The Biggest Change Since Prohibition…NOT!

Within days we will be entering a brave new world in Ontario with lots of competition in beer sales from private retailers, with wine following close behind.  At least that is the hype from the provincial government as it announces “the biggest change since the repeal of Prohibition”, with its recent amendments to the Liquor Control Act.  It’s now time to take a closer look at what these “changes” really are.  This post is more about beer than my usual wine theme, because that’s what’s happening right now, but the current situation illuminates the mindset of the folks who came up with this scheme.

The Beer Store Monopoly

First, a little background to beer sales in Ontario.  Many, many people believe that The Beer Store, which has a near monopoly on beer sales in the province, is government owned.  In an Ipsos Reid survey in 2013 (reportedly, as the survey results can no longer be found on line), only 13% of responders knew it was foreign owned [buzzer sound]  Yes, it is owned by three giant multinational foreign beer companies, none of which is majority Canadian owned:  Molson Coors (read Coors), Anheuser-Busch InBev (owners of Labatts), and Sapporo from Japan (owners of Sleemans).  I say “near monopoly” because there are only two other ways for the consumer to buy beer in Ontario, at the LCBO (also a near monopoly) and at the breweries themselves (not very convenient).  Now here are the facts that will make the situation clearer:

  • The Beer Store (we’ll call it TBS from now on) is privately owned.
  • It sets its own prices, unregulated (to be accurate, prices are set by the brewers, but as we have seen, that is effectively the same thing).
  • Correction, the only government regulation is to set a minimum retail price.
  • Any other beer retailers must sell at the price set by TBS.  Therefore it is effectively a monopoly if competitors cannot undercut on price.

There is no other jurisdiction in the world that licenses a private company to have a monopoly on alcohol sales and then to have no regulation or oversight on pricing.  It’s madness.  And here’s one more point that will make you sit up.  The Beer Store also supplies bars, restaurants, etc. for selling on to consumers.  Since that activity is effectively wholesaling, the price charged will be somewhat less than the price consumers pay, right?  WRONG!  TBS charges up to 30% more to drinking establishments than to retail customers.  They are out of control.  You can see the actual numbers in the recent C.D. Howe Institute report on “The Need for More Competition in Ontario’s Alcoholic Beverage Retailing System”; check out Table 1.

The Truth about Grocery Store Sales of Beer

Starting December 15, 2015, grocery stores are commencing sales of beer to the public.  What we gain is some more outlets selling beer.  That’s good.  More importantly, there’s finally some competition for TBS, right?  Wrong again.  As pointed out in the previous section, the new retailers must sell their beer at the same price as TBS in order to protect it from serious competition.  Here are a few more interesting points:

  • The new retailers can only obtain their beer inventory through the LCBO.
  • There was a bidding process to obtain the right to sell beer at a grocery store.  The regulations required that the retailer’s application stipulate a profit margin of between 3% and 9.9%.  Well, just imagine how successful you would be if you went with the high end.  Therefore the retailer will only have a margin of a few % and the LCBO retains almost all the profit for acting as a middle man.
  • The beer sales counters can only be open during the same hours as the LCBO or TBS, not grocery store hours, so you’ll often go and find beer unavailable.  That surely doesn’t contribute much to the convenience factor.
  • Beer cannot be sold in any package larger than a six-pack, a rule also designed to protect TBS.
  • Stores must have at least 10,000 square feet of food retail space, and must sell a complete range of fresh and packaged foodstuffs.  These rules are designed to shut convenience stores out of the market.

All right, that’s enough about beer – you get the idea.  The government has designed the system to protect the big boys while appearing to increase competition.  The only advantage to the consumer is a very modest increase in convenience while the huge advantage to the government is that they may be able to fend off some lawsuits that are challenging their right to monopolize the business and inflate prices.  Now let’s see what the implications for wine sales might be.

Grocery Store Sales of Wine

At the moment the enabling of grocery stores to sell wine is up in the air because of the purported additional complications in this market, related to the North American Free Trade Agreement (NAFTA).  The possible problem is that there is an exemption in NAFTA that grandfathers winery owned stores that existed before NAFTA came into effect.  At that time many different wineries had retail stores (they were only allowed one each) that were stand alone or on the premises of supermarkets, for example.  Because the number of stores was then fixed in perpetuity, larger wine companies started buying up the little guys in order to gain the retail store space, thereby limiting competition.  We have now reached the point where 260 of the 292 stores are owned by just two companies:  Constellation Brands (the “Wine Rack”) and Andrew Peller (the “Wine Shop”).  This situation has put most small producers at a disadvantage in the marketplace, perhaps contributing to the decline in Canadian wine sales over the past 40 years.

