B.C.'s liquor rules still sting

B.C.'s Liquor Distribution Branch reaps the profits of a monopoly that dates back to Prohibition—and many want that changed

Seated in one of the crammed backrooms of Davie Street's Marquis Wine Cellars, with wooden boxes of Bordeaux wines piled to the ceiling above me, I tell myself that if there's an earthquake, I'll die in style.

No bonk from some plonk for me. Stacked above me: several embossed cases of Chí¢teau Mouton Rothschild (2006), a bit pricey at $1,210 a bottle.

It's not really a seismic event that concerns me, though, but the shop owner's gesticulations and impassioned ranting. John Clerides, 51, is Greek and, therefore, genetically primed to explode. The target of his fulminations, paper flailing, table-thumping, and occasional retraction—for libel's sake—is the British Columbia Liquor Distribution Branch. Its policies and pricings have, he claims, led to this province having the most expensive liquor in North America and to B.C. wine buyers dying the death of a thousand cuts. His diatribe would be of little consequence except that—during a month of investigation—I hear precisely the same (if less voluble) observations from a half-dozen other high-profile experts on wine. Some request anonymity. Others, like Clerides, fear retribution from the powers that be for speaking out.

In a business where, I'm discovering, some see the bottle as half full and others see it as half empty, Clerides is the pessimist. He has little patience, he tells me, with the regulations that govern the LDB monopoly, and he hears all the time about well-known restaurateurs, specialty-wine-store owners, connoisseurs, and Alberta liquor smugglers who grimly face—or elude—the LDB's sky-high 123-percent markup on every bottle of wine and a 170-percent markup on every bottle of spirits sold in the province.

But it's not just the pricing that drives Clerides and his wine-drinking friends to apoplexy: it's the maze of restrictions, arbitrary rulings, and brutal wholesale margins, Clerides says, that has led Rich Coleman, B.C.'s former minister responsible for the LDB, to call the province's liquor-distribution system “a dog's breakfast.”

“The LDB's like a dictatorship. They're the bully on the playground,” Clerides says, waving a sheaf of proposals he has sent to B.C.'s Liberal government, suggesting ways the system might be modernized. “Hong Kong got rid of taxes on wine recently. They've become a wine-marketing centre. Alberta privatized its liquor-distribution system years ago. Prices are cheaper there. Liquor's cheaper in the States too. Europe doesn't have government-run monopolies. You buy wine anywhere. The LDB's mired in laws that go back to the '20s; it's a hangover from Prohibition. Try being creative! You think outside the box, you get squeezed.”

Clerides pauses in his screed, puts his thumb on a stack of wine-marketing ideas he'd like to see implemented in B.C., and crushes an imaginary bug.

When I ask Clerides who's responsible for this, he says a name. It's the same name I hear from every authority I speak with. And so I begin pursuing Jay Chambers, for 17 years the general manager of the LDB and the person responsible, critics say, for guiding a system that hurts B.C. restaurants, private liquor stores, and specialty wine shops because all must buy from the LDB alcohol monopoly.

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Comments (73) Add New Comment
Ali
Here here. In New York, I have seen Canadian wine priced lower than what we pay here at home! Does that make any sense at all? The LDB could at least have the decency to buy us dinner first.
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Jackie Cooke
After moving from BC to Alberta five years ago, I find it ridiculous that LDB supporters are still claiming that free enterprise hurts consumers, particularly in remote locations and further, that multi-national retailers already control these markets in this province. Costco, Walmart et al. have put a lot of mom and pop businesses (of all kinds)out of business. The reason independent wine retailers do so well in this market vs. the big box giants is..... get ready for it, "innovation, service and selection." If you want Yellowtail, go to Costco, if you don't, you shop for unique brands from boutique stores. Calgary for example, is constantly opening new independent stores, despite the power that Costco and Liquor Depot have in this province. I don't shop at any big box liquor retailers for alcohol and there are many thousands of others who don't either. So, the premise of the argument the LDB supporters are putting forward about lack of access to unique products and high prices in small towns is quite ridiculous. Innovation and entrepreneurship, especially in markets dominated by the multi-nationals can and have proven to be quite successful. The speculation that a privatized market wouldn't work in BC and the arguments against it sounds like...."well we don't think it will work, so there is no point in trying" kind of attitude that has always existed at the LDB.
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mike w
The LDB needs to be dismantled and liquor sales turned over to the free market.
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Dan in Van
Great article!

I cannot believe that the supposedly "free enterprise" BC Liberals don't have the guts to bring the liquor laws into the 21st century. This government needs to focus on healthcare and education rather than distributing liquor and running retail outlets.

