Opinion

With Massive Mark-ups, Why Are Liquor Branch Revenues Declining?

Government gouging booze buyers is proving a failed approach. There's a better way.

By Bob Exell, 13 Oct 2011, TheTyee.ca

Spilt wine

In BC, you have more to cry about over spilled wine.

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When a multi-billion-dollar corporation faces declining revenues and significantly misses profit targets, what might be the cause? How about...

Poor marketing. Poor product mix. Poor service. Inadequate financial controls. Failure to innovate. High prices. Or plain bad management.

In the case of this mammoth enterprise -- not in fact a corporation but a government bureaucracy -- none of the above.

Last year (fiscal 2010/2011) the big booze retailer Liquor Distribution Branch of B.C. saw its revenue slip to $2.82 billion from $2.854 billion the year before. Its net income of $890.4 million was $83.3 million below budget.

"The decrease was the result of poor sales due to continued unfavourable economic conditions," said the Branch's annual report.

No one challenged that disclaimer. More likely, no one even read it.

Because the Liquor Distribution Branch (LDB) is just a tax collector. On paper it reports to the provincial Solicitor General, but in reality it is the revenue branch of Ministry of Finance that calls the shots.

Of course it makes total sense for a multi-billion-dollar retailer -- 197 stores of its own plus hundreds of strong-armed, quasi-private retail outlets -- to be controlled by tax collectors in Victoria. But the LDB's factotums -- the executive at the branch's Vancouver box office -- do as they are told. They do not think outside of it.

To be more precise, they do nothing to create favourable market conditions -- such as giving the market what it demands: a decent product at a fair price. Nor even online sales, as is done in Ontario and Alberta.

But fair pricing? A joke, as we shall see.

The LDB is the ultimate monopoly. It has no competitors, no challengers, no contrarians within. It is the despot behind an impenetrable wall, neither benign nor benevolent. It controls booze in all its forms -- imports, distribution, retailing, pricing. What it says goes. Period. End of story.

Here is an example of its mind-think: when British Columbia's astute politicians decided to embrace HST, joining the federal and provincial sales taxes at the hip, the province virtually sacrificed its power to increase its seven per cent sales tax at any time in the future. Why? Because over the years the provincial sales tax has been increased from three to four to five to six to seven, whereas the federal tax has been decreased from seven to six to five. Any action on the part of the province to further increase its component of the HST would be greeted with greater outrage than the introduction of the HST itself.

But with the advent of the HST the Liquor Distribution Branch saw a dilemma. The problem was that sales tax on booze was not the PST's seven per cent. Booze had its own special sales tax -- 10 per cent. But administration of the harmonized sales tax meant the LDB would have to be in lock-step with it. That would reduce the provincial portion on booze to seven per cent from 10 per cent. The impact: a potential revenue shortfall.

What to do? Make it up somewhere else -- that's what monopolies do. So the LDB increased its markup. Presto! Problem solved.

Yet the LDB has been telling us for years that its markup wasn't a tax at all. It was its margin. Not that one could readily find private enterprise with a margin of equal proportion, for the LDB routinely takes a product that costs five dollars and sells it for more than 20 dollars.

That is why consumers in British Columbia pay the atrocious prices they do for beer, wine and spirits.

Guide to gouges

Let's look at look at some of those prices. We'll focus on wine, for it's a simple matter to make a product-by-product comparison with prices for exactly the same wines in a nearby market: the State of Washington.

In so doing, we'll bear in mind the exhortations of the federal Minister of Finance, Jim Flaherty, who recently declared that "Canadians are irritated when they see large price discrepancies on the exact same products being sold on different sides of the border."

(Note: the Washington [WA] prices shown are store shelf prices. For a precise comparison with B.C. prices add tax of 8.5 per cent to each of the WA prices.)

French wines:

Saumur Les Pouches (white Loire wine): B.C. $17.95, WA $9.95 (Haggen's, Bellingham, WA).

Jadot Beaujolais Villages (red): B.C. $19.99, WA $10.99 (Trader Joe's, Bellingham, WA).

Duboeuf Beaujolais Villages: B.C. $16.99, WA $7.99 (Bellingham Food Co-op, Bellingham, WA).

Fevre Chablis Champs Royaux (white Burgundy): B.C. $28.99, WA $15.99 (Costco, Bellingham, WA).

Spanish wines:

Garnacha de Fuego (Grenache red): B.C. $15.99, WA $7:99 (everywhere in Bellingham, WA).

Marques de Caceres Rosado (rose): B.C. $16.99, WA $7.99 (Food Co-op, Bellingham, WA).

Borsao Tres Picos (red): B.C. $27.99, WA $13.99 (Costcutter Market, Birch Bay, WA).

Segura Viuras Brut Riserva (sparking white wine): B.C. $16.99, WA $7.99 (Costcutter Market).

California Wines:

J. Lohr Seven Oaks Cabernet Sauvignon: B.C, $22.99, WA $12.99 (Costco).

Chilean wines:

Conosur Carmenere (red): B.C. $14.49, WA $8.99 (Costcutter Market).

New Zealand wines:

Kim Crawford Marlborough Sauvignon Blanc: B.C. $11.99 (half-bottle), WA $13.79 (full bottle, Costco).

Italian wines:

Toscana Villa Antinori (Tuscany red): B.C. $24.99, WA $15.99 (Costco).

Australian wines:

Yellow Tale Shiraz (red): B.C. $11.99 (single bottle), WA $8.49 (magnum, Costco) or $6.99 (single bottle, Costcutter Market).

Is there a legitimate commercial reason for such differentials? No. In fact, the Washington prices reflect the American three-tier system -- importer, distributors, retailer -- where all three take a cut. B.C. has a simple two-tier system: the agent, who is also the de facto importer, and the LDB, the importer of record.

Inefficient tax collector

And yet, as noted, despite those big price tags on its products, the LDB managed to lose money last year.

As its revenues decline, does the LDB point to its pricing policy as a possible culprit? Does it say anything at all?

