Politics & Wine in BC and WA

Developments in the worlds of politics and wine both south of the border and here in BC ...

WA Privatization Initiative Defeated. Washington state voters defeated an initiative in the state that would have deregulated their liquor industry probably more so than in any other state (52% to 48%). The Costco-backed initiative 1100 would have closed state liquor stores (which still have a monopoly on the sale of spirits) and would have eliminated the requirement to source all liquor products through wholesalers and distributors (the middle tier of the 3 tier system). Various other restrictive laws and regulations would also have been removed. Washington state wineries were generally opposed to the initiative primarily because it would have removed the "immediate payment" requirement currently in place for liquor sales and because of fears regarding changes to distribution practices that protect smaller wineries.

BC Premier Resigns. Here in BC, Gordon Campbell announced that he would step down as Premier as soon as the Liberals choose a successor. Campbell's resignation was a direct result of the controversy surrounding the introduction of the HST. The BC Liberals will now be largely consumed with a leadership race. Perhaps our next Premier will be a wine lover?  Maybe then we will get some relief from our archaic distribution system and its related liquor laws?

BC's New Minister of Agriculture (& Wine?)

A new BC cabinet was announced this morning (Oct. 25th) and the new minister of agriculture is Ben Stewart, of the Stewart family that owns Quail's Gate Winery.

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!