Liquor-policy changes leave industry in limbo

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      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.




      Mar 18, 2015 at 11:32am

      The problem that I see is that the government liquor monopoly opened the door a bit for private retailers with the private wine stores, and then opened it a wee bit more for the cold beer and wine stores. So there are three retailing systems in operation, one of which should pack up shop and go away. There is no excuse for the continued presence of retail stores operated by the government of British Columbia. It is not only not the role of government to operate retail stores but it brings no expertise whatsoever to the commodity. With all due respect to the few knowledgeable individuals in the signature stores, have you ever watched the high comedy of a member of the public asking for a wine recommendation from a BCLDB employee? The stores are staffed by highly paid union employees and then there are all the other costs of operating retail stores. Taking into consideration its high overhead, can the government continue to justify by way of the bottom line its presence in the retail market? Liquor monopolies are a hangover from prohibition but that is so long in the past. Government can continue to licence and enforce, and it can continue to take its outrageous and punitive markups on liquor, but it must get out of retail and let the market find its own level.

      Ewan Fleet

      Mar 18, 2015 at 1:25pm

      Just wondering how Mr. Clerides' accountant "ran the numbers" without knowing what the government is going to charge him for his product ?


      Mar 18, 2015 at 1:36pm

      I don't understand the need for all of these regulations. The government should be doing nothing more than collecting a tax on the alcohol. Everything else should be left up to the retailers. Let them compete among themselves, and let them sell what they want.

      They should be the ones who get their supplies and decide what to sell, not the government. It's just like any other business.


      Mar 18, 2015 at 2:18pm

      John will pay the same wholesale price as the BCLDB, so he knows what the cost is. What the BCLDB has not announced is their shelf prices, which is what consumers and restaurants will be paying.


      Mar 18, 2015 at 3:25pm

      What John C (and the article writer) neglect to mention is that Marquis' current discount is almost double that of most every private liquor store in the Province, he's just being placed on the same playing field as other private retailers. If he wants to jack up his prices to support his existing enormous margins, that's his own call - it's not forced.

      steve y

      Mar 18, 2015 at 6:44pm

      Susan Anton has the easiest job in the province... improving our current liquor laws which are terrible but she has managed to do the impossible and make things even worse. Unbelievable.


      Mar 18, 2015 at 9:25pm

      It's hardly a level playing field when operators such as John Clerides are not allowed to sell beer and spirits or have to relocate from a location they have built over decades to qualify to sell spirits , liquor or beer.


      Mar 19, 2015 at 1:34am

      Why can't I buy for Mr. Clerides? I'm sure he'll give me better service than his liquor board counterpart, and he still needs to make a buck, which he deserves a discount for providing service and moving millions of dollars of LDB taxed inventory -- he might even deliver. He would win every time on service, and for that Mr. Clerides would not be on a level playing field because he would do business better, something the government exempt from understanding. I asked my LDB store manager how many people he thought had to carry that case of wine I was buying from him from the moment it arrives to BC? He responded with his estimation of about 8 or 9 people that had to lift it and move it and he thought I am the 9th person picking it up. That is the most inefficient system I can imagine, and to think that I, the 'customer,' have to schlep this case the final mile in the back of my car to my restaurant where I will then try to fight the good fight and promote fine wines in this province whilst taking abuse for our neighbours and visitors that our prices are too high. No logistics, no 'just in time' delivery, no accountability, no returns, no checks and balances, no wholesale price = nonsensical. Restaurants in every other wine market (mature or adolescent) in the world not run by a government monopoly receive a wholesale price because they buy the product and then retail it. As a low margin business to begin with, we need all the help we can get if we want to continue to put top quality product on the table and employ good people. If we have a proper wholesale price for wine, beer and liquour I am confident the restaurant industry will be able to create jobs and oppourtunities for British Columbians.

      Industry doesn't realize

      Mar 19, 2015 at 2:22am

      John C can only carry wine. The deeper discount was given because it is a limited product offering. Only wine. LRS shops can carry wine, beer & spirits which opens them up to a wider audience. It is not a level playing field if he still can't carry beer & spirits, and pays the same price for wine, while the LRS and GLS can purchase any product they want while the private wine shops can't. That's like running a race with your feet tied together while everyone else uses both legs to sprint. It is also not a level playing field if restaurants can't purchase from private shops, even though many of them would of given the opportunity. Not so level.

      Industry also doesn't realize

      Mar 19, 2015 at 2:47am

      The private wine shops got a deeper discount, which allowed them to charge closer to what the government shops charge for wine. The LRS shops had to have higher prices, to have a viable business, which brought the amount of mark-up in line with the overall margins of the private wine shops. Roughly the 30+%. Given that, their overall mark-ups were roughly the same. Do you think that LRS shops would limit their product selection so that they couldn't carry beer (largest seller) and spirits? It is quite slanted after April 1st, especially since John C will be paying the exact same price for wine, without the option to carry beer & spirits. So to assume that John's margins were enormous is to not undertstand how the LRS shops price their products at a higher price-point, for the exact same products. After April 1st, the private wine shops are going to be operating at a competitive disadvantage.