February 20, 2016

Understanding ‘Changes’ With Ontario’s Alcohol Business

By admin

Kathleen Wynne’s Ontario Liberals have announced a number of changes recently, including the availability of wine in a number of select retailers across the province.

Let’s emphasize the word ‘select’.

Just a small handful of extremely powerful and influential companies will have the ‘right’ to sell alcohol to the public of Ontario.  Yes, we’ve heard about the one or two ‘mom and pop’ shops that have also received permission, but it’s unlikely they’ll last because of market size or additional costs or requirements imposed by the LCBO and AGCO.

This isn’t liberalization of the market and the LCBO is still living by its key word and mandate:  CONTROL.

Suppliers still have to submit their product to the LCBO for approval for listing with these new channels.  This process is the same as its always been, albeit with a few more options for those making submissions.

This means suppliers have to have certain volume levels of product available (ie. they must be commercial in size) and they must be willing and able to (a) take an additional hit with their margin to account for the additional middle man being introduced (ie. someone like Loblaws who’s going to want a cut) and (b) market the product once it’s in-store.

What does this leave?  Yes, there will be a few small suppliers that will try to get a listing and who will blow their financial brains out within a few weeks of getting a listing, but let’s face it:  the extra costs and middle-men involved will ensure nothing but swill on the shelves a few weeks after the launch of this great ‘liberalization’.

Suppliers of quality products – usually those produced in lower volumes or select vintages – will not be able to afford the high costs of getting grocery store listings.

What the Wynne government has done is increased the range of accessibility for a small number of producers via an even smaller number of large, multinational retailers.

This is not competition and it will not benefit small producers.

What will benefit small producers is the licensing of small retailers and entrepreneurs and giving them the right to sell whatever they like without having to go through a ‘black box’ approval process or expensive marketing campaign via the LCBO.

Another key way to approach this market is to allow importers from other Canadian jurisdictions to bring their product into Ontario without having to feel like the SS or Gestapo will pursue them and their clients.

Finally, the best way to improve the market is to give suppliers the ability to open their own shops without the hassle.