I’m working on this week’s column in a corner booth in the lounge of Cactus Club Cafe’s Broadway and Ash location and, frankly, I’m extremely frustrated. Don’t get me wrong—the food and service are on point, and when I glance up at the TV, the Canucks are leading the Senators by a couple of goals. Things should be good, right?
What’s upsetting me is the B.C. government’s new wine-pricing system, which is due to take effect this coming April. This is the part where I beg you to stay with me. Hey, I know that crunching government numbers isn’t the most gripping of topics, but if you’re reading this column, this is something that affects you—and in my opinion, it totally, totally sucks.
The long and short of it is that the provincial government is about to implement a major overhaul of the pricing structure of wine in B.C., and simply put, it’s gonna hurt.
Up until now, there’s been a listed price for wine in B.C., the same price you see on government liquor-store shelves. Independent liquor stores have received a discount of either 16 or 30 percent off these prices based on their licence, and restaurants receive no discount whatsoever. (That’s another rage-filled column.) That wine you pay 25 bucks for at your local government liquor store costs any restaurant wishing to resell it 25 bucks as well. At the same time, restaurants aren’t permitted to purchase from private liquor stores, nor will that be allowed in the foreseeable future.
Now, with the coming introduction of wine sales in grocery stores, the government is looking to bring in a new pricing structure that provides a base wholesale price for wine, leaving it open to all stores (grocery, private, government) to dictate the final selling price. Basically, the politicians arrive at this price by adding 89 percent to the first $11.75 of the supplier cost of a wine, and then a 67-percent markup on anything above that. What this means is that for stores to continue with their current profit margins, the new wholesale prices look to maintain the status quo shelf prices (or even offer a marginal discount) for wines currently listed under $15, but (and here’s the kicker) we could be seeing significant increases on everything else, even wines now priced as low as $15.
There are countless consequences of this potential move, including a guaranteed spike in black-market purchasing of wine by local restaurants and consumers in Alberta, where product is significantly cheaper, which will add to that province’s coffers and hemorrhage B.C. tax income.
But let’s look at this by referencing what’s right here in front of me at Cactus Club. I’m going to take some liberties by making some speculative calculations of price increases, based on a formula created by Mark Hicken, a Vancouver-based lawyer who specializes in wine law. I’m assuming that Cactus Club would want to maintain its current profit margin.
Cactus Club lists California’s J. Lohr Seven Oaks Cabernet Sauvignon ($22.99, B.C. Liquor Stores) at $12 per glass. Under the new system, that government liquor-store price will hover around $29, immediately bringing that $12 glass to $15. Not into a California Cabernet or being so spendy? Germany’s Selbach “fish label” Riesling ($17.95, B.C. Liquor Stores) is a citrusy, delicious $9 glass of wine. Under the new system, we’re looking at about $20.50 in stores, and that $9 glass can easily go up to $11.
Don’t assume that going by the bottle will ease any pain. Argentina’s Viña Chela Organic Malbec is $14.99 in government liquor stores and on the wine list at Cactus Club for $32—a standard markup of just over 100 percent. Come April, we’re looking at adding around $2.50 to the shelf price and potentially about $5 more on the list here, bringing it to roughly $37.
Should this system be implemented, restaurants will likely take a major financial hit. Really, either it’s restaurants that are going to have to absorb way higher costs, or it’s going to be you. I’m guessing you don’t want it to be you.
When the recession hit hard in 2008, we saw broad layoffs of hospitality-industry staff across B.C., along with the shuttering of many beloved Vancouver restaurants (Parkside, Aurora Bistro, Fuel, et cetera). The magnitude of these changes could easily dwarf the recession’s effect and devastate our dining landscape.
Some will point out that wines under $15 will stay the same price, and that those hovering around the $10 mark could even be a tad cheaper. Hey, I’m not elitist. I’m kinda broke sometimes too, and I’ve certainly sipped my fair share of $10 to $15 wines. When I do enjoy these wines, though, I keep in mind that in exchange for me minding my budget, I’m consuming industrial, factory-produced product that’s often built on the back of shoddy labour practices, unsustainable farming methods, and padding the pockets of multinational corporations.
You get what you pay for, and people will likely flock to these types of wines once this system rolls out, when preferred styles are priced out of their weekly budget. Consequently, this new system will punish honest farmers, independent producers, those who put pride in their work via ethical farming and business practices, and, simply put, decent-quality wine. It also punishes you, the consumer, in stores and in restaurants.
There are many of us in the industry who aren’t going to take these changes lying down. Hopefully, local wine-lovers won’t either.