The rule (and I think there is something similar in the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA) is based on the premise that additional stores selling only Canadian wine would put foreign producers at a disadvantage.  But grocery stores wouldn’t be limited just to Canadian wine, so this sounds like a bogus argument to slow down the process until the LCBO figures out how to hamstring the grocery stores so much that the LCBO makes as much money as ever for less work.  Legal opinion seems to agree with me.

So, heaven only knows what the LCBO is plotting (the government basically takes their marching orders from the LCBO in the area of alcoholic beverage sales) but you can be sure that increased competition is the least of their concerns.  We are supposed to find out more early in the New Year.

The Lure of Provence

The Promenade des Anglais by the Nice seaside

The Promenade des Anglais by the Nice seaside

Earlier this fall I was privileged to spend three weeks dawdling around Provence.  I’ve always loved the pace and joie de vivre of Mediterranean culture, not to mention the climate and the wine.  Provence easily lives up to that reputation.  The traditional province is essentially the south of France east of the Rhône and as far as the Italian border.  It is approximately delineated by the modern départements of Var, Bouches-du-Rhône, Alpes-de-Haute-Provence, Alpes-Maritimes, and Vaucluse.  The only département that I did not spend much time in was Alpes-de-Haute-Provence.  Most of the best wine comes from Var, Bouches-du-Rhône and Vaucluse, but Alpes-Maritimes is a good place to start out from, since its coast is the French Riviera, a.k.a la Côte d’Azur, and one of the two major airports in Provence is in Nice (the other is Marseille).  The brilliant blue sea and fresh fish are certainly attractive, but the wine is generally from elsewhere in Provence and there is that veneer of artificiality that disappears once you get away into the more rural parts of the province.

View of the village perche of Bonnieux with the vine covered valley below.

View of the village perche of Bonnieux with the vine covered valley below.

We’ll get to the big name wine areas later, but first it’s pleasant to spend a few days in the Luberon.  This is the largely rural area south of Mont Ventoux, full of vine-covered valleys and hilltop villages (villages perchés in French).  This is Peter Mayle country, especially around the villages of Ménerbes and Bonnieux (where we stayed), so there is one wine in particular that everyone knows – Coin Perdu from the book and subsequent film, A Good Year.  The movie was made at Château la Canorgue, just outside of Bonnieux, and the iconic drive up to the main house is shown here.  Coin Perdu is not available for tasting (but it is for sale!);  however everything else is open.

Drive up to Chateau Canorgue, used as the location for the film "A Good Year" starring Russell Crowe and Juliette Binoche

Drive up to Chateau Canorgue, used as the location for the film “A Good Year” starring Russell Crowe and Juliette Binoche

This is an organically managed estate where sulphur use is minimized, so the results can be a little scattered.  The reds are quite tannic but the rosés are lovely, typical of Provence.  The whites exhibit some reduction, likely because of the minimal sulphur use.  While you’re in the area, don’t miss the magnificent Roman bridge, the Pont Julien, only a couple of kilometers down the road.

In the other direction, just past Ménerbes, is one of the best wineries of the Luberon, le Domaine de la Citadelle.  They have three lines of wine.  In ascending order of prestige, they are le Châtaignier, les Artèmes, and le Gouverneur Saint-Aubin.  They are made in all three colours except there is no Gouverneur rosé.  The whites clearly increase in depth and structure through the line-up with the Châtaignier showing off the perfume of Clairette, along with some Grenache and Ugni Blanc.  The addition of Roussanne and Marsanne in the Artèmes provide more body and structure while retaining a floral aroma.  Both these whites are aged in stainless steel, while the Gouverneur has some oak aging – it is built on Viognier, Roussanne, and Marsanne, with some Vermentino, Grenache, and Chardonnay.  Although the Châtaignier rosé is made using the preferred method of short maceration followed by pressing, while the Artèmes uses the more controversial saignée method, the Artèmes does have more depth, perhaps because it is made from older vines.  As with the whites, the lower level reds are aged in stainless steel, although the Artèmes does spend time in old foudres and also experiences some barrel aging.  Both are based on Syrah, Grenache, and Carignan, with some Mourvèdre added to the Artèmes.  That and the wood aging are likely what gives it greater richness.  Finally there is le Gouverneur red.  Here the cépages are 90% Syrah with a touch of Grenache and Mourvèdre.  The wine is barrel aged for one year (as are all wines at la Citadelle) with 15% new oak, resulting in depth and ripe tannins, although it is currently somewhat closed – clearly a vin de garde.  As a bonus, la Citadelle boasts a rather idiosynchratic corkscrew museum where you can pass a pleasant half an hour.  Afterwards, try some lunch at la Maison du Vin et des Truffes in Ménerbes.  The truffled egg dishes are worth the parking hassle.