Anyone who has been in business knows you don't have to wait a year to figure out your sales are flat or declining. Shortfalls can be spotted early on. As they develop into a trend, the business person has four options: revitalize the business, cut costs and create efficiencies, put itself up for sale, or do nothing.

But the torporific Liquor Distribution Branch, lamenting the poor economic conditions it faces, responds this way (a quote from its annual report): "The LDB will carefully monitor its sales and expenses and will make adjustments to its operations as necessary."

What adjustments? According to the same annual report the LDB's labour force of full- and part-time employees has remained constant year-over-year at about 3,500. Operating expenses, however, increased in fiscal 2011 as revenues declined.

Were it a public company what would shareholders have to say about that? But there is just one shareholder: the government of British Columbia.

The option the government should obviously select -- but won't -- is to sell the business.

Sell it because the LDB is a ridiculously inefficient tax collector, needing 3,500 employees and a huge physical plant to remit just $890 million to the government. Compare that to total annual government revenue of almost $40 billion, much of it logged in by (in relative terms) a handful of employees in the Ministry of Finance.

To put it another way, of the LDB's total sales receipts of $2.82 billion, it spends almost $2 billion managing its enterprise.

Sell it for the immediate gain to be realized in receipts from private sector interests from their purchase of fixed assets, real property, leasehold interests, and "goodwill." How much would the government's liquor empire fetch? Clearly it would be in the hundreds of millions of dollars, for the LDB's balance sheet itself reports post-amortization hard assets alone of about $170 million.

Sell it to get rid of the politics -- especially the clout exercised by the B.C. wine industry which has virtually unlimited access to store shelf space, even as some of its products are little more than sugar water, alcohol and additives.

Sell it to give a boost to the private sector and to give consumers greater choice and a bit of a break.

And, finally, sell it to increase government revenues.

That's correct, increase them; for clerk with a calculator could readily devise a tax regime that would extract more revenue from private enterprise and consumers in fees, royalties (as in Alberta) and taxes than is currently sent to the government by the LDB.

But we return to the four options of the failing business: it will be option four, of course. Do nothing. [Tyee]

Former wine importer Bob Exell is a writer and editor who worked for several Canadian newspapers as well as the Canadian Press in Toronto and New York. He was executive assistant to a Conservative cabinet minister in Ontario before moving to Vancouver in 1975 where he served as an assistant deputy minister.

63 Comments:

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  • zalm

    32 weeks ago

    "Losing money"

    Help me out here. How does net income of $890 million equate to "losing money"? Lord knows I could use a bit of a break on the wines I buy, but I need to see something a little bit better than this, what with cherry-picked pricing standing in for solid fact.

    What I do know is that last time I was vising the brother-in-law in Edmonton, I couldn't find a nice Mosel Riesling Auslese to celebrate that special occasion with the game meat he prepared. Had I known everybody in Edmonton wanted only to pump me full of Yellowtail, I'd have risked jail and certain death at the hands of Alberta's "revenooers" and brought a couple of nice JJ Prums or a Fritz Haag with me.

    There's a lot more to this controversy than Bob wrote here, and he's not off to a very good start.

  • Wake Up

    32 weeks ago

    Not all issues are problems...

    There are a couple of issues here.

    One, tax on liquor in BC has increased too much past the point of no return, while people's wages have stagnated and everything is so damned expensive - so people's consumption has dropped. The government is therefore seeing somewhat less return than if they priced liquor lower. Lower prices = higher consumption.

    Two, 3500 employees make a living from the BC Liquor Stores. It isn't as good a living as it was, because working conditions were altered several years ago, and new employees do not make as much or have as much stability.

    This author jumps to the conclusion that 1. if the total of liquor store revenues are going down, then 2. there are obviously too many overpaid employees.

    Ummm. One missing link here is that the tax/profit/revenue of the liquor stores is raked off the top and put into the Government's general revenue/account. THE LOWER AMOUNT OF PROFIT, which incidentally, CANNOT BE CALLED A LOSS because they are still RAKING IN THE DOUGH,can seriously not be due to having employees. Is liquor supposed to bought out of a massive warehouse sized vending machine?

    Operating costs have gone up. Has anyone checked the salaries of the TOP executives of the liquor branch? Like Hydro which just chopped 700 employees I am guessing to be able to maintain the top execs? oh, and maintain credibility of BC government. Wait, does that mean people are okay with real working people losing their jobs, and not the fat cats at the top who get paid 65 000$ per board meeting?- Did Hydro drop the top exec's salaries OR just chop regular working people?

    Or maybe operating costs include the unbelievably high costs of shipping, and heating in BC. Just like in schools - does the Liquor Store also have to pay the fines on its carbon emissions back to some strangely set up carbon offset firm? Perhaps that's another reason for not having as much money to show for itself.

    Why, in all of these conservative mantras, is it working people who are just trying to have a life and provide a little extra for their kids - like a university education - who are continually blamed for lowering profits - which in THIS case, this author is saying that the profits should be going to a private business - one person or a family or an American owned corporation perhaps - instead of providing hundreds of families a fair living, so that they in turn can pay taxes to feed the system which somewhat works for us - or at least did.

    Does the rest of the province really not see through this toxic talk?

  • Wake Up

    32 weeks ago

    Come On Tyee...

    I'd like to ask the Tyee if anyone vets the headlines on these articles. How did this headline pass what I thought were higher standards here; this is like reading the Province. The article speaks for itself as an editorial, but this headline is ridiculous.

  • David Beers

    32 weeks ago

    Administrator

    Point taken Wake Up

    I'll adjust the headline to be more clear -- since I didn't just vet it, I wrote it!

  • driftwolf

    32 weeks ago

    I use sake as the example.

    I once asked the LCB to give me a quote for a case of good sake. It came to about $60 per 1 litre bottle.

    In Japan, the cost of this sake is $10 per bottle. Excellent sake is generally inexpensive because, unlike wine, it has a limited shelf life. It MUST be consumed within months of being made. It's got one of the best quality vs price ratios of any drink I've had.

    LCD doesn't see it that way. They wanted their 600% mark up. I told them to shove it up sideways. Prohibition ended years ago. Someone should tell the government.