The $300 million this government spends on running this antiquated system could be better used on social programs. I also suspect that the high cost of liquor in BC is partly responsible for driving consumers to non-taxed illegal substances.
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Chongo
This province is full of antiquated government run monopolies - ICBC anyone?
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Name Withheld
Wow, so many outdated ideals about the wonderful private system in Alberta. As someone who very recently moved back to BC, and regularly brought booze to Alberta from BC when on vacation, because it was either cheaper here or there was a greater selection (yes, goes against conventional thinking, doesn't it?) I can speak from experience. I'm not disputing that there are SOME items that are cheaper there, but those items are, in many cases, not the items that the masses are looking for. If there is a smuggling syndicate, then it may be for only the highest end of the high end goods. I found most liquor was on par (within a couple %), beer is generally cheaper in BC, and Wine was hit and miss. The majority of liquor stores in Alberta are owned by three companies, those that aren't have higher prices than those that are...kinda losing the idea of "privatization creates competition" aren't we? Here's another thing to think of, if you are a small producer (craft brewer, or winery say) and you are in BC, once you are listed with the LDB, you are basically in every liquor store in the province (maybe not physically on the shelf, but the capability to be is there). In Alberta, you get listed with their LDB (YES
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Name Withheld
@Jackie Cooke. Those new stores are simply new Co-ops or Liquor Depot stores (you'd be amazed how many 'independent' stores are actually owned by the Liquor Depot/Liquor Barn conglomerate). As for going to the specialty stores...yeah, great idea, drive from SE Calgary to the NW to buy a bottle of wine...I'll take BC's system any day, although the LDB needs to work on it's mark-ups, and could look at expanding it's listings....
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BK
Many thanks for an excellent article.
The horrible taxes reaped by the provincial government must be eliminated. It is beyond embarrassing and the sooner the government sobers up the better. We are living in a dysfunctional paradise.
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Anonymous
I'm curious where in North America wines are more expensive than BC and where in the world too? So far BC is number one in the world from my experiences.
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Dr Zen
Part of the rationale is for high liquor prices is to discourage excessive drinking which results in increased social costs. Why then is the markup based on price and not simply total volume of alcohol?

If you're unfortunate enough to have a cultural background where good wine is a normal part of life, have some sense of smell and taste, and enjoy a half bottle of a halfway decent Rhone ($20+) with dinner you're going to pay a hell of a lot more in taxes than the gangsta wannabes guzzling Molson "cold shots" in the parking lot before hitting the club.

But hey, at least the government has protected us from roving gangs of lawyers and wine connoisseurs wreaking havoc on the cowering masses of Vancouver.
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LostMyGlasses
#firstworldproblems

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Kay
I'd rather liquor profits in this province go to the ministry of social housing and development than to the fat cats of the Costco. We pay more for housing here too, for gas, food etc than many other places in Canada or the USA. It's the cost of living in the best place in the world. The LDB also does more in the way of Social Responsibility and preventing the sale of alcohol to minors in comparison to private shops. They also have a green initiative, and a solid marketing plan to bring consistency to the look and feel of BC Liquor Stores. Restaurants complain about pricing when they mark up wine by up to 200%. Other businesses would kill to have margins that LRS's get. Especially when they have a competitive advantage of late openings and refrigeration. Sure booze can be cheaper here, but again, I'd rather see the money put back into the social system than see huge profits for the owners of Costco, while they pay their employees 10 bucks an hour.
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CPD
I would much rather have the profits in the hands of our government to fund programs than a bunch of private liquor barons.
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Taxpayers R Us
As told me by a BC Liquor store manager, if it weren't for the tax on it, a case of beer would be around $2.00.

Do the math.
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AlexSherry
I went into the liquor store yesterday and showed the staff the article (not in a rude way) and they said it was horrible...maybe cause they are making really good $$ when in The States they are making a much more realistic wage...I have American relatives who don't even want to come up here because of prices. I'm from Florida originally and have been here for ten years and still get bitter about it! It should not be government run!! GARGAGE--stop ripping off your people, as per usual in BC...
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Dan in Van
@CPD @Kay ... you guys are missing the point. It currently costs the government $276 million every year to run the LDB. That's $276 million that could be spent on homeless shelters rather than selling booze in the most inefficient way possible.

Plenty of western European countries have adequate social systems without having their governments sell their booze.

It's just plain ridiculous. These high mark-ups on wine make it a drink for the rich in BC. Shouldn't poor people be able to afford a glass too?
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T-BONE
@ Dan in Van
Read the article, the LDB brings in 900 million a year.
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Kay
So the reason why the LDB costs so much to run is because most of the store staff are members of the BCGEU. The Union is responsible for making sure they have adequate medical/dental benefits, vacation time, pension, special leave, and all that good stuff that the European system of government allows. Unfortunately, our own government is lacking in this department with respect to the private industry. However, it does take care of the workers employed in public service. It is this fundamental difference in treatment that creates the gap in wages and frustrates most readers when they hear LDB employees are making $22 bucks an hour. On the other hand of the coin, take the supposed villain Jay Chambers, who made $223,628 last year for bringing in $900 million. Compare this with Ford's CEO, who made $26.5 million last year while paying his employees $15/hr and cutting benefits. Ford made $815 million last year, less than the LDB contributed to the government in the same period of time.

Yet all the haters out there want liquor to be privatized so that we can get cheap booze and create more minimum wage jobs in the process. Screw that.

Oh and @ Dan in Van... read my first post carefully, the profits from the LDB go into the Ministry of Housing and Social Development. Guess what... it goes into building low income housing and funds the addiction programs for those who fall to alcoholism. What better use for the money that we are supposedly being raped of?

And while I'm at it, for those who complain about the selection of product, the LDB employs the first Western Canadian to achieve the Master of Wine designation, and the only female MW in Canada. She is a hard sell, and only brings in quality products that can be secured in quantity. Who better to be picking the wine for the LDB's shelves?
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Dan in Van
Let's see: the revenue from liquor sales is $900 million and the government spends nearly $300 million. If the government got rid of the LDB, but taxes remained the same, revenue from liquor sales would still be $900 million. A more efficient private system would cause the government to receive MORE money for social programs.

Clearly there are a lot of vested interests in maintaining the current system (I imagine some posters here make money off this system).

The net result of the LDB is that a minority of people benefit from these special union privileges. But the hard working minimum wage earners of BC are denied the pleasure of enjoying a reasonably priced glass of wine or beer.

The current system is elitist and should be changed for the greater good.



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Gí¶lí¶k Z Buday
Sick fascism. Privatize It!
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