First off, there is no imminent LCBO strike on the horizon. The news link is from 2005!!!!!!! So calm down everybody....it ain't happening! lol
I used to be a fan of the LCBO concept. This was before I became a wine aficionado, and had taken some formal education on the subject. The LCBO stifles competition, prevents smaller wineries and other beverage suppliers from offering their product in Ontario (through bureaucracy), and severely limits the available selection. Yes, they have the Vintages program, where a good variety of international wines are available. The problem is that the all of this product is changed every 6 weeks or so (except for products listed on the Vintages Essential program). Let's say you go to Vintages and purchase a wine you never tried before. After a couple of weeks, you try it and are blown away. You now are a fan of this wine and want to purchase it on future visits to share with friends or family. Maybe you don't go wine shopping too often, so a few weeks passes before you venture back to do some wine shopping. Well guess what, there is a good chance that this wine you loved so much is gone and been replaced by different product.
The LCBO is one store that services the entire province. You can't offer 10-15,000 different products when you only have one store. There isn't enough shelf space to display everything, as most stores across the province need to stock the same items (or mostly, with some variance from store to store). The LCBO offers about 5000 different products at any given time. In Alberta, there are 15-20,000 different products available, since it is privatized. Now everything is not in one store, but you allow the marketplace to create specialty shops. One can open a specialty wine shop that focuses on the wines of Italy, or maybe the wines of Bordeaux. This allows you to frequent these shops to get products not available at the general wine shop or the supermarket, where only the Yellow Tails and the Mateus bottles are available (big shops tend to focus on what sells best and don't attempt to specialize in unique offerings).
Now this does not translate into lower prices. Wine in Alberta is usually more expensive that it is here, but you have a much broader selection available to you as a result of the privatized system. The province still makes their money through taxation (many pro LCBO people say that selling it will shed away all the profits flowing into the public coffers....this is not the case). Allow private business to absorbe all the risks and costs of operating, and just cash in on the sales by continuing to tax it the way you are now.
Another reason I am now anti-LCBO is due to the neglect of the Ontario wine industry. You would think that a provincially owned liquor retail monopoly would have a mandate to protect and promote its homegrown industry. Instead, it stifles it and makes it very difficult for wineries to sell their product in the LCBO stores.
Let's say you're a small winery operation in Niagara (many of them are pretty small players), where your entire production of this year's barrel fermented Chardonnay release is 30,000 cases. You decide that you're going to offer your product to the people of Ontario through its provincially owned liquor store. You contact the LCBO to find out what's involved in getting your wine onto their shelves. They tell you that they need a minimum of 100,000 cases of your wine, since it needs to be stocked in all of the stores throughout the province. You reply that you only produce 30,000, and ask if they can stock it only in the GTA area so you can have a little left to sell through your winery shop that caters to the burgeoning wine tourism in Niagara. They tell you nope. You then ask what price they're willing to offer you for your wine. They will buy all of it (if you can supply the 100,000 cases, which you can't), at $9.50 per bottle. This is because they need to mark it up by 64% in order to sell it in their stores. You reply that you sell it for $14.95 in your winery shop, and that if you sell it all to the LCBO, you will lose money (growing vines and making wine in Ontario is expensive, and you can't make VQA quality wine for under $10 per bottle...the economics don't allow it)! You ask if the LCBO offers some kind of program to assist Ontario wineries through a subsidization program, allowing you to stock it in the LCBO without being forced to take a big loss. They then tell you that they used to offer this, but this program has just been cancelled! They then tell you that if you want, you can increase the price to $12 per bottle, and they'll retail it for just under $20 in their stores. But, you will have to increase the wine price in your winery shop, because you're not allowed to compete with the LCBO, and your price has to be the same as it is listed in their stores. Of course, by doing so, you're taking your wine out of the largest buying market, since few people spend as much as $20 for a bottle of wine (80% of the market is for wine under $18 per bottle), but at least you're not taking a loss! But the LCBO tells you that if the wine is not selling well, they'll drop the price, expect you to take the loss (because they won't absorb any of the price reduction), and eventually delist you from their inventory!
So, if you're this winery, what are you going to do? Sell it all to the LCBO (if you can provide them with the needed quantities) at a loss and go out of business, or are you going to sell it at your winery shop at the same price that the LCBO was going to sell it for (around $15), along with your wine to home delivery online through your website? Let's see, take a loss or make money....oh god, the decisions one has to make in this life....what do I do???? lol
So, what happens is most of the Ontario wineries choose to go it alone, and sell through their winery shops (only located on their winery facilities). Most Ontarians will never get to taste good Ontario wine (we make excellent Riesling, Pinot Noir and Cabernet Franc by the way), and when they look at the Ontario section of the LCBO, they see plenty of Jackson-Triggs, Inniskillin, and other big players. Half of the offerings from these big players are not VQA (Vintner's Quality Assurance) status wines, but instead are "Cellared in Ontario", cheap plonk wines that are imported from over farmed locales such as Chile, Australia and Italy, bottled and aged here, and labelled as Ontario wines! This is why many citizens of this province have such a low regard for Ontario wines.
The other shopping alternative are the wine shops located in large supermarkets and malls. These 2 or 3 wine shop chains are owned by the big wineries (ie. Jackson Triggs, Inniskillin etc.) and they are only allowed to sell their own products, which most of it happens to be "Cellared in Ontario" product, and not so much VQA Ontario wines. And if any other smaller players decide that they want to open up their own wine shops in a local mall, they will quickly find out that they're not allowed. The rules were changed years ago, and the loophole allowing these shops to exist was closed. Since these existing players were already open and running, they were grandfathered in, and everybody else is prevented from getting into this fixed game!
My SO and I frequently visit Ontario wineries, first to taste and purchase excellent wine, as well as to support the local wine industry. This industry has become a major driving force for the tourism industry, as many Americans and other international travellers visit Niagara, not just for the Falls and the casinos, but to visit the Niagara wine region. Just ask the smaller winery folks in Napa Valley (California) how integral the tourism industry is to them. Many of them will tell you that wine tourism brings more revenue to them than wine sales in retail outlets.
The day that the LCBO becomes privatized and I have the ability to purchase from a much larger selection of both Ontario wines as well as wines from around the world, I will be one happy camper!
Cheers
Goomer
