Breaking the Status Quo at the LCBO

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Bare LCBO Product Shelves
During a three month period early last year, I'd been stopping by my local Liquor Control Board of Ontario store weekly, waiting patiently for new whisky releases. Each time I surveyed the shelves I was let down, finding that not only were there no new products to be found, but also that the shelves under the large words "single malt" were slowly becoming bare.

These sad few months inspired me to embark on a quest to understand why we in Ontario have the dubious honour of both paying some of the highest alcohol prices in the world as well as being unworthy of having year-round accessibility to unique and interesting whisky products. Let me start by saying that the results of my investigation have left me fuming over the disadvantaged position Ontarians are in.

While the LCBO is proud to show off the upsides of having a crown corporation provide booze to the citizens of Ontario, there can be no argument that consumers are losing out; both regarding the money from their pockets, and the products on the shelf. Full LCBO privatization is not something that any government has been receptive to. As such, the solutions presented within this article are focused on working with the current system to build and improve upon it.

To illustrate this, let's compare LCBO operations to those of privatized specialty alcohol retailers in other markets. I recently had the fortune of interviewing Andrew Ferguson, Co-Store Manager and Whisky Expert at Kensington Wine Market (KWM) in Calgary. As a private retailer, he has much less clout in the industry than a behemoth like the LCBO would, yet KWM outshines even the best LCBO store in numerous ways.
Product Selection
Being a small retailer, Ferguson is always sure to stay on top of new product offerings in the industry. Reading whisky news and blogs daily, constant communication with importers, as well as travelling to Scotland and other regions several times a year allows him to meet with distillers, independent bottlers, and merchants directly to sample new products that haven't gone to market yet. If he sees potential in a product, Ferguson often will jump on it to get at least a few cases ordered to gauge consumer demand. This diligence and willingness to experiment with small test runs of products is what allows KWM to ensure that new products are available in their store first, while simultaneously carrying between 300 and 350 different expressions of whisky at any one time.

To our knowledge, the LCBO doesn't have a dedicated category specialist who travels the world looking for new exciting products, in fact the LCBO seems reluctant to seek out new products themselves. Their Vintages section does import small amounts of one-off whiskies and other spirits, however the only products ever stocked by the LCBO are those which the distributor has successfully passed through the lengthy and complex application process. Without LCBO representatives actively exploring what is available in the industry and quickly jumping on new and unique products, the LCBO is relegated to only carry products that are presented to them in a price range and quantity which fits their pre-determined requirements; a far cry from the first-hand exploration, research, and risk-taking that the private industry is doing. This would be a small cost for the LCBO to bear given their large size.

What about those who make products? As a winemaker, brewer, or distiller, getting your product into an entity as large as the LCBO is an onerous process. Unlike private retailers such as KWM who request product from suppliers, the only hope for a distillery to have their product stocked in the LCBO is to actively solicit the LCBO to carry it. Even if a distributor successfully manages to navigate the maze of the LCBO submissions process, they still need to meet the LCBO's criteria for social responsibility and political correctness. Is the product name socially respectable? Is the product theme and bottle messaging appropriate? If not, the product may be rejected, regardless of its quality.

After a product reaches the shelves, there is one further hurdle, this time facing the consumer: fear of buyer's remorse. Yes, the LCBO does have sample bars in some of its flagship stores, but the selection is limited. A solution to this already exists: miniature bottles. Those small samples you occasionally see attached as bonuses to other products or stocked at the front of the store near the checkout are a great idea that has been poorly executed. Who wants to buy a miniature bottle of low-end blended whisky, when the full bottle isn't that expensive to begin with? What consumers do want is miniatures available for higher-end and special release whiskies - allowing people to try a small amount of the spirit before committing to purchase a full bottle. If the product is solid, the LCBO would find that this could increase sales dramatically; as people will come back for a full bottle of the product if they enjoyed the miniature.

The LCBO needs to augment or refine its submissions process to target unique and interesting products, not simply to meet a certain quota in a certain price range. This includes drastically expanding their whisky selection, bringing in miniature bottles, and working with distillers to have exclusive "indie" releases brought in specifically for the LCBO.