  • Wake Up

    32 weeks ago

    Thank You, David Beers

    Your high standards obviously still exist even at close to midnight. I would suggest something like... The Real Problem with Declining Liquor Store Revenues is...? This leaves it up to the imagination of the reader who will definitely get whomped with the opinion in the piece, BUT instead of having the answer spelled out, there will need to be some thinking going on - so as not to shape and manipulate.

  • Fiat lux

    32 weeks ago

    The only reason the Board is

    The only reason the Board is losing money is that the government wants to sell it off.

    Most likely to "wealth creating foreign investors", bringing more worthless, imaginary money to the country to inflate prices even more. .

    Ed Deak.

  • Frank

    32 weeks ago

    Help me out here Bob

    "How much would the government's liquor empire fetch? Clearly it would be in the hundreds of millions of dollars, for the LDB's balance sheet itself reports post-amortization hard assets alone of about $170 million."

    You want to sell an asset that provides over $800 million a year in revenue for the government for less than its revenue for one year?

    That makes no sense. Although to the BC Liberals I'm sure it does as they've been selling assets and can't figure out why our debt is rising so fast.

    And as pointed out above by Wake Up, and which should be highlighted in light of the 99% protests, those 3500 employees don't need second jobs. Those are well-paid family-supporting jobs that pay taxes back to the government.

    If you privatize and replace them with $10 an hour jobs you increase poverty. Does BC want to end up like Harrisburg, the capital of Virginia, which has declared bankruptcy because half of its citizens are living in poverty so it can't raise taxes?

  • Fiat lux

    32 weeks ago

    The Socreds, original

    The Socreds, original predecessors of the BCLibs, sold "Beautiful BC" magazine, that had no ads, to Jim Pattison for one year profits of the magazine and soon the ads appeared.

    Remember that "right wing conservatives" have always been, and are, the best "fiscal managers"

    That's why BC now has over three times the debt load, up to over $100. billion, from the $33. billion they inherited from the NDP.

    People vote for them, all over the world, because they know their uncanny ability to handle money.

    Ed Deak.

  • Van Isle

    32 weeks ago

    Question to the LCB. Four

    Question to the LCB. Four years ago a bottle of ordinary scotch whisky was about $27.00 retail and the exchange rate between the Canadian Dollar and the English Pound was 2.4 to 1. Today the that same bottle of whisky is about the same but now the exchange rate between the Canadian dollar and the English pound is 1.6 to 1. How came you haven't passed that difference onto the consumer?

  • Barryeng

    32 weeks ago

    Ed

    Ed, by "Their uncanny ability to handle money", do you mean their ability to put it in their own pockets?

    If,( and it is a big if), the LDB is losing money, it is through a deliberate attempt by them to force me into private, for profit liquor stores. It wasn't long ago that the LDB was the only place to buy liquor. Now every hotel has a private outlet. It wasn't long ago that you could only by beer or wine at the private stores, but now you can get anything there. It wasn't long ago that you could buy any liquor at the government operated store, but now they limit what they are allowed to carry, forcing me to go to the private stores for specific brands.

    If,(and it is a big if) the LDB is losing money, It is a clear attempt to privatize one more income source for the Liberals. It worked with BC Rail. It is working with BC Hydro. It looks like it might work with BC Ferries. According to their logic, it will probably work with the Liquor Distribution Branch too.

  • munroe

    32 weeks ago

    Hmmm

    Now we have the point of view of a wannabe bootlegger. All about diverting money from the public to private pockets. How much has liquor consumption and problems increased since private distribution expanded so rapidly since 2001? That is the real question.

  • Jerry Munro

    32 weeks ago

    Deliberately Create a False Crisis, Then Privatize It...

    "Poor marketing. Poor product mix. Poor service. Inadequate financial controls. Failure to innovate. High prices. Or plain bad management." from article.

    Ed Deak nails it, in my view. The reason all these "public" crown corporations are failing or in various stages of crises, along with the social services sector is, the government wants to sell them off to the corporate/private sector... as part of their maturing agenda to privatize the government services sector. This is true from the medical system through to the distribution of liquor.

    And the main evidence of it in the case of liquor, in addition to the above quote from the article... These being the actual means by which the Corporatist State is undermining this particular public sector. ...is they have allowed the private sector more and more to intrude in on the increasingly profitable sectors, in the case of the growing number of private stores with more varied hours etc, that are taking business away from the "public" stores. Where they could be moving into these areas themselves and providing more good "public sector" jobs, if it was not the intention to facilitate the "private" sector.

    Fuck the "private/corporate" sector.

    People are going to drink, just as they are going to and do smoke pot etc. Only because of the nature of these products and their tendency to attract criminal elements into the "business", ditto casino's, they should be brought exclusively into the public sector of the Liquor Distribution Branch to ensure safe quality and "reasonable priced" products for sale. (This side of capitalism. Democratized along with the rest of the economy, the other side of the revolution.) With the profits flowing into the public purse for "services" and to cover the unfortunate human and other costs that sometimes attach to alcohol and drug use.

    It is the same process going on here that is most dramatically occurring with the medical delivery system... create a crisis with over pricing and separating out important elements to the private sector, or cash starve it as in the case of the medical system, then advance the private Enterprise solution as the appearance of the only viable solution to a crisis weary public. (A similar process is at work within BC Ferries.)

    The corporatization of capitalism, feeding the drift to fascism, proceeds apace, and this, in the public sector, is one of the ways this process manifests itself.

    It needs to be exposed and fought, this broad corporation process, and integrated as one of the demands into the coming street battles that will go on. There is no other real way to deal with it.

  • Fiat lux

    32 weeks ago

    Barry....You have to admit

    Barry....You have to admit that it takes an uncanny ability to triple the debtload and still get reelected time after time on their claims of good fiscal management ?

    Mulroney's original FTA closed 12,000 businesses and fired half million well paid workers, but that was all good management and that's why we now have more "free trade" fraud, giving more and more of the country away, because "Canada now is a free trader country"

    Ed Deak.

  • pseudotsuga

    32 weeks ago

    + net income = loss?