View along the sea of vines seen from la Maison du Vin et des Truffes in Ménerbes

View along the sea of vines seen from la Maison du Vin et des Truffes in Menerbes

Truffled egg dishes for lunch at la Maison du Vin et des Truffes

Truffled egg dishes (a brouillade and an omelette) for lunch at la Maison du Vin et des Truffes

Part of the Roman town in Vaison-la-Romaine

Part of the Roman town in Vaison-la-Romaine

Circling around Mont Ventoux, it takes over an hour to drive from the Luberon to the heart of the Southern Rhône wine region, amid the villages of Vacqueyras, Gigondas, Rasteau, Cairanne, also not far from Châteauneuf-du-Pâpe itself.  A nice place to stay is Les Tilleuls d’Elisée in the small city of Vaison-la-Romaine, where you can visit the magnificent Roman ruins (seen at left) between wine tours.

Eric Saurel, owner and vigneron of Montirius, showing off some of his wines

Eric Saurel, owner and vigneron of Montirius, showing off some of his wines

One of my favourite producers, and a must-visit on this trip, is Montirius, located in the Vacqueyras AOC.  They are both biodynamic and a natural wine producer, but not so extreme that they forgo adding sulphur.  Therefore their wines retain the freshness and sense of place that many of us are looking for, but the wines also travel and age well.  The owner/winemaker Eric Saurel, kindly took us through a good range of his wines, including several of the single vineyard bottlings.  His offerings from Gigondas are particularly noteworthy.

A good place to try some Châteauneuf-du-Pâpe is in the eponymous village at the wine shop “The Best Vintage”, where you will be helped out by proprietor Danielle or sister Carole of the Brunet family, owners of Château de la Gardine.  After a tasting, you might want to repair to Le Pistou just up the street for some lunch.  Then remember that you are in the heart of Roman Gaul and visit the magnificent arenas Orange, Arles, and Nîmes, as well as the nearby Pont du Gard.  Much less well known but equally impressive is the Graeco-Roman town of Glanum, just outside Saint-Rémy de Provence.

Waterfront of Bandol

Waterfront of Bandol

Returning to the Còte d’Azur from the west takes us to the lovely seaside fishing town of Bandol and its surrounding wine region.  As you can see from the map below, none of the wineries is actually in the immediate vicinity of Bandol.  Rather they are in semi-circular area up in the hills, encompassing the villages of Le Castellet, La Cadière d’Azur, Le Plan du Castellet, and Saint-Cyr-sur-Mer

Map of Bandol AOC showing the various properties (red dots)

Map of Bandol AOC showing the various properties (red dots)

Some of the top wineries to visit are Domaine Tempier (primus inter pares), Domaine de la Suffrène, Domaine de Terrebrune, Domaine de la Tour du Bon, Domaine Pieracci, and Domaine Lafran-Veyrolles.  We also enjoyed Château Romassan because of memories of a previous trip visiting another of Domaine Ott‘s properties.  After quenching your thirst, enjoy some fine fresh seafood at the restaurant l’Auberge du Port by the quai in Bandol.  A great place to stay in the area is the Hostellerie Berard in La Cadière d’Azur, seen below during market day.  On the right below is the hilltop village itself as seen from Château Romassan.

Main street of La Cadiere d'Azur with the entrance to the Hostellerie Berard at left

Main street of La Cadiere d’Azur with the entrance to the Hostellerie Berard at left


La Cadiere d’Azur atop its hill with the vineyards of Chateau Romassan (Domaine Ott) in the foreground

The daytime temperature in Provence averaged around 20C or more (~70F) while we were there in October, so go and enjoy fine wine, fine food, and fine weather, along with magnificent classical sites.