Month: July 2016

On Friday July 22nd, the Premiers of British Columbia, Ontario and Quebec announced a limited deal to improve access to Canadian wine in their respective provinces. The joint press release is here: Increasing the Flow of Wine Among Quebec, Ontario and British Columbia. The press release does not provide any detail as to what the initiative covers but it refers to easier on-line access to wines produced in these three provinces. It also refers to the fact that the initiative will be implemented through actions of the liquor boards in each province. As noted, there is currently very little information about the extent of this agreement.

However, it is possible that the agreement is based upon a relatively new e-commerce program unveiled by the LCBO (Ontario\’s liquor board) late last year, which indicates a process for \”special orders\” of Canadian wines. The details of that program can be found here: LCBO E-commerce, particularly in the links labelled \”e-commerce presentation to the trade\” and \”FAQs about e-commerce\” (both are PDF documents). If the LCBO program is the basis for this provincial deal, then the following characteristics would constitute the fundamentals of the program:

• Wineries would be able to list their products on an e-commerce website run by the liquor board in the other province (e.g. LCBO or SAQ, Quebec\’s liquor board).
• Consumers in the other province could purchase any of the listed wines so long as they ordered by the case. 
• The wines would not be stocked by the liquor boards. Rather, they would be ordered by the liquor board from the winery following a customer order.
• The winery would ship the wine to the liquor board in the other province, who would then either deliver the wine to a government liquor store for pickup by the customer (free) or arrange for delivery to the customer\’s home or office at extra cost. Delivery would only be possible within that liquor board\’s particular province.
• It seems likely that the wines listed on the site would be subject to provincial liquor board markups, which in the case of Ontario are 73.5% for out of province wine. This would mean that the wines would either have a higher end-consumer price in the other province than they would in their home province or that the winery would have to sell to the liquor board at a significant wholesale discount.

The Alberta government has announced that, effective August 5th, it is eliminating the discriminatory liquor markup policy that was introduced in the last provincial budget. As reported here earlier, Alberta had previously had a liquor markup policy that applied equally to products regardless of place of origin. The budget changed that by providing lower preferential markups to small breweries located in Alberta and provinces that had signed the New West Partnership. As a result, an Ontario brewery, Steam Whistle, sued the Alberta government and obtained an injunction to prevent the change on the basis of a preliminary argument that s.121 of the Constitution (the \”free trade provision\”) might prevent provinces from charging markups or fees that did not apply equally to all Canadian products. The Alberta government has now announced that they are reversing course and going back to a system that is non-discriminatory: Government to Create Consistency for Alberta Beer Markups. This move should effectively end the Steam Whistle case – which will also end the potential for a court ruling on the effect of s.121. At the same time, the Alberta government announced it will later introduce a \”grant program\” to encourage the growth of Alberta based small brewers.