    Unless I'm missing something, a net income of $890.4m doesn't equal a loss. "Didn't meet expectations" seems more reasonable.

    I doubt the existing system is the best one, but calling a positive income a loss doesn't seem like a good start in arguing for change.

  • paul willcocks

    32 weeks ago

    badly flawed piece

    There is, I'm sure, an argument to be made about privatizing the LDB, but this is a bad article.
    "To put it another way, of the LDB's total sales receipts of $2.82 billion, it spends almost $2 billion managing its enterprise," the writer claims.
    But $1.5 billion of that amount is the cost of the alcohol purchased by the LDB from private suppliers.
    The writer doesn't note that wages and benefits declined, though not by much, in the last year.
    And the claim LDB lost money is simply false.

  • Luck

    32 weeks ago

    booze money

    FACT IS OUR PUBLIC LIQUOR BOARD IS MAKING OVER 1.5 BILLION ANNUALLY WITH VERY LITTLE ADVERTISING.

    HIRE PART TIME EMPLOYEEES AT AROUND $11.65 PER HOUR AND FULL TIME WORKER TAKES VACTION TIME OFF.

    THE PRICES CONTINUE TO GO UP BECAUSE NO ONE COMPLAINS.

    FINALLY GROUPS ARE ORGANIZING AROUND THE WORLD TO LET THE RICH JERKS KNOW THAT THE POOR MAKE UP 99% OF THE VOTE.

    HOPEFULLY IT WILL COME TO VANCOUVER BC CANADA.

    SO NOW POOR PEOPLE USE THAT POWER TO MAKE CHANGE.

    EVERYONE ON THE TYEE CONTRIBUTORS HAVE BEEN KICKING THIS NOTION AROUND FOR MANY YEARS.

    IT IS NOW REALITY.

    THE POOR NOW SEE THEY HAVE POWER. USE IT FOLKS.

    LOOK AT WERE THE MONEY IS BEING SIPHONED OFF BY THE LIBERALS AND THEN YOU CAN FIX THE PROBLEMS.

  • DavidG

    32 weeks ago

    The price is usually double

    over what we pay @ Point Roberts. Layer Cake is $12, and about $25 here.

    The rules for bringing wine across the border are two bottles per person, assuming you are staying 48 hours or longer.

    But the Canada Customs Agents believe they are NOT a revenue collection agency (unlike BCLC), and so there is wiggle room. We bring back 1 bottle per person if we are down 24 hours, and 2.5 bottle per person if we are down 48 hours or longer.

  • RickW

    32 weeks ago

    Isn't The Article Missing The Point?

    Booze is controlled by government to keep the citizens from becoming rum-soaked degenerates. As such, it's ultimate aim is the creation of a society that is free of boozers and ne'er do wells.

    Falling profits would indicate that government is succeeding - however slowly....

  • happy

    32 weeks ago

    Customer service sucks

    I went into the superstore at 40th and Cambie looking for an imported beer a friend had told me about.
    When unable to find it I approached the employee standing there and asked.
    "I don't know" she said - and walked away.
    I had no problem with her not knowing. I had a huge problem with her NOT saying "but I'll find out"
    I left without buying anything and went to a private store where my business was appreciated.

  • Meggsy

    32 weeks ago

    DO NOT PRIVATIZE ANYMORE

    The option the government should obviously select -- but won't -- is to sell the business.
    __________

    NO, no no no! Do not privatize the business the prices would most definitely go up! not down!

    In fact some of the prices mentioned are the same or even higher in Alberta who has privatized a lot of their liquor. In fact prices can range a difference of $10 per item depending on the store or if there is a another store near by. They bank on the demographics of the areas.

    all revenues of all liquor belongs to the Province of BC and to insinuate that it should be privatized is asinine.

    the difference in American prices and Canadian prices is due to import/export taxes -- take that up with the FEDS, not the public asset owned by the people of BC.

  • Meggsy

    32 weeks ago

    Privatizing doesn't work in favour of the people

    The LDB has already been partially privatized, that has not resulted in cheaper prices, it resulted in massive inflated prices beyond a reasonable scope. Not all liquor stores are run by LDB.

  • David Beers

    32 weeks ago

    Administrator

    wording that is confusing some has been revised

    apologies for not editing this opinion piece with an eye towards how a fast reader could misread. The author wrote that LDB lost money 'year over year' (i.e. its revenues declined and net income missed targets) and then in a short handed way further down said LDB lost money. I am changing the wording to accurately reflect what the author also makes clear in the piece -- that LDP, despite marking up liquor as it pleases, sees its sales declining and isn't contributing revenue to the gov't coffers that it is expected to produce.

  • Meggsy

    32 weeks ago

    An information request would be good

    As other public assets, in annual reports, have odd expenses that seem to come from the government but don't indicate what those expenses are. It can be seen in BC Hydro as well, the exact year the Liberals were elected.

  • Cynic

    32 weeks ago

    Btw Luck, as soon as I see

    Btw Luck, as soon as I see your all-caps posts I scroll right by. If you want to be read, stop yelling.

  • Bob Exell

    32 weeks ago

    Paul Willcocks et al

    Of course the LDB does not lose money. As a monopoly it makes a ton of money. My reference to losing money year-over-year (the operative phrase here is year-over-year) is terminology one can find in newspaper business pages any day of the week. It refers to a business whose annual revenue is declining compared to the previous year or years. That is the case with the LDB.
    "Managing its enterprise" is straight-forward
    enough. If you manage an enterprise--and I have--you buy, sell, hire, fire, borrow, pay,
    and, in other words, do whatever is needed to (forgive me) manage your enterprise. Need I have used more column space to set that out? In an earlier life I was a supplier to the LDB. It paid my company. We were both managing our . . . etc.
    Other than Willcocks' snits re nomenclature,
    the comments that struck as weird were those relating to public sector jobs. I find it difficult to accept that it is OK for a government enterprise to rip off the consumer if the end result is to provide make-work employment for public servants. I don't begrudge their jobs. I worked with a bunch of them and respected many of them. But the system remains an anachronism.