Product Availability & Marketing
The lethargic speed at which the LCBO evaluates, selects and stocks new products is frustrating for distributors and consumers alike. While the LCBO's process mandates a minimum 6 - 8 month lead time between new product sample submission and stock arriving on the shelf, private retailers like KWM strive to get their products available to consumers as quickly as possible after the purchase has been made, typically within a few months (even this delay is usually just due to overseas shipping). While private retailers like Kensington actively try to place orders for new products weekly to ensure their preciously limited shelf space is kept full, the good people of Ontario are forced to wait until the LCBO's next scheduled reorder date to receive more product to restock their shelves with, regardless of how perplexingly empty they are. If the LCBO took a less rigid approach to scheduling whisky releases, they could more readily perform ad-hoc stock transfers from warehouses to stores in order to ensure shelves are never barren.

For private retailers, some products can be put onto the shelf much more quickly, especially higher end products which can be flown in rather than be sent by ship. Some special-release whiskies that KWM has had flown in are Bowmore's Laimrig and the special recreation of Mackinlay's Rare Old whisky, a replica of the whisky that Sir Ernest Shackleton took on his Antarctic expedition in the early 1900s. These expressions were on shelves within a month of ordering. Similarly, some distilleries try for timed world-wide launches of specific products (Ardbeg and Glenmorangie being prime examples), so occasionally a product will be secretly shipped before the release announcement, so when the marketing push begins, the product is already available everywhere, right away.

One of the few sad exceptions to this rule is the LCBO who typically waits until the fall to launch new product lines, suppliers and consumers wishes be damned. Often by the time something finally does become available on the LCBO shelves, private retailers like KWM may have been long sold out and in the process of re-ordering. One recent victim we can look to as an example is The Famous Grouse's commemorative bottling for The Queen's Diamond Jubilee which was celebrated back in June 2012. This quite excellent blended whisky eventually made its appearance on LCBO shelves over half a year later, in the winter of 2013. It is because of this lag-to-shelf problem that frequently, companies don't even bother to make their more interesting or limited release products available in Ontario because by the time it hits the shelves, the product "buzz" in the marketplace will have worn off.

Yet another problem is that of the buyer's dilemma - with new product releases often happening in "clumps", the cash-constrained buyer must now choose just one or two premium releases from the large selection of new stock to purchase. If the LCBO were to spread out new product releases evenly throughout the year, buyers would have more incentive to visit their LCBO stores more often, and jump on new products when they come out, rather than have to pick from a fleeting smörgåsbord of new releases a few times a year.

When it comes to marketing, the LCBO needs to do a better job of advertising its spirits. By providing more information to the public about their different products, people will be more open to branch outside their comfort zone and pick up a bottle of something in a category they've never had before. Having a simple "whisky shop" promotional section is a small step that the LCBO has taken, however too little information is provided about the stocked spirits. Better tasting notes and more information about the vendor on their web site and in-store would be a start.

The LCBO has recently improved their site by enabling browsing through their spirits catalogue, with the ability to filter by type, region or price, however there are some glaring problems with this new functionality. At the time of writing, while there are 132 whisky products available under the "Scotland" region, there are only 35 of those that have been provided a "sub-region"; AKA the local regions of Speyside, Islay, Highland, etc. It's a sad fact that in this day and age, the LCBO web site's catalogue system is still so terrible to use, that whisky lovers most often need to physically visit their local LCBO store to see what new products are available.

Pricing Disparity
As a price conscious whisky lover, I've been heartbroken to see the price of many single malts rise well above the rate of inflation at the LCBO over the years. Certain bottles, especially the ones priced above $80, seem to rise in price between $3-5 every year.

Looking back at the private retail store KWM in Calgary, they have little negotiating power with suppliers compared to the LCBO, yet they still manage to beat them on price quite handily on many occasions, and they are at least on par with the LCBO for virtually everything else. It stands to reason that if the LCBO took some time to review prices in neighbouring markets, some pricing adjustments could be made to both increase sales while simultaneously cutting down on illegal trade across provincial and international borders.

