GOVERNMENT LIQUOR MONOPOLY HURTS EVERYONE
Forecast looks bleak, but knowledgeable retailers can help you find good deals
News this month that liquor agencies are not being paid in a timely manner poses the question: Why is the government still buying and selling liquor in B.C.?
This time a new software program is the culprit, and businesses who live at the beck and call of the all-powerful monopoly have been told they should not expect to be fully paid until the software is fixed.
As it was explained to me, an agency expecting a cheque for $40,000 for product sold received one-third of what was due. When they inquired as to when full payment could be expected the answer was, they are working on it.
Let’s hope it’s faster than the time it is taking to delivering product to restaurants and retailers from their warehouse, now as long as three weeks, if it’s delivered at all. With the biggest retail season of the year just around the corner, tensions among agents, restaurant buyers and retailers is at an all-time high.
So where does all that leave consumers? There was a time when I would suggest it’s up to you to learn as much as you can about wine because the more you know, the more demanding you can be as a buyer. That kind of pressure can really change the retail mix, forcing wine shops — both government and public — to find and sell better wines at better prices. It is still good advice, but today you need to know a lot more about private versus government stores and how they work if you want to be a savvy shopper.
The current price of wine in B.C. is determined by B.C. Liquor Distribution Board Wholesale Operations, another government monopoly set up to sell liquor to retailers including its first cousin, B.C. Liquor Stores. The frankly misleading wholesale price is comprised of the historic wholesale price (the cost of wine landed in B.C.) plus a tax markup of 89 per cent applied to the first $11.75 per litre of wine, and a second-tier markup of 27 per cent applied to the remaining price, making it more like wholesale times two.
At this point, everyone adds their cost of doing business to the price and plus, plus, plus later you end up with what is known as the hospitality price in B.C. Liquor Stores, and hospitality plus even more in private wine shops.
The price is so inhospitable that B.C. Liquor Stores stripped out the PST and GST on its in-store pricing to give its shelf price a 15 per cent haircut. The price looks much better until you get to the till, where the 15 per cent is added
back in. Not surprisingly, the private sector followed suit, lest they look even more expensive.
As high as hospitality prices are, they are higher in the private sector where few, if any, vendors have the capital to compete with the resources of government stores. The private sector often prides itself on being more nimble than government, more innovative, quicker to respond and more, but all of that has been legislated out of liquor because LDB Wholesale controls every step of the private business. All
this adds up to a lot of uncertainty and, in most cases, higher prices for consumers.
Despite the millions of dollars restaurants pay for wine every month, they still pay the same inflated hospitality price you and I pay for our single purchases. In return, they speak of brutal customer service, constant stockouts and, in a strange, almost anti-environmental way, they are barred from buying product from any neighbourhood store, government or private. The result is you pay a minimum of $35 for a $10 wine — if you haven’t already given up on dining out.
All this makes it imperative you connect with knowledgeable retailers and/or store clerks who have your wine interests at heart. They remain committed to finding you the best wines and prices in the market, but it may mean you need to venture further afield than you are used to shopping.
From where I sit, the forecast couldn’t be more bleak for distributors, private retailers and consumers. It is as if the Borg
have taken control of the BCLDB and we are to be assimilated to drink overpriced commercial wine the rest of our lives. Resistance is futile.