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Wanted: a level playing field

March 4, 2015   ·   0 Comments

IT WILL BE INTERESTING, indeed, to see what the Ontario government comes up with to fulfill Premier Kathleen Wynne’s promise that the province will soon have “a lot more open” wine market.

She says she made the commitment to Australian Trade Minister Andrew Robb, adding that changes to be announced as part of Finance Minister Charles Sousa’s spring budget will benefit both consumers and the treasury.

The changes are likely to be recommended by former TD Bank chair Ed Clark, who chairs a panel that’s  reviewing the unique, anachronistic way wine and beer are sold in Ontario.

Her remarks came the same day the Toronto Star came out witha huge story outlining how two large firms – one of then American-owned – now dominate the province’s retail wine sales.

In the story, the Star’s Martin Regg Cohn said the Liberal government is considering a major reorganization of how the foreign-owned Wine Rack and private Wine Shop chains currently operate.

The story outlined how Wine Rack, owned by U.S.-based Constellation Brands, and Wine Shop, owned by Canada’s Andrew Peller Ltd., have thrived by having been exempted from the LCBO’s 66.5 per cent markup, instead paying a much lower tax rate of 16.1 per cent for blended wines sold in their 268 outlets, which typically have only 25 per cent of their blends originating in Ontario vineyards.

That’s in contrast to Vintners Quality Alliance (VQA) wine, which is made entirely with Ontario-grown grapes.

Richard Linley, president of the Wine Council of Ontario, says his organization is ready to work with government. “As an industry, we believe there are options that will create economic opportunity for both Ontario’s VQA wine industry and the government, while improving convenience and choice for consumers.”

Just how the government plans to accomplish the feat remains to be seen. Obviously, any move designed to improve sales of Ontario beer or wine may face challenges under the North American Free Trade Agreement.

At present, Wine Rack and Wine Shop, each of which has an outlet in Orangeville at two of the town’s four supermarkets, give shoppers the impression that they are offering a broad choice of products, only some of which are blends of Ontario and foreign grapes. However, the different brands on their shelves are all of firms (mainly in the Niagara Peninsula) that they have purchased. As matters now stand, the truly independent wine producers must sell their products at their wineries unless they can get them listed at the LCBO.

In the circumstances, the government would have to do more than just permit Wine Rack and Wine Shop to carry other vintners’ products.

Perhaps one alternative would be to level the playing field by allowing the Wine Council or groups of its members to form marketing co-operatives that could open stores where a major selling point would be that all the wines on the shelves are from local grapes.

Of course, another option would be to follow the lead of British Columbia and Alberta and allow beer and wine to be sold in corner stores.

The problem we have with that option is the relative lack of control over sales to under-age or inebriated clientele.

But while sales in corner stores generally would cause that problem, we would welcome an initiative to extend the concept of LCBO agencies to country stores.

It strikes us as pretty obvious that hamlets like Laurel, Honeywood and Terra Nova might once again have prosperous general stores or convenience stores if they had the sort of LCBO agency now found in Hockley Village. And that would surely be a real boon to some  hamlet residents who now must go long distances even for a loaf of bread.

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