  • Meggsy

    32 weeks ago

    Bob

    How can you justify saying "make work" employment for public sector while know very well those jobs would still need to be fulfilled regardless of the "public" sector title if it were privatized.

    Your post is odd, IMO.

  • Bob Exell

    32 weeks ago

    Meggsy

    Meggsy, my reference was to an earlier posting that suggested (or at least it did to me) that a benefit of the system was that it created many well-paid jobs. True. Perhaps it is harsh of me to refer to these jobs as make-work. But my experience suggests to me that the staff is bloated. Unfortunately a lot of existing jobs would be lost were the LDB to be privatized. But it won't be. There are segments within the industry--i.e., the private sector--who want it to remain just as it is. And they say so with their campaign contributions. But that's another story in itself.

  • marikane

    32 weeks ago

    Author needs wine education

    I'm going to pass over the well-worn arguments made and take issue with another comment the author made:

    "the B.C. wine industry which has virtually unlimited access to store shelf space, even as some of its products are little more than sugar water, alcohol and additives."

    Does Bob have any basic knowledge of wine or facts to back up this statement? Does he know that a few marginal producers does not a region make? Has he ever tasted a Tantalus Riesling?

    Obviously, it was just a callous swipe at the local industry made to emphasize his larger point, but it serves to prove that Bob doesn't know wine from grape juice. So, why should we believe his other points?

  • Meggsy

    32 weeks ago

    The Libs, under Campbell

    The Libs want to privatize the LDB (they have been trying for a decade, ironically the prices have skyrocketed under this idea), however the idea of bloated staff could be true in some departments, as is in many private companies as well.

    The prices are high especially compared to the American market due to import/export tax plus the extra 10% Provincial liquor tax and deposit.

    I don't really think it is a case of bloated staff as much as it is tax grabs and the government dipping their paws in the pot of revenue to shift towards subsidizing the privatization of other parts of the public asset pool.

  • Pender Island Codger

    32 weeks ago

    Privatized liquor sales

    Can this approach to declaring LCB moribund be the intro to a privatization ploy? When this sort of thing came to the surface in Washington state, the government was all set to turn over their business to private vendors, without asking a cent! I think that outcry brought out the adults to lend advice, but it was not a sure thing.
    Given BC Lieberal track records (see BC Rail and tree farm licence giveaways) I can see the BC government handing liquor and wine sales over to BIG BOOZE, without debate, consultation, or warning.

  • Dan the socialist

    32 weeks ago

    NO, no no no! Do not

    NO, no no no! Do not privatize the business the prices would most definitely go up!
    ============

    I was working in Fort St. John when that happened and used to go to Grande Prairie to shop and at first prices went down after the government stores closed but then went up to where many products are actually cheaper in BC Liquor stores now...That is what will happen here if it is privatised even though fewer employees, min wage workers with no benefits at the till..

    It is actually so much cheaper to smoke pot these days. 50 of weed goes a lot farther than 50 of booze...

  • For a better world

    32 weeks ago

    Lacking

    This article is lacking in its scope, along with its distorted conclusion. A number of relevant issues are missing.

    A major benefit in pricing has already been granted to the private liquor stores. These businesses have complained several times to the BC government and on each occasion they received more favourable pricing.

    Liquor store prices are also higher than they should be to accommodate the estate wineries. The higher prices enables these organizations to enhance their profit margins. It also allows some of the bigger players to blend low cost foreign plonk and market it as a BC product.

    The province expanded private liquor stores because "private" is the primary ideology of their financial backers. These entities want an LCB monopoly for themselves. That will enable them to pay employees less than livable wages and reap the greater spoils. Prices, as in Alberta, will not be reduced.

    Another reason for privatization, as it exists so far, is to avoid lost government revenue should liquor store employees decide to strike.

  • blackie

    32 weeks ago

    dark ages

    Sorry folks, but liquor policy in Canada, and in BC, is in the dark ages. Those pleading to keep government-run liquor stores can't have traveled much. In the last year, I've bought good, cheap wine -- with tonnes of variety -- in New Zealand, several US States, France, Switzerland, Italy, and Austria. Most of it -- almost all in fact -- I bought in grocery stores.

    I don't want the government to privatize the liquor operation, I want the government to get out of it entirely and license the sales through legitimate retailers, like Safeway etc.

    We get laughed at when people from those other places come here and try to buy booze. That's of course after the initial price shock fades away.

  • frank2

    32 weeks ago

    I'd second others who pointed

    I'd second others who pointed out that this article is seriously deficient in not (a) setting out the importance of taxes in pricing, (b) impacts of the private operators on LCB sales over time, and (c) the social objective of cutting consumption of a dangerous (if pleasurable) drug.

    The idea that we should seek to maximise government revenues from alcohol (or gambling, or, in future, other drugs) is seriously deficient -- it ignores the costs to individuals and society of excess consumption. Maximising the difference between social benefits and costs would be much better -- but perhaps too difficult to do in practice.

  • happy

    32 weeks ago

    How bout like Quebec then

    Beer and wine sold practically anywhere, 7/11, grocery stores, etc...
    Hard booze still the domain of the government liqour store.
    This thread is all over the map IMO. Are we discussing privatizing the retail outlets or the warehouse and distribution end of it.
    It should be clarified.

  • DJHawk

    32 weeks ago

    This piece about the LDB

    Wow! This piece looks and sounds like it was written by the BC Chamber of Commerce or the Canadian Federation of Independent Business in an attempt to villify government enterprise. Could this piece be the start of a "Privatize the BC LDB" campaign?

  • LeftSeater

    32 weeks ago

    A reason to shop in Quebec?

    At the Gatineau Costco this summer;

    Coors Light Cans 60 pack - $56.55 + deposit & tax - total for 2 = $135.08

    Then there was a 24 pack (bottles) Corona $23.69 + dep ($2.40) + tax ($3.20) VS. $45.99 + dep & HST at the BC Government stores.

    Alexander Keith's IPA - 24 pack (bottles) $27.83 + dep & tax.