We've discussed the LCBO's pricing structure in depth before, so if you are interested in reading more about how the largest liquor purchaser in the world is squandering away pricing advantage opportunities, please refer to our article on the LCBO's pricing strategy.

Google search auto-complete LCBO expensive
Even Google knows that the LCBO is expensive.

Specialized Service
Smaller, private stores need to work for the customer's business. KWM provides knowledgeable service and expertise in-store. There is always a whisky expert on the floor who knows at least something about each product. Customers are never left wandering the whisky section without someone available to answer with some authority any questions about any product. They've tried them all and know at least their basic their history. The LCBO has made a decent effort to train their employees about wine styles and the wine products they carry, however I could count on one hand the number of times someone at the LCBO has been truly helpful with my selection process, other than showing me where something is located. The implication of this is that customers cannot rely on the LCBO to actually "sell" them their whisky products. Oh sure, a customer can come in, choose a bottle, and purchase it, but the LCBO has done nothing to facilitate ensuring the customer selects the best product based on their unique tastes. There are some dead simple things the LCBO can do to improve on this, such as providing detailed tasting notes, independent reviews, or recommended food pairings.

The LCBO has at some stores set up "tasting bars", where customers can taste samples of products they may be interested in. A great idea, and one which I'm sure many whisky aficionados including myself take advantage of. Being able to try samples of different whiskies before buying is definitely a plus for customer service. While this is a step in the right direction, the sad fact is that the tasting bars are often "closed", require a cash/debit payment for each sample tasted, typically don't have more than a dozen bottles available for tasting at any one time, and limit the customer to a maximum of two half ounce samples per visit. The LCBO doesn't seem to have any process to control what products are selected for their tasting bars, and perhaps it is this reason why that information isn't available online. This service pales in comparison to what private stores are doing. KWM has at any time over two hundred open bottles in store so that people can taste samples, often at no cost. Combining this tasting policy with the on-floor expertise, I wouldn't hesitate to send anyone into KWM by themselves, something I could never do with the LCBO.

KWM also listens carefully to customers. Should a customer come in asking about an interesting or new product they don't stock, often they will work to ensure that they get at least a case of the product ordered, even if it is just so that client can have a single bottle. The LCBO does let consumers private-order products that they don't carry, so long as you order a whole case at a time, and don't forget that the final cost per bottle of the product will be approximately three to four times higher than the retail price in the country of origin after application of exchange rates, LCBO mark up, freight, taxes and duty. Oh, and if you are planning on splitting those bottles with a group of people, that's not allowed either.

What is the Solution?
LCBO - Wine Spirits Beer Window
Like any twelve step program, the first thing that needs to be done is to admit there is a problem. As with most government institutions, there is no lack of back patting going on internally. Thankfully, the Ontario Liberal government has had a study commissioned which has recommended a number of other more general changes to the LCBO operations. These changes were targeted at bringing in more revenue to government coffers, however it would be foolish not to consider other changes, such as the ones I've outlined in this article at the same time. Other various proposals have been brought forward to allow private beer and wine sales, but unfortunately most of them focus on getting low-end or mass-produced alcoholic products into hands easier.

Rightfully, there is some opposition to these proposals. Problem drinking and under-age consumption are very real issues that need to be dealt with carefully. The problem and under-age drinker however, are not the ones purchasing $100 bottles of whisky. For the lovers of high end wines & spirits, availability in the local corner store is the least of our worries.

What we truly need is for the LCBO to act as any business ought to - leveraging their buying power to negotiate for the lowest price possible, and apply a fair mark-up to the negotiated cost with their supplier. As Anthony Matijas in his Toronto Standard piece writes, the assumption that the LCBO seems to be running with "is that Ontario is populated primarily by borderline alcoholics, and only an artificially high price point keeps us safe from destroying both our livers and families." There is research backing up the benefits of minimum floor pricing for low-priced alcohol, however this discussion revolves around high end spirits, not $1 bottles of beer. While there seem to be no studies done on effects of pricing on irresponsible alcohol consumption among premium spirits buyers, I would hazard a guess that allowing a fine whisky such as the Ardbeg Corryvreckan to sell at $112 instead of $188 (as of writing) would not increase irresponsible alcohol consumption in Ontario.

