In case you missed it, in the midst of all the positive reaction to a C.D. Howe report that makes it clear that the privatization of wine, beer and spirits in this province would not only put more money into government coffers but would also create more choice and better prices available for consumers, Patrick Gedge told the St. Cathaines Standard that his association stands firmly behind the LCBO monopoly.
We should be concerned by that, very concerned.
Gedge, president and CEO of WGAO, heads up a big list of wineries, which have chosen to throw in with the alliance as opposed to the Wine Council of Ontario. They are:
Andrew Peller Limited, Bricklayer’s Predicament, Chateau des Charmes, Colio Estate Wines, Constellation Brands, Cooper’s Hawk Vineyards, Crush, Dan Aykroyd Wines, De Sousa Wines, Diamond Estates Wines & Spirits, EastDell Estates, Fresh Wines, G. Marquis, Girls Night Out, Hillebrand Showcase, Inniskillin Wines, Jackson-Triggs Niagara Estate Winery, John Howard Cellars of Distinction, Kittling Ridge, Lake & River, Lakeview Cellars, Le Clos Jordanne, Magnotta Winery, Mastronardi Estate Winery, Megalomaniac, Milan Wineries, NHL Alumni Wines (Hat Trick), Niagara College Teaching Winery, Peller Estates, Seasons De Sousa Wine Cellars, Small Talk Vineyards, Stonechurch Vineyards, Thirty Bench Wine Makers, Trius, 20 Bees Wines, Two Sisters Vineyards, Vinoteca Inc. Premium Winery, Wayne Gretzky Estates No.99.
Those members represent over 85% of all Ontario wines that are produced and sold in Ontario including the wines that no one really wants to talk about: Those so-called International Canadian Blends (ICB) that are not really Ontario wines at all, but blended with a small portion of Ontario grapes with juice from God knows where, and crowding the shelves at the LCBO and confusing consumers for decades.
Gedge, pictured above, said between the LCBO’s 640 stores and the agency stores, it’s difficult to identify where there would be under-serviced areas in the province that wouldn’t cannibalize existing sales.
“Why invest the energy and the dollars and the risk of setting up small networks that cannibalize what exists today when you can focus your energy on leveraging a pretty massive network that is there?” he told the newspaper.
The stance of WGAO is that the best way to increase sales of Ontario wine and grapes is to leverage that LCBO distribution network, he maintains.
Gedge says the challenge for Ontario wineries, all Ontario wineries, is to take on imports, not each other. He said at the LCBO 70% of sales are imports and 30% Ontario (he lumps ICB with those numbers).
Gedge, who has no background whatsoever in the wine industry other than his stint at WGAO , told the Standard that “our goal is to, quite frankly, convert imported wine drinkers who have 70% of the marketplace and bring them over to Ontario wine. If we can work at converting those people, (there will) be enough business for all of the wineries,” he said.
Gedge, as a parting note, laid this zinger on the Standard: He’s never seen a business case that can objectively quantify that private systems would have significant benefits to the industry.
That’s a howler, of course, and it’s quite likely that Gedge knows that (at least I truly hope he does). He’s a smart man with an envious resume outside of the wine business. But he’s paid to protect his alliance interests, and those interests just happen to be the sea of ICB swill that has no other place to go but the LCBO and, here’s the kicker, those “private” stores that are all owned by WGAO members because of some archaic rule that allows licences that existed pre-NAFTA to carry on seemingly until the end of time.
While monopolies have crumbled throughout the free world, the LCBO hangs of for dear life, partially because of reasoning spouted by the likes of WGAO .
Competition, Mr. Gedge, is what makes the world go around. It fosters healthy businesses to flourish, and unhealthy ones to fold; it challenges businesses to do better; it creates competitive pricing; it creates added choice; it puts everyone on an even playing field.
I don’t know how Gedge can dismiss the findings of the C.D. Howe report that concludes Ontario would rake in more money from alcohol sales, consumers would pay less for booze and have greater choice of products if the Ontario government opened up booze sales to the private sector.
The study says that Ontario is actually losing revenue by holding a virtual monopoly on the sale of booze.
The report, written by two economists, points to the Western provinces that have more competition and have 7% more per capita in provincial alcohol profits than those with government-run monopolies.
The study concludes that it is in the best interests of the Ontario government to allow wine and beer sales in grocery and convenience stores, permit beer to be sold by other retail outlets and grant licences for off-winery stores to wineries and to new wine retailers.
“These changes would increase the choices available and reduce prices for Ontario consumers, as well as improve the competitiveness of Ontario’s smaller wineries and breweries and generate more revenue for the government,” the report said, according the Canadian Press.
Ontario, and this is important for you to understand, Patrick Gedge, is the only jurisdiction in North America that limits off-site liquor sales to a chain of government stores, a single private beer retailer and a fixed number of off-winery wine stores, the report said.
I believe most consumers agree with the stance taken by the rest of Ontario wineries (not one of them making blended wines) represented the Ontario Wine Council.
The wine council says the institute’s call for major change in Ontario’s alcohol retailing system agrees with its position that lack of competition is resulting in less choice for consumers and reduced government revenues.
The WCO says it has developed a model, based on substantial research, for the introduction of private wines shops in Ontario, which would operate parallel to the LCBO. The “Pairs Perfectly” proposal, outlined here, addresses all of the concerns raised in the Howe report with respect to consumer choice and maximizing government revenue to support priority public services.
“The C.D. Howe Institute is on the same page as the Wine Council of Ontario, in calling for greater choice and convenience for consumers. Our model offers the best solution for change in a way that delivers a win for all concerned — consumers, the LCBO and government — in a socially responsible manner,” said Allan Schmidt, chair of WCO.
The “Pairs Perfectly” model envisions a network of privately operated wine shops across the province which would be retail customers of the LCBO’s wholesale distribution arm, similar to the beverage alcohol system in British Columbia.
“We will continue to urge the Ontario government to work with us to modernize and improve retail opportunities for Ontarians to better be able to enjoy the products of our province’s outstanding wine regions,” Schmidt said.
“Consumers have been clear with us. They want change in the way wine is sold in Ontario, but they want to see it done in a way that is complementary to the LCBO and we agree. Ontarians deserve the opportunity to have additional selection and the kind of shopping experiences that residents of other provinces enjoy.”
And that, Mr. Gedge, is how you grow the Ontario wine industry. Not by throwing in with a dinosaur monopoly in dire need of change.
It is quite clear your comments and position are solely guided by your members’ desire to protect the ICB brands and hundreds of “private” retail stores they own, but, come on, the industry in Ontario needs one voice in this fight.
And yours, quite seriously, is downright scary.