DTC Shipping in the US; SAQ as competitor?

News from both Canada and the USA that may affect the BC wine industry eventually ...

Agents Upset Over SAQ as Potential Competitor. The Edmonton Journal has an interesting article describing the efforts of the Quebec liquor board (SAQ) to set up shop in Alberta as a competitor to existing agents. Predictably, the agents that are now operating in that province are not happy over plans for a provincial alcohol monopoly to venture outside its borders and to compete with private businesses in other provinces. More profoundly, this raises questions as to the proper scope of a liquor monopoly's operations and, particularly, whether it is right for a liquor monopoly from a non-privatized province to wield its monopoly purchasing power in another province which has privatized.

HR5034 - Wholesalers Get Rough Ride at Congressional Hearings. The wholesaler and distributor industry groups which are attempting to roll back progress on direct to consumer shipping in the U.S. by virtue of congressional bill HR5034 got a rough ride at recent hearings in Washington, DC. This story from Wine Business describes the presentations. In related news, a consumer group has now also formed in order to advance the interests of wine consumers at the state and federal levels: American Wine Consumer Coalition.

The Future of the BC Wine Industry: Look to WA state?

Here's a great article outlining the history of the Washington state wine industry and how that state has dealt with and is still dealing with the post-prohibition regulatory environment: This Changes Everything? The Washington Costco Initiative. Anyone interested in the future of the BC wine industry should read this article. We are only just starting to deal with the issues that are covered here and, in my view, the history in WA will provide valuable indicators of what will eventually happen here. The BC wine industry cannot exist in perpetual isolation from the world market. Sooner or later, we will join the rest of the globe ... better to be ready! UPDATE: this article has now been expanded into a three part series ... all the parts are excellent and particularly worthwhile is the discussion related to the effects of privatization on a small winery's business.

Liquor Privatization Issues

A number of issues related to liquor privatization are in the news this week:

WA Privatization Initiatives Under Attack: The two liquor privatization initiatives in Washington state are under attack from an unlikely coalition of emergency workers, churches and, most significantly, liquor wholesalers: see this comprehensive article from Wine Spectator. Initial poll numbers showed that one or both privatization initiatives might pass. More recent numbers show that support is foundering under a well financed attack from the wholesalers.

Private Liquor Stores in BC: this week's edition of Business in Vancouver lists the area's leading private liquor stores and has an article which reviews some of the challenges facing private retailers when they have to source all product from their biggest competitor, the BCLDB.

LCLB Policy Directive on Standalone LRS: A new policy directive from the LCLB (PD 10-05 Standalone requirements for licensee retail stores) was just issued which deals with the continued requirement that LRS stores must operate as "standalone" businesses and cannot be visibly associated with other businesses. The justification for these requirements is that "government does not support licensee retail stores in premises located in or associated with any other business, with the exceptions of an LP, a licensed hotel (including associated FP), or LRS". This policy rationale is likely difficult to understand from a consumer's perspective - in reality, it is likely aimed at preventing supermarkets and big box businesses from operating liquor stores. However, it is also questionable from a legal perspective - commercial speech through signs and advertising is protected by the Charter of Rights. If an LRS was actually connected with a nearby business, I don't see how government can prevent it from saying so!

Rejection of Minimum Alcohol Pricing in Scotland

A proposal to introduce minimum alcohol pricing in Scotland has been defeated on the grounds that it "would penalise responsible drinkers, harm the Scotch whisky industry, cost jobs and [is] probably illegal". Opponents of the measures, which were introduced as a potential response to problem drinking, pointed to the likelihood that the rules would likely "breach EU and international trade rules". As readers likely know, BC has had minimum shelf prices for alcohol for a long time. I have questioned the utility of these policies, as they are currently used, since they simply create windfall profits for suppliers and provide no proven benefit in terms of reducing problem consumption.

Artisan Spirits Industry Wants Direct Delivery

A front page story in this week's Business in Vancouver ("Entrepreneurial spirits dampened") explains that BC's artisan spirits industry wants to be treated like BC's wine industry. The article chronicles numerous problems including the familiar ones of hefty LDB markups as well as with the inefficiency of the LDB distribution system. At the present time, all spirits in BC, including locally produced artisan spirits, are routed through the LDB distribution system and are subject to full LDB markup (170%). As a result, the artisan spirits industry is asking for "direct delivery" treatment such that they can bypass the LDB system and its markups. While I have sympathy for their concerns, this is a thorny issue ... because it demonstrates the general inequity with the current BC distribution system and its many inherent structural problems: how is the government going to extend direct delivery to artisan spirits without also addressing the trade issue of discrimination against imported products? The obvious solution is a complete overhaul of the current system but I'm not holding my breath on that one.