B.C. liquor reforms tilt playing field against wine agencies and importers

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      April 1, 2016, marked the one-year anniversary of the B.C. government’s effort to modernize the province’s liquor policies. To celebrate the milestone and ensure everyone is aware that all’s well in Victoria, it issued a news release entitled “No foolin’­—#BCliquor changes are a win for British Columbia.”

      Of course, the release was riddled with good-feelin’, voter-friendly accomplishments—such as wine beginning to be available in B.C. grocery stores, and the opportunity for artisan and farmers markets to feature craft beer and wine—and trotted out other revolutionary developments, like the implementation of happy hours and the removal of beer-garden fencing requirements.

      Now, there were more than a few things missing from this release, particularly the oft-mentioned “level playing field” that was constantly guaranteed over the past year. You know, the one where the government officially separated the wholesale and retail aspects of B.C. Liquor Stores so the wholesale division would be providing the same wholesale price for all, including both government stores and private retailers?

      Of course, that level playing field was heavily tilted toward government liquor stores, as a good handful of private stores aren’t even permitted to sell beer and spirits, and it is only B.C. Liquor Stores that are permitted to sell to restaurants. Oh, and restaurants also got the shaft in the whole scenario, as they continue to pay full retail price for all products, with nary a hint of any wholesale price or discount.

      As one would imagine, being the sole retailer permitted to supply restaurants leaves B.C. Liquor Stores with an incredible advantage. To be even more competitive, though, government stores have been gradually importing more products as B.C. Liquor Store exclusives that, with their purchasing and market power, they’re able to offer at remarkably affordable prices.

      When it comes to wine, an increasing number of products in this exclusive category, along with other wine categories retailed by the stores, are lower-quality items, the fast food of the wine world—generic, uninspired plonk that, of course, is often a larger revenue generator. There are multitudes of them on shelves, many of them practically identical to one another.

      Think of Vancouver trading out Chambar, Hawksworth, Bao Bei, Wildebeest, and, hell, even a couple of Cactus Clubs in favour of another half-dozen McDonald’s. In many cases, this has come at the expense of a solid selection of quality products at all price points and selection for the consumer, never mind general wine culture in what many refer to as a “world-class” city.

      Consequently, many wine agencies and importers are having to downsize or possibly even close up shop altogether. I’ve spoken with more than a few who don’t know how much longer they can stay in the game if things keep going this way.

      “There is a dumbed-down selection of products on shelves,” Paul Watkin, sales director of Seacove Premium Wine and Spirits, told me when reached by phone. The well-regarded team at Seacove has been importing quality, well-made wine by globally respected producers for decades. “We’re seeing less and less not even premium but unique wine on government-liquor-store shelves.

      “We’re losing listings and our portfolio is becoming smaller as a result,” he added. In fact, Seacove recently had a salesperson move on and has opted not to replace the staff member in order to ensure the business remains sustainable.

      Sure, importers can always bring in wines to be offered as spec items, warehoused for sale by the case to private retailers and restaurants, but with government stores being the key industry players, it’s difficult for companies to run sustainably by solely relying on this model.

      Another issue with the spec system is that when products are ordered by restaurants, they can take anywhere from 10 days to four weeks to arrive, even though they are warehoused in Richmond. Not one person in this industry has been able to offer a valid explanation as to why. These are extremely difficult parameters for small businesses to work within, so often restaurants end up defaulting to picking up more mainstream products (with higher government profit margins) from government store shelves. There are more than a few conspiracy theorists who think this isn’t coincidence.

      The biggest issue I’ve heard about from wine agents is pricing. Although we were constantly promised these changes wouldn’t mean increases in prices, this has not been the case. In government stores, taxes are no longer included in shelf prices, instead being added at the till, so there’s an illusion of price stability that doesn’t exist.

      Agents constantly learn through restaurant purchasers or consumers of their shelf prices increasing without their knowledge and without those increases happening on the agents’ end. Importers were initially offered a formula with the government-policy changes so once their wholesale price was established, they’d have a good idea of the shelf price that consumers are being offered; that formula seems to have gone out the window.

      Here’s one of numerous examples from last summer: Charles Smith Wines’ (delicious) Kung Fu Girl Riesling from Washington state jumped from $20.99 to $21.49 on the shelf, and their Eve Chardonnay’s listed hospitality price (the nonwholesale price that restaurants pay through the spec system) leaped from $19.49 to $21.49, without notice or the wholesale price having been adjusted on either.

      Even though we were paying some of the highest prices on the planet for wine, this means we are now paying even more.

      While the provincial government touts these changes as “a win for British Columbia”, I haven’t heard that from anyone else. In fact, there is one comment I do hear, and it is heard extraordinarily often at import agencies, in private stores, and amongst restaurateurs.

      The one refrain I hear more than any other when it comes to government liquor policy: “It’s a nightmare.”