  • Paul Rickett

    32 weeks ago

    Food (or drink) for thought

    Disclaimer - I run a private wine store

    1. Fair reporting: It would have been fairer to quote the BC prices with HST out.

    2. Taxation: The comment about inefficient tax collectors for $890M is wrong. That number is the profit from operations that is returned 100% to Govt. If that net had been earned by private corporations only the BC corporate tax, currently 10% of net profit, would have accrued to BC, i.e. $800M less every year. The LDB system collects HST in addition to returning a bottom line. This additional tax collection from the LDB system is c. $340M in HST p.a (i.e. on top of the $2.8B).

    3. Choice: 18,000 wines are approved for sale in BC. LDB stores list about 3500 across the chain, the biggest private chains c. 3000. There are c. 1000 private stores in BC that can sell the 15K the LDB don't carry if they choose. Alberta has only 11K wines approved for sale. LDB stores account for 41% of total alcohol sales in BC and only 20% of retail locations. As private stores outnumber LDB stores by a factor of 5 one might say that the private sector is not doing enough to deliver consumer choice. Not one of my Albertan customers feels there is wider choice in their local stores.
    The LDB exercises a huge chokehold at wholesale level on what and how wine is imported and this needs to be simplified and streamlined. The whole system is also full of a myriad of pettifogging, inane rules and inefficiencies that essentially act as a restraint of trade to the private sector.

    4. Efficiency: By LDB’s own admission (P.18 of 2011 Annual Report) their efficiency is about 40% less than the best of the unidentified companies it benchmarked itself against. On a normalised basis LDB`s sales per employee are equivalent to Walmart and its sales p.sq.ft at the lower end of the normalised range for US private retail merchants that carry alcohol among other products.
    Please read page 20 in the report. Employee costs went down by $3.5m. Overall increase in cost was driven by factors that might impact any private organisation in that year.

    But all that aside, there are two real elephants in the room; and the private sector has not yet provided good answers:
    1. How privatisation would be revenue neutral or positive to the Government and,
    2. Given that alcohol policies are deemed a function of social policy how can privatisation reduce prices and yet not increase consumption? The Government is armed with numerous studies from our Universities that cite increased health and social problems from wider availability and lower prices – private industry response has been fulmination, not refutation.

    This is not an apologia for the LDB, there are serious issues to be addressed within the current framework and I believe the Alberta solution is ultimately a better one overall for numerous reasons. Today there is no incentive for the BC government or LDB to do anything until the private sector gets its act together and addresses the real issues.

  • snert

    32 weeks ago

    The answer is quite simple.

    Unless you are standing right outside the doors to Gov't store there are at least 4 beer & wine stores between you and the nearest branch. The current business model is just doomed to failure because of the competition.

    Ed Deak is most likely right, the government just wants to unload the stores.

  • G West

    32 weeks ago

    Paul Rickett

    The Alberta solution?

    A private liquor store on 'every' corner in certain districts in Edmonton and Calgary; the highest murder rates (Edmonton) in the country.

    And some of the highest rates of public drunkenness.

    But, don't take my word for it - have a look at this:
    http://www.ofcmhap.on.ca/sites/ofcmhap.on.ca/files/Retail%20Alcohol%20Monopolies%20Paper.pdf

    You're right though - these are serious issues and I'm not at all sure that the private sector has the beans or the desire to deal with them. The reason most private businessmen and women got into the liquor biz since 2002 has nothing whatever to do with public responsibility and community spirits.

    We've just seen (on June 15) what increasing the availability and amount of liquor to the public can lead to....Maybe this society just isn't ready for private profits in the liquor trade to any greater degree than we have already

  • Fish-counter

    32 weeks ago

    Alberta privatised their liquor stores 20 years ago

    The world did not end and prices did not go down either.

    I remember the old liquor stores, where you had to write a requisition and the product came down a conveyor ramp through a hole in the wall. I also remember Baby Duck and Lonesome Charlie as the wines guaranteed to turn your stomach.

    There is no reason for liquor stores to be government-owned. The government can probably make more profit through taxation than through retailing anyway.

    Otherwise, why does everyone want cheap liquor? Are there not more than enough road traffic accidents from drunk driving as it is?

    P.S.
    Can you can still buy some liquor through grocery stores? I know one bakery that used to flog some German ooze because it was a cooking item. It was good loophole, that one.

    P.P.S.
    In England, it was possible at one time to get liquor on a prescription from your doctor. Guinness was routine, but one doctor prescribed a bottle of expensive champagne per month for one of his patients. It was quite the little scandal because they were drinking buddies.

  • zalm

    32 weeks ago

    Paul Rickett

    Interesting food for thought. Thanks .

  • Okanagan Orchardist

    32 weeks ago

    Laugh all you want... well just a little

    Somewhat off topic, but I think there is nothing better than to see the LDB income going south. Is it possible that more people are finding out that spending money on liquor is just, like cigarettes, throwing your money away?
    But I wouldn't suggest privatization, because, I think, that would only lead to competition, and once you have that, you would have the boys on motorcyles pretty well in control of the profits.
    I totally agree with your last comment, G WEST

  • firefox007

    32 weeks ago

    Not Privatizing Doesn't Address Cost.

    Outside of the un-democratic monopoly over one important product, those who deny a free market in alcohol don't address the huge & un-necessary mark-ups of the BC Gov't.

  • Frank

    32 weeks ago

    firefox007

    What's to address? I don't have a problem with the mark-ups. Beer and wine stores, as well as all other retailers, call that mark-up, profit.

    But in this case the profit goes to the people of BC, not a small group of shareholders.

  • pwlg

    32 weeks ago

    rural grocery stores-resellers

    LDB finally allowed liquor and beer resellers in rural BC grocery stores-general stores to make more money from selling LDB products.

    I wonder if this change of policy shifted some LDB profits to these general store resellers in rural BC?

  • pwlg

    32 weeks ago

    rural grocery stores-resellers

    LDB finally allowed liquor and beer resellers in rural BC grocery stores-general stores to make more money from selling LDB products.

    I wonder if this change of policy shifted some LDB profits to these general store resellers in rural BC?

  • Jerry Munro

    32 weeks ago

    The Bubble...

    "The world did not end and prices did not go down either." fishcounter.