Lastly, I'd recommend that the LCBO drastically expand their tasting bar service by allowing up to four samples per customer (that still only equates to two ounces of alcohol), stock tasting bottles of every whisky over $80, and work with suppliers to stock a cabinet full of premium miniatures beside the tasting bar, so a customer can grab a small bottle of something he/she likes.

As customers with no other option, we need to stand up and make it known that the status quo is not good enough. There are real solutions that can be implemented to improve year-round access to a world of good whisky at fair prices. Make yourself heard and voice your discontent. We all deserve more from the legal monopoly that is the Liquor Control Board of Ontario.

8 Comments

Excellent piece - well written and those are excellent suggestions. Let's hope the powers-that-be are paying attention! (though...um, I doubt it...)

Great article. I agree that the price of scotch is inflated, and the selection lackluster.

A couple of years ago I visited Scotland, and went to a whiskey shop in Huntly (20 mins from Speyside) and drooled over the selection and prices available. Speaking with the proprietor, he was happy to ship me anything, that is, until he learned I lived in Ontario. Apparently, the only place the rules if liquor import are so strict and difficult, he just doesn't bother.

The problem is the Government stranglehold on the industry. People need to not only lobby the LCBO but their MPPs to take some action.

Sadly, the Liberals are in still, and they may just add yet another tax on liquor instead.

I have some friends who travel to the U.S. regularly, and I have them pick up things, or, living in Ottawa, can hop over to Quebec if something is there. But usually not much less. But five bucks is five bucks. :-)

Very well written.

Readers of this article may also be interested in a recent video, "Straight Up: The issue of Alcohol in Ontario". It provides good background on the current situation in Ontario.

(link: http://www.momandhops.ca/now-playing-straight-up-the-issue-of-alcohol-in-ontario/ )

As one craft distiller notes in the video, "why does the LCBO advertise?". Good point - residents in Ontario only have two choices of locations where they can purchase alcoholic beverages, the LCBO and The Beer Store. There are opportunities to purchase direct at winery or craft brewers / distillers, but these are not readily accessible to all consumers.

This article in the Toronto Star from May 2012 also addresses the manner in which the LCBO advertises - by strong-arming the distributors to pay for the advertising... which inevitably means higher prices for Ontario consumers.

(link: http://www.thestar.com/news/canada/2012/05/26/cohn_the_lcbos_sleeper_ploy_that_drives_people_to_drink.html )

There is a real need for the Ontario Government to rethink the raison d'etre of the LCBO...


Great article, a lot of well thought out points made. Maybe someone from the LCBO brass will read this and make some changes! :)

Great article! I could not agree more with everything that was said. As a Quebec resident living near the Ontario border, I have noticed that the issues that plague the LCBO seem to plague the SAQ in Quebec also. It is time for a major overhaul in both provinces. Here's hoping that someone will take action sooner than later.

I think the real question we need to ask ourselves is "do we really live in a democracy?" If a majority of people would like privatisation (as I'm sure they do) and we cannot have it, what does that say about the system that governs us? The response of our "leaders" to this dilemma is of course "get elected, change the system". But we're not all lawyers. We don't all know how parties work and politics and such, but does that mean we shouldn't have a say in anything? If democracy is giving FULL power to a little group of people every 5 years and if these people can basically ignore any promise they made that got them elected in the first place, then democracy is just a word. If it were what it's supposed to be, OF THE PEOPLE, BY THE PEOPLE AND FOR THE PEOPLE (Lincoln), we'd have the best scotch in the world at the best price. Period.

