Just imagine… Ontario with private wine stores

Privatization: “to transfer from public or government control or ownership to private enterprise.” (http://dictionary.reference.com/browse/privatization).  OK I admit I probably didn’t have to publish that definition for you to appreciate what this article is about.  If you have been following the Ontario wine industry, or Ontario politics, over the past few weeks you are well aware that the issue of privatizing the sale of alcohol in Ontario is once again heating up.  Of course this is nothing new as the debate over privatizing the LCBO has been going on for decades.  In fact in 2005 a report titled “Beverage Alcohol System Review” commissioned by Dalton McGuinty himself strongly recommended privatization at that time.  Needless to say it didn’t happen.

The LCBO has been in place since 1927 and few times has it even come close to being abolished or integrated into a joint system with the private sector.  However I have been following the discussions very closely over the past few weeks and I feel as though not only is the discussion once again heating up but it has the structure and backing to potentially succeed this time.  I am all for it.

I had actually been perched on the “privatization” fence for a while before jumping over.  At first I blindly supported privatization but only because I believed many of the “myths” which I’m sure many of you believe.  I had initially assumed that privatization would instantly lead to lower prices, ala our friends to the south.  Then I realized that is likely not true as evidenced by higher prices in many other provinces which have adopted at least some form of privatization.  Many believe that the LCBO – due in part to a relatively low tax rate compared with other provinces – actually helps keep pricing in check.  In fact a private system may lead to higher prices mostly because a store owner would still have to mark up their product considerably; both to cover contributions back to the government and to make a living.  Then for awhile I jumped on the anti-LCBO bandwagon striking them down as a monopolistic Goliath who does nothing but serve the interests of themselves and the government – ignoring consumers all together.  That is also not true.  The LCBO contributes hundreds and hundreds of millions of dollars to the Ontario government, which many believe helps keep all of our taxes down.  They also have such a massive structure that they can afford to operate what are sometimes unprofitable stores in many outlying areas of the province.  This includes many small towns where a privately owned store would likely struggle.  Plus in my personal opinion the LCBO is actually a wonderful shopping experience.  The stores are well merchandised, easy to shop, and they employ very knowledgeable staff.  The buyers for the LCBO are extremely talented and as such the product we get access to is quite good.  All of which, from a consumer perspective, is very positive.  They are also governed to help curb major societal problems including alcoholism and under-age drinking by keeping the sale of the product so regulated.

What I’m trying to say is that I had previously supported privatization based on limited knowledge of how it would actually unfold and because of an unfounded bias against the LCBO.  I’m sure there are many out there who think the same way.  So why now, based on everything I just outlined with full knowledge of the situation and a better appreciation for the LCBO, do I still support the privatization movement?  Simple, it ultimately benefits consumers with better selection and more choice.  Regardless of the structure a private wine system may take it would put the availability of products in the hands of individuals in the private sector.  These people would be able to stock their shelves with whatever product they wish.  Small wineries from around the world would have more chance of being available at retail stores because they wouldn’t have to meet the massive production requirements of the LCBO.  Shops could cater to an individual market, location, and unique consumer demands.  These are the very fundamentals of a free market.  Then picture Toronto where you have true ethnic diversity.  You would likely find this diversity in the availability of wine.  Just like a descendent from Tuscany can open a truly authentic restaurant, that same person would theoretically be able to open a truly authentic Tuscan wine shop.  How amazing would that be?   Finally what garner’s the most support from me is the rather obvious benefits to our local wine culture and businesses.  Private wine stores would allow for better stocking of Ontario wineries who can’t find their way onto LCBO shelves.  A recent study showed that wine consumption in Ontario has surpassed liquor and now accounts for 30% of Canadians’ total alcohol consumption.  That number rises year over year, while both beer and liquor consumption continues to fall.  Furthermore the study showed that one third of the wine consumed is now domestic wine (see the full article).  It’s no secret that the quality of wine in this province is getting better year after year, so the availability of this wine to the local consumer should be without barriers.  It shouldn’t require you visiting that winery to get the product.  I have personally predicted that Ontario wineries will be a major force on the world wine scene in 5-10 years. For that to happen, and for us to be considered up there with France, Italy, California, Australia, etc. privatization also needs to happen.

This movement is being driven largely by the Wine Council of Ontario which has launched a consumer driven approach called #mywineshop which you can find on www.mywineshop.ca.  This is basically a glorified petition where consumers can create a virtual wine shop and put it on the map.  They can then directly e-mail their local MP with support for the privatization movement.  This consumer involvement is new and is fundamental to the most recent lobby for change.  Check it out and if you can spare even 5 minutes put your very own wine shop on the map.  Their model is one where the LCBO and private wine stores co-exist and more importantly, their model is well laid out and could actually happen.

As I also mentioned there is significant momentum behind this and I am far from the only person writing about it.  Check out the great writers below and their take on the possibility of private wine stores.

John Szabo, Wine Align
David Lawrason, Wine Align
Shawn McCormick, Uncork Ontario
Mike Dicaro, Spotlight City
Rick VanSickle, Wines in Niagara

Just imagine more consumer choice when it comes to purchasing wine.  Just imagine a shop in the middle of Niagara which carried wines from every single winery in Niagara with a store owner who is an expert on the region.  Just imagine being able to open your very own wine store.  Just imagine our wine industry, finally structured the way it needs to be.

- Mark
Follow me on Twitter: @towineman