    The world ends for Alberta, at least as they have known it through this laissez faire neocon period, when the oil runs out... then its the old brick wall of reality for them again. Right now, they are still living inside the bubble. (The bubble is also building in my old home province of Saskatchewan.)

  • Kreditanstalt

    32 weeks ago

    How about a little

    How about a little competition? That might help make them a bit more competitive.

    Competition within: they could replace all their expensive unionized employees and put new, affordable employees on renewable year-by-year contracts.

    Competition without: they could simply have their monopoly status revoked. Then their allegedly poor management would have to shape up quickly. How come British Columbia's liquor laws are still medieval? Why can't we buy a bottle of table wine (at least!) in supermarkets? Why can't we home brew freely - and sell it freely?

    And they wouldn't be taking $890m out of the public's pocket WITHOUT the monopoly ststus...

  • Fiat lux

    32 weeks ago

    "The purpose of competition

    "The purpose of competition is to eliminate competition" J K Galbraith

    All forms of economic competition increase and transfer costs on others and to collectivize the economy into the hands of special interests, in Soviet fashion.

    Since the neoclassical market economic theory took over about 35 years ago, living costs have increased over 1,000%, executive salaries that used to be about 10 times of the lowest paid are now several hundred times, there were no foodbanks, now close to a thousand across Canada. Poverty and homelessness went ballistic, people can't afford to buy homes, but communist millionaires are welcome to come and buy up everything so their kids can race their $200,000 Maseratis on our roads.

    Ed Deak.

  • Kreditanstalt

    32 weeks ago

    Help!

    "All forms of economic competition increase and transfer costs on others and to collectivize the economy into the hands of special interests, in Soviet fashion."

    Huh?!? I've never heard such an anti-gravity, flat-earth statement in my life. Literally.

    Fiat lux, we DON'T live in a capitalist economy! Nothing remotely like one. Get it through your heads, people...this is a planned, managed economy through and through.

    Government attempts to regulate EVERYTHING: wages, prices, employment, inflation, interest rates. And to prevent EVERYTHING: unemployment, poverty, drug use, immigration, labour competition, discrimination, free trade.

    How anyone can imply that a monopoly like the LDB keeps prices "reasonable" and that "neoclassicaal market economic theory" is responsible for all inequality boggles the mind...

  • Fiat lux

    32 weeks ago

    I`ve been in business in BC

    I`ve been in business in BC since 1957 and have seen the times when we could buy locally made products, now all destroyed by the free trade and globalization fraud, not to mention the communist/capitalist brotherhood.

    The whole world's economy is now collectivized in the hands of the multinational corporate mafia, stealing and enslaving everybody.

    That's what the 1% is about.

    Wake up !!!!!!!!!! At least some now are and this is only the beginning as the original uprisings against the commies have been.

    Let's only hope there won't be any violence anywhere.

    Ed Deak.

  • Frank

    32 weeks ago

    Kreditanstalt

    Kreditanstalt : "How about a little competition? That might help make them a bit more competitive."

    Newsflash, they're outnumbered already by private beer and wine stores.

    Kreditanstalt : "Competition within: they could replace all their expensive unionized employees and put new, affordable employees on renewable year-by-year contracts."

    And then we'd have thousands of poorer families. Why be against paying people good wages? Do you WANT everyone to be poorer than you?

    Kreditanstalt: "Why can't we buy a bottle of table wine (at least!) in supermarkets?"

    For the same reason my local supermarket doesn't sell cars, computers and cows? Its not exactly a hardship having to go to more than one store.

    Kreditanstalt : "Why can't we home brew freely - and sell it freely?"

    I assume you'd agree we need someone inspecting all of that home-brew for sale? Just to make sure no one is drinking anti-freeze or something?

    "And they wouldn't be taking $890m out of the public's pocket WITHOUT the monopoly ststus..."

    They aren't taking $890 million out of the pockets of the people of BC. That profit goes to the people of BC. Unlike for example the money used to buy ferries from Germany.

  • Kreditanstalt

    32 weeks ago

    Huh?

    Why is everyone here so afraid of competition in this country?

    I lived 20 years overseas(in east Asia)and found that California wines, Argentinian wines, local beer - just about everything except brand-name Scotch - cost LESS than it does in B.C. And I could buy it in any supermarket. Isn't it time this province moved into at least the 20th century, if not the 21st?

    "Why be against paying people good wages?"

    Answer: ...because why should consumers of alcohol be forced to pay for high-wage employees by way of high liquor prices? What happened to choice? To free competition?

    "Its not exactly a hardship having to go to more than one store."

    But why should we? So you mean the one single sole reason for having a government liquor monopoly is to keep higher-than-otherwise wage employees in work?

    "That profit goes to the people of BC."

    So why not leave that money in their pockets to begin with?

    And as for private beer and wine stores constituting "competition", I had a chat with one winery owner and was told hat their prices were SET by the LCB and that they could not undercut government liquor stores! And that price-fixing applies to every "private" competitor.

  • Frank

    32 weeks ago

    Kreditanstalt

    "I lived 20 years overseas"

    And yet you moved back in spite of our high prices. Can't understand why.

    "Answer: ...because why should consumers of alcohol be forced to pay for high-wage employees by way of high liquor prices? What happened to choice? To free competition?"

    Because those same consumers benefit from it. Those high wage employees mean better communities, higher tax revenues for government, less spending due to less social problems.

    "But why should we? So you mean the one single sole reason for having a government liquor monopoly is to keep higher-than-otherwise wage employees in work?"

    That's a good one. Another is it means the profit from their work is shared by the people of BC. What do private operators provide? They take the revenue, pay a piddly amount in wages and government (us) has to pick up the tab for helping workers who don't make enough money to survive.

    "So why not leave that money in their pockets to begin with?"

    By privatizing? How would the $890 million in profit be returned to the consumer then?

    As we see in places like Alberta the prices don't go down. Government simply loses a revenue source. The consumer is actually
    worse off.

