. Fair enough, but again the research doesn’t support it. An independent study by the Center For Social Research on Alcohol and Drugs, at the University of Stockholm, Sweden, examined Canada’s fourth largest province. The resulting report, “An investigation of the effect of privatization of retail sales of alcohol on consumption and traffic accidents in Alberta, Canada,” concluded “There was no significant effect on the number of fatal motor vehicle traffic accidents.”

That was 2005 research. A look at more recent numbers suggests things have actually improved. In 1993, alcohol was a factor in 1,492 casualty collisions (those causing injury or death). That was 12.6% of all collisions in the province that year. By 2010 – the most recent stats available – that number had dropped to 980, or just 7.1%. It’s not surprising. By putting beer closer to where people live, they don’t have to drive (or if they are foolish enough to drive impaired, at least they won’t be travelling as far).

The only, only, downside I can see to privatizing Ontario’s liquor distribution system is displacing some people from jobs into which they’ve grown comfortable. I hate to think of taking away the lifestyle and benefits someone depends on, but in a competitive environment LCBO-trained employees would be among the very few experienced applicants for all the many new jobs created. Some of the more motivated might even be tempted to open their own shops.

But I bet the LCBO would rather you didn’t think about that, either.

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6 thoughts on “Bringing Ontario Up-To-Date”

  1. One effect of liquor privatization in Alberta you didn’t mention was a lowering of wages for liquor store employees. You mention an increase in jobs as an outcome of privatization, but are they they kind of jobs the previous ALCB employees had, with health and pension benefits as members of the public employees union? Of course not, that’s at least partly where the profit margin and decreased price of private sales come from. Liquor store clerk jobs are now minimum wage, or as low as they can be to get someone to stock shelves and stand behind a till.

    Depending on where you sit on the political spectrum this may be either a good or a bad thing, but it is definitely an outcome of privatization. While I enjoy the convenience and wider variety of beer available under our privatized liquor store system, I sometimes feel a twinge of sadness for the ALCB employees that lost their living-wage jobs. But then I have another delicious imported craft beer and feel better about it. 🙂

    1. Thanks Barry,

      I appreciate your point. Truly I do. I was a business analyst for the Ontario government for 3.5 years and earned quite a generous salary during that time. But then I got held back from promotions based on seniority — not ability.

      It’s not the government’s role to inflate the value of cashiers and stockpersons. Everyone deserves an opportunity to *earn* a living wage, but the government shouldn’t be in the business of keeping wages artificially high.

      1. It’s not the government’s role to inflate the value of cashiers and stockpersons. Everyone deserves an opportunity to *earn* a living wage, but the government shouldn’t be in the business of keeping wages artificially high.

        Then the province can pay the increased welfare/ODSP costs that will result from said stockpersons/cashiers being reduced to living on a minimum wage (in addition to whatever costs are needed for their upgrading) just like the state (provincial) and federal governments in Canada and the United States have to pay due to businesses like Wal-Mart, McDonald’s etc. not paying enough money to their employees.

  2. First off, the government sets the minimum wage, so if they see a problem with how that affects living conditions, they should address that.

    Secondly, I don’t see how the Ontario Disability Support Program (ODSP) is affected dramatically. Please explain.

    Third, as to welfare, I assume you mean Ontario Works? Frankly, if the sale of the LCBO brings in billions of dollars, as Dalton McGuinty’s former Finance Minister suggests, while creating tens of thousands of new jobs and all the taxes that come with the creation for thousands of new businesses (many of which would pay really good wages because it would be a highly competitive field), I’m okay with some of the new revenues being used to retrain employees that want to upgrade skills.

    I believe the government should make skills training a priority. But Ontario doesn’t need public servants to sell liquor, at the expense of economic growth.

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