Globe Covers Outdated Border Wine Policies

Today's Globe and Mail has a good opinion piece from Lysiane Gagnon entitled "Canada's Customs Inquisition". It deals with the problems travelers face when they honestly declare that they are bringing back more bottles of wine than their duty-free exemption allows. According to the article, such honesty can sometimes trigger secondary searches or other intense questioning. My personal experience has never been this bad, although I have had bizarre supplementary questions related to firearms (why would CBSA relate these two?). Generally though, the article makes a good point: why are our border agents acting as tax collectors for Canada's liquor boards?

In a completely unrelated vein, there is a profile of yours truly in this week's issue of Lawyers Weekly: Lawyer Starts Boutique Wine Firm.

Outdated BC Wine Laws & Policies

For some summer doldrums entertainment, you may want to read this non-exhaustive list of Outdated BC Wine Laws & Policies which has just been posted on the Free the Wine web site. The list would be funny if it wasn't true. Sadly, it shows that BC still has a long way to go in bringing our wine industry environment into the 21st century.

LCLB: Enomatic & Tasting Rules Under Review

In an earlier post, I noted that there has been a minor controversy this summer regarding the use of Enomatic "wine tasting machines" in some private retail stores. I asked for clarification on this from the LCLB and I can now confirm the following:

  • The use of Enomatic machines is permitted so long as the store is otherwise complying with the terms of its license in regard to consumer tastings. Store owners should check the terms of their license - but the terms and conditions for most licenses are here.
  • For most stores, the most significant restriction will be that self-service on tastings is not permitted (in other words, customers cannot pour their own tastes) ... this will mean that they cannot operate the Enomatic machine themselves. Instead, as applicable, the agent or a store employee would have to operate the machine.

Some retailers have complained to me that the rules regarding tastings in LRS stores are overly restrictive particularly the requirements to dispose of any unfinished bottles at the end of the day (which defeats the purpose of the Enomatic machine). In this regard, the LCLB has told me that they are currently reviewing their policies in regards to tastings and they expect to "clarify" the policies in the near future. Hopefully, this will mean some modernization of the policies with clearer accommodation for new technology like the Enomatic.

Generally, it's my view that the current policies need to be updated - so long as there are safeguards to over-service, it's always a good thing if consumers can try wine before they buy it. In regards to limiting the amounts served, the Enomatic is actually a great tool because the machine measures pours much more accurately than people do and customers could be given a "smart card" that limits them to the exact amount permitted by the tasting policy. If it is any consolation to private retailers, I can attest that the rules for tastings in LDB stores are equally frustrating - a recent LDB memo on this subject has caused some agents to re-think how they will address in-store tastings in government stores.

Update: this story has now been covered by the Vancouver Sun: Another Bizarre BC Wine Law Dampens Competition

Summer News: LDB Sales Down, HST Impact, Enomatic Controversy

Here's a grab bag of a few bits of interesting summer liquor news ...

BCLDB Liquor Sales Down. The latest edition of the BC LDB's Quarterly Market Review shows that overall liquor sales in British Columbia for the quarter ending in June were down 8% by volume and almost 5% by value over the previous year. Those are significant drops when total annual sales figures for BC are $2.8 billion. Sales of wine and spirits were both essentially flat while sales of both beer and coolers were down considerably. The LDB missed its sales targets last year and numbers like these seem to indicate a repeat performance.

HST Impact on Restaurants. As was expected, it has now been confirmed by the Canadian Restaurant and Food Services Association that the introduction of the HST had a strongly negative effect on restaurant sales in July. The Association is now asking government to mitigate the impact by considering other compensatory measures such as a long requested wholesale discount on liquor. As I have previously written on many occasions, BC's liquor wholesale distribution system for restaurants is seriously outdated since restaurants get zero discount - they pay full retail price when they buy wine and other liquor. This puts them at a serious competitive disadvantage when compared to restaurants in neighbouring jurisdictions (such as Alberta and Washington) and also creates sticker shock and dismay when tourists see the price of wine on restaurant wine lists. Let's hope government listens on this one.

Enomatic Controversy. I have recently been made aware of a minor controversy involving the use of "Enomatic" wine dispensing machines in various private liquor stores. These machines (from Italy) dispense measured pours of wine for tasting and keep the wine fresh for up to 3 weeks by preventing oxygen from entering the bottles. A few private retailers have purchased these machines to allow customers to sample wine before purchasing. I can attest from seeing them in operation in Italy and California that they work extremely well. However, the LCLB is apparently having some difficulty with them: read the full story here on the Winecouver blog. Update: August 6th ... I haven't been able to get any additional information on this to date but Wines & Vines has now covered the issue: Government Limits Wine Dispensers.

Border Wine Taxes & Fees Modified for HST

It's the summer travel season. Many British Columbian wine enthusiasts will be venturing south of the border and will want to bring a few bottles home with them. As most will know, that is a very expensive proposition in BC if you exceed your miserly duty-free allowance of two 750ml bottles of wine per person. However, the introduction of the HST has made these importations ever so slightly less expensive. Previously, for BC, the charges were 85% liquor board markup plus 10% PST plus 5% GST.  However, the sales tax portion has now gone down from 15% to 12% and is calculated in a way which is slightly more advantageous. Canada Border Service Agency (Customs) has revised its memo on this issue to show the new tax collection rates and process. The following table shows you the comparative rates for importing a non-duty-free 750 ml bottle of wine into a Canadian province when you return from a trip to the U.S and also shows you the effect of these charges if you import a 750 ml bottle of wine that cost $15.

As you will see, the rates charged at the border for British Columbians are very high in comparison to most other provinces (Quebec is also very high). In BC, you will end up paying more than double the original price once you have imported the wine. Once again, British Columbian wine lovers are getting soaked by our government on this issue.

Excise Tax
Liquor Board Markup

Border charges
for a $15 bottle of wine

Total Cost
of $15 Wine
British Columbia
85% of value
(min $1.83, max $12.75)
$0.47$2.60 for 750 ml bottle
$0.47$3.12 for 750 ml bottle
$0.4739.6% of value
66% of value + $0.67

Please note that for almost all provinces, these rates are only valid in the "travellers stream" - which means you must personally bring the wine across the border with you. If you ship the wine, the rates are generally much higher (it's hard to believe that the BC rates could be higher, but they are!). There are also quantity limits for these rates: 45.45 litres for BC; 45.45 litres for AB (although the memo says 9.09 which is wrong); 45 litres for ON; no limit for MB; 9 litres for Quebec. Also note that the way of calculating these fees differs from province to province - see the CBSA memo for details.

You may also wish to read my Bringing Wine Back to Canada After a Trip article.