    "I had a chat with one winery owner and was told hat their prices were SET by the LCB and that they could not undercut government "

    Assuming that's true that's pretty funny that your party who wraps itself in the banner of "free enterprise" thinks that's a good idea. By all means ask them why they think that should be the case. We already know that there was a gold rush mentality among those who opened those beer and wine stores and I bet they're big Liberal supporters.

  • Fish-counter

    32 weeks ago

    If you want cheap wine, brew your own

    The kits are heap and picking berries is even cheaper. Of course it takes a year to ferment and finsih. But of course, most folks are into conspicuous consumption, so paying through the nose for grape juice has become an art form.

  • mikev

    32 weeks ago

    cost vs benefit

    Just like smoking, Alcohol causes health problems. Alcohol contributes to illegal activity including violence. It's not just some widget where the better you get at selling it the happier everybody is.

    There is already a private sector alcohol marketplace. Compare BC Liquor Store prices to the prices in any private cold beer & wine store / liquor barn. I'm imagining the BC Liquor Store employees have a more decent wage than the employees at most private operations, and yet the prices are lower, and the whole operation is contributing to government revenue. I think it's a good deal to give 3,500 people a decent living in return for all the mayhem caused in so many more peoples lives by alcohol. Distributing alcohol in the cheapest way possible ("profitable" or "efficient") is not something I want to get behind.

    I'd like to see BC Liquor Stores expand to selling cigarettes & nicotine replacement options, co locating with methadone clinics and legal injection sites, and in the future after prohibition ends selling marijuana as well. Gather all those sorts of vices together and say well if you want to have that kind of fun here you go, but be careful because you can harm yourself and others, and if you need any help we are prepared to give it to you, we have AA / NA pamphlets etc and can refer you to services like counseling and government programs etc.

    Totally privatising would be just another in a long list of terrible ideas just like it. I don't particularly want to see a wild west survival of the fittest situation in distributing intoxicants, it doesn't seem to do other places a whole lot of good. How much of the price differences you mention are because of us getting "gouged" by our procincial government, compared to import/export differences not controlled the LCB (and faced by any other potential operator in BC as well)?

  • The Modern

    32 weeks ago

    consolation

    I am writing this to console the writer of this article. His writing is bang on: there is a lack of any sense of innovation and they answer to nobody (...just read about this year's Whistler Jazz Festival).

    To suggest the system is 'just fine the way it is'... because (among other reasons) it 'keeps people employed'...is ridiculous.

    If you think a system where someone who fulfills the duties of a 'cashier' (often grumpy and uninformed) for up to 35.00$ an hour is a system worth keeping - I am not sure what sort of skewed reality you live in.

    But let's put the economic argument aside...and raise the cultural aspect to this all. I now live in a place where I can buy cheese, bread, salami, beer and wine all in the same place. And it is excellent: cultured; alcohol is respectfully consumed; people are treated like adults and it is fun.

    I lived over three decades of my life in BC and left very recently as a result of puritanism and the sort of attitude that is displayed by many of the commentators here.

    I'm curious...in fact I'd like people who think the 'monopoly liquor system' is great to share with us whether they have actually travelled anywhere...

    On second thought nevermind: you probably believe B.C. is 'the best place on earth' because it says so on the license plates.

  • Frank

    32 weeks ago

    The Modern

    We sure are hearing a lot from people who don't live in BC on this issue.

    And yes I understand you people on the Right are against people being employed for a liveable wage. Its all you guys ever talk about, how everyone but you and the bankers and financiers are overpaid know-nothings who should be happy they earn enough for bus fare to their job.

    Since keeping people employed is not a goal of your economic view one can only wonder what would be the purpose of an economy set up to your liking? Cheap prices, cheap labour and people willing to do ANYTHING to survive another day I guess?

    I can see the problem with trying to sell that idea. Too bad you guys can't.

  • Wake Up

    32 weeks ago

    To The Modern on consolation

    Wow. You are writing stuff of which you obviously know nothing but are simply using exageration to make a point which without exageration wouldn't make any sense. Check this contract for liquor store employees as of May 12th, 2010.

    http://www.bcpublicserviceagency.gov.bc.ca/policy/down/BCGEU/Retail_Stores_and_Warehouse.pdf

    The top level 5 hourly wage above 913 hours is $20 for longtime employees, and for part-time level 5 wage is $15.50. Several years back they were attempting to cut costs and I heard from a friend who works there that they exist on as many part-timers as possible.

  • crankypants

    32 weeks ago

    Actually

    Actually, the BC Liberal Party has seen to it that the government liquor stores have fair competition from the private ones. The cost of booze that the private liquor stores pay is discounted by 16% when compared to what the government stores have to show as cost. If the writer of this article thinks that we are paying too much for liquor, then maybe his target should be the private sellers.

    The reduction in profits the writer refers to may be due to the fact that the LDB has closed some of their stores in favour of the Signature Stores. Coquitlam has gone from two liquor stores to one, and amazingly enough it is the smaller of the two. I suspect that this has occured in other areas as well which would likely mean that many customers now turn to private stores that are close by rather than drive many miles to find a government store.

    Washington State is having an initiative vote as to whether that state should close down their liquor stores in favour of letting private stores sell hard liquor. It will be interesting to see how they vote on the issue.

  • Fish-counter

    31 weeks ago

    Government liquor stores are a relic of the past.

    They are quaint relics at that, echoes of a time when the Hudsons Bay Company used to trade for beaver pelts in the forts. Ancient relics have a place, but not in the liquor business.

    The exceptions are the native territories, like Nunavut where it is apparently illegal to posess yeast. As my son put it after a two-week stint in Pond Inlet, "Liquor ruins lives up there". That is not a racial slur, but an unfortunate biochemical fact. Not everyone has the enzymes to process ethanol like we do.

    Interestingly, liquor prices are always higher at the private outlets than in the BCLC. Anyone who thinks "competition" will bring down the price is probably forgetting that the price of gasoline is the same everywhere you go.

    If you want inexpensive wine, brew your own. We do, and we pick our own berries too. It is informative and very, very cheap. Why do we always cast ourselves as consumers instead of becoming producers?

    There is great joy in making your own wine, and bread too. In BC we pride ourselves on our ingenuity, so let's see some.

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