At every talk that I do someone in the audience always brings up the fact that alcohol, wine and beer prices in Ontario are crazy compared to our American cross-border shopping destinations. Well my friend’s changes are on the horizon. And don’t think that they will be positive.
According to Kathleen Wynne, yes she’s the one we voted in, transit expansion in Ontario, but mostly in the GTA will be paid for from the sale of government assets and changes to the LCBO. The poor old LCBO currently contributes about $1.75B to the Ontario coffers on sales of approximately $5B. Using my antiquated HP calculator, that I had to purchase for some reason or another, this looks to me like the LCBO has a Gross Profit margin of around 34%. This is a number that I think any business would be thrilled with in today’s economy and you would think that the Ontario government would be thrilled with these numbers.
But Wait!
Wynne has asked Ed Clark, the TD Bank Chair, to find ways to improve operations (read profits). Clark says it’s critical to improve customer choice and convenience. Note now that there is no mention of giving the customer a better deal or reducing prices. Ed says that we (the LCBO) are not getting the best deal we should be because we are not using our buying power to lower our costs. Also to help the craft brewery the LCBO should be allowed to sell 12-packs. It (the LCBO0 also has to respond to its customers (us) demands for new boutique brands – STOP! I have never heard anyone complain about not being able to buy boutique brands but I have certainly heard everybody complain that we get charged too much! Clark is, as expected, silent on this consumer demand.
Now you may not know that Mr. Clark has announced that he will be retiring next month. He’ll also be leaving his $11M annual salary and will, like many of us, try to maintain a reasonable standard of living on his pension. Somehow I’m thinking he will not be worried that we Ontarians are paying twice as much for a bottle of Canadian wine as our US neighbors are. But I digress…
Mr. Clark also stated that we, the lucky consumer, may see kiosks, run by the LCBO, popping up in grocery stores.
But Wait!
Beer drinkers he’s also thinking of you as well. He wants to make sure that brewers don’t pass any extra costs “immediately” on to you, gradually not so much of an issue. Jeff Newton, president of Canada’s National Brewers says that the Ontario government already taxes beer at a rate of 44%. Newton says that additional taxes will result in higher beer prices.
What are our options?
Well they could sell the LCBO to the same guys that bought the 407. Do you remember when the average 407 Trip Toll was $4.00, well now it’s about $6.00. So given this logic our alcohol prices would increase around 50% every 7 years if the LCBO was owned by the 407. Or maybe Petro Can could run it.
So, where are we heading, and remember where you read this…
- We will never see liquor, wine and beer sold in grocery stores, Costco or other similar places like we see in the US.
- Any “savings” that can be realized within the LCBO will NEVER result in lower prices for the consumer.
- LCBO Kiosks will be virtually the same as wireless kiosks that we see today; same stuff, same selection, same high prices.
- Beer prices will increase.
- Wine prices will increase
- Liquor prices will increase.
And on a positive note – Premium Wines has their buy one bottle at regular price get your second bottle for $1.00 sale on. Smirnoff Vodka is on for $9.99/ 1.75l after rebate ($57.25 LCBO) and if you read the small print, buy 5 bottles with a $60.00 total rebate your Net Cost is $5.99 a bottle.
And at Top’s – A grocery store, oh no!
You can pick up an 18 Pack for $12.99
Time to go and drown my sorrows in some free water!
Oh – Almost Forgot “Would You Like To Donate $2.00?”