A well spoken point of view, one that I am sure many agree with. It is very frustrating dealing with the LCBO when you are looking for something (in some cases even standard bottlings) outside of the usual humdrum. The LCBO as well as charging an arm and a leg, frequently "de-list", "discontinue" items that are readily available elsewhere. Whilst they do offer the ability to bring a bottle from one store to your local store, this has proved more disappointing than fruitful in most cases. If I track a bottle down via their internet site, I can go into my local LCBO and request it brought here for me. Unless, of course, the product has become de-listed or the store that has the stock refuses to release it. This practice, along with others, disadvantages small demographic regions/buyers, especially when one considers that the LCBO is a public entity. The LCBO ensures the inability for individuals to import specific bottles they are hunting for, by making the red tape and cost associated with the process prohibitive. It is tragic for anyone short of an alcoholic that has aspirations to try different items, even non-whisky.

Well thought-out commentary, thanks for sharing.

In terms of the tasting bars at the flagship store, variable and inconsistent inventory is certainly an issue. But the main problem I find is the one in my city is almost never open. Officially, the hours are 1-8pm, Monday-Saturday. In practice, they are "too busy" on Friday nights and Saturday to run the bar, and so keep it closed (i.e., all staff on the floor or cashes). Thursday night is closed because that is regular group event night at the bar. Wednesday night is closed because the staff does group event night at another location. Tuesday night is often closed because that is the "special event" night when they do more than just the regular event in a week. So, effectively, Monday is the only reliable time to sample (unless staff have called in sick). None of the above is posted - it's just my experience of only being able to actually sample 2 out of the last 10 times I've tried.

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  • selfbuilt commented on Breaking the Status Quo at the LCBO:

    Well thought-out commentary, thanks for sharing.

    In terms of the tasting bars at the flagship store, variable and inconsistent inventory is certainly an issue. But the main problem I find is the one in my city is almost never open. Officially, the hours are 1-8pm, Monday-Saturday. In practice, they are "too busy" on Friday nights and Saturday to run the bar, and so keep it closed (i.e., all staff on the floor or cashes). Thursday night is closed because that is regular group event night at the bar. Wednesday night is closed because the staff does group event night at another location. Tuesday night is often closed because that is the "special event" night when they do more than just the regular event in a week. So, effectively, Monday is the only reliable time to sample (unless staff have called in sick). None of the above is posted - it's just my experience of only being able to actually sample 2 out of the last 10 times I've tried.

  • EB commented on Breaking the Status Quo at the LCBO:

    A well spoken point of view, one that I am sure many agree with. It is very frustrating dealing with the LCBO when you are looking for something (in some cases even standard bottlings) outside of the usual humdrum. The LCBO as well as charging an arm and a leg, frequently "de-list", "discontinue" items that are readily available elsewhere. Whilst they do offer the ability to bring a bottle from one store to your local store, this has proved more disappointing than fruitful in most cases. If I track a bottle down via their internet site, I can go into my local LCBO and request it brought here for me. Unless, of course, the product has become de-listed or the store that has the stock refuses to release it. This practice, along with others, disadvantages small demographic regions/buyers, especially when one considers that the LCBO is a public entity. The LCBO ensures the inability for individuals to import specific bottles they are hunting for, by making the red tape and cost associated with the process prohibitive. It is tragic for anyone short of an alcoholic that has aspirations to try different items, even non-whisky.

  • JP commented on Breaking the Status Quo at the LCBO:

    I think the real question we need to ask ourselves is "do we really live in a democracy?" If a majority of people would like privatisation (as I'm sure they do) and we cannot have it, what does that say about the system that governs us? The response of our "leaders" to this dilemma is of course "get elected, change the system". But we're not all lawyers. We don't all know how parties work and politics and such, but does that mean we shouldn't have a say in anything? If democracy is giving FULL power to a little group of people every 5 years and if these people can basically ignore any promise they made that got them elected in the first place, then democracy is just a word. If it were what it's supposed to be, OF THE PEOPLE, BY THE PEOPLE AND FOR THE PEOPLE (Lincoln), we'd have the best scotch in the world at the best price. Period.

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