Starting in the fall, Ontario residents will be able to purchase imported and domestic wine from grocery stores across the province.
Ontario Premiere Kathleen Wynne made a formal announcement today from a Toronto Longo’s store. The announcement calls for 70 stores to carry wine by this fall, and up to 300 in the coming years. These stores will join the 60 that are already approved to sell beer in Ontario.
Ontarians love their liquor. The LCBO raked in over $5.4 billion in revenue last year.
The move is not without controversy. The current monopoly held by the LCBO on imported wines and domestic wines made outside of Ontario employs nearly 6,500 full-time equivalent employees in 651 stores.
The Ontario Public Service Employees Union represents them and part-time employees – over 7,000 in total.
According OPSEU president Warren (Smokey) Thomas, it comes at a high price. “Make no mistake about it: this is privatization of one of our crown jewels,” he said in a press release. “In the end, we’ll all pay the price.”
How much will the move eat into the LCBO’s lucrative monopoly?
According to the LCBO, annual wine sales are its biggest revenue generator. LCBO stores sold over $2 billion worth of wine last year, almost double what it sold in beer and slightly more than all other liquors and coolers combined.
All in all, the LCBO realizes a net profit of just over $1.8 billion from store sales. The government, however, receives more from private vendors.
Ontario is home to more than 290 independent wine retailers including The WineRack and The Wine Shop. They operate separately from grocery stores even though they are located in the same building.
The privately owned Beer Store is the largest single seller of alcohol in Ontario by volume with annual revenues around $2 billion.
Revenue from the beer and wine tax (tax imposed on independent Ontario wine and beer retailers) totalled $566 million.
What does all this mean?
Privatization of alcohol is already here. Only half of the 70 stores will be able to sell imported wine. Half of the proposed 300 store expansion include private stores already in operation.
The LCBO, and thus the province of Ontario, will reap substantial financial rewards from the sale of alcohol in LCBO stores and private retailers. Private retailers may eat into individual store revenues, but they will contribute to the more than half a billion dollars in tax collected by the provincial government.
Private wine retailers represent only a fraction of Ontario’s wine sales, and always will. Even with private retailers operating in Ontario, the LCBO owns close to 85 per cent of wine sales in Ontario.
The numbers show that even major changes in policy will not prevent the LCBO from operating as a substantial revenue generator for the province. Some, however, have expressed concerns about increased hours of access.
If the introduction of wine follows the trend set by the introduction of beer, this may not be true. Currently grocery stores that carry beer can only sell it during “the hours of operation authorized by the Board for the sale of beer.”
To paraphrase: the hours of operation for most LCBO’s.
Strong regulations may also ensure strict sales rules are followed. Specialized checkout lanes that require cashiers to have a valid smart serve certificate and quantity restrictions are among the proposals.
Let’s not forget customer service.
LCBO employees enjoy a variety of training opportunities. Among these programs are product seminars that equip employees with the knowledge to make educated suggestions.
