During the B.C. legislature’s question period last week, Attorney General Suzanne Anton, who’s been tasked with overhauling our liquor policy, continued her steadfast insistence that with the new wholesale pricing scheme to be launched April 1, “the industry and consumer [will] have a better regime for liquor in British Columbia.” This move to a base wholesale price that ostensibly creates a “level playing field” does anything but, since private and government stores operate on different financial models, and only the latter can sell to restaurants, which in turn pay full retail. I guess some playing fields are more level than others.
For a few decades now, I’ve had the privilege to be immersed in Vancouver’s wine culture, where people support and encourage one another, rather than it always being about competition.
I look at the current situation and, frankly, see the welfare of many hard-working, dedicated people in the industry in jeopardy. The B.C. LDB isn’t even announcing its new shelf prices until Friday (March 20), leaving restaurants with just seven business days to reconfigure their financial models and evaluate the sustainability of their operations. Wine-forward establishments featuring unique bottles from around the world will very likely pay more for them under the new model, which means consumers will too. I’m speculating here, but we’re at a time and place where that conclusion seems inevitable.
It’s no exaggeration to say that each and every discussion I’ve had with importers, restaurateurs, and retailers over the last couple of months has been an absolute downer. My pal Neil Ingram—the sommelier who owned Gastown’s (dearly missed) Boneta restaurant and most recently has been wine director at PiDGiN and on the floor at Cinara—had planned to open a new restaurant in 2014 but has found himself in a holding pattern, unsure if there will be a viable way of doing so under the new model. John Clerides of Marquis Wine Cellars predicts that his profit margins, which have been sustainable for over a quarter-century, will be reduced to less than half of what they’ve been with the coming changes, unless he significantly raises prices and slashes labour costs. During our most recent phone call, I asked what would happen if he didn’t raise his prices and kept his staffing at its current level. “My accountant just ran the numbers,” he replied. “I’d find myself $750,000 in debt a year from now.”
Wine, beer, and spirit importers have had to present rejigged wholesale prices to the B.C. LDB without knowing what their final shelf prices will be. In question period last week, Opposition MLA Katrine Conroy stated that B.C. LDB staff have been phoning importers asking them to lower their wholesale prices (and, consequently, their profits). Conroy suggested this is so that Anton doesn’t have to take responsibility for the impact of the new system’s final pricing, assumed to be higher for thousands of products, once it’s released.
Those on the receiving end of these calls are both frustrated and baffled, as it’s difficult to do anything about final B.C. Liquor Store pricing when it’s an unknown factor. In fact, Anton has publicly accused importers of taking advantage of the current climate to hike prices unnecessarily. Being thrown under the bus prompted a news release to be issued by the Import Vintners & Spirits Association, which represents over 100 import and distribution agencies and, according to the release, accounts for over $860 million in wine, beer, and spirits revenue, and 30 percent of annual B.C. LDB liquor sales.
“It is the position of the IVSA and its members that the accusation that distributors and suppliers are ‘taking advantage’ by raising prices to increase margin is patently false,” reads the statement. “Furthermore, we believe that her [Anton’s] accusation is propaganda to deflect the possibility that price increases are due to the BC Government’s poor planning, execution and overall lack of industry consultation in moving to what is becoming widely acknowledged as a flawed Wholesale Price Model for liquor in British Columbia.”
Over the past couple of months, I’ve seen colleagues and friends have their businesses put in jeopardy and our entire industry recklessly placed in a precarious position. There has been little consultation with those concerned, only dismissiveness, steamrolling, and bullying by those in power. I cannot overstate how much turmoil this is causing across the trade. How this can still be presented as something good for the industry when those directly affected have been howling for months in the media is beyond me.
There are so many of us who have chosen to build our lives around this industry we love—yes, love. And when you love something, you do everything you can to protect it. We stakeholders truly believe B.C. has the potential to build better liquor policy than what is currently being rammed through, without taking away provincial income and without destroying businesses both large and small. A flat-tax system akin to the Alberta model would be a good start. Beyond the April 1 launch of this new policy, we will continue to push for a better way that is truly more equitable and fair for all, including (and most importantly) for you, the consumer. Stay tuned.