I’ll have a lot to say about the LCBO in future – some of it is even good! But first it’s worthwhile to try and understand why it is here at all and what it is trying to do. The Liquor Control Board of Ontario (the quasi-monopoly responsible for retail alcohol sales in Ontario) was formed after the repeal of the Ontario Temperance Act (“Prohibition”) in 1927 – more about that in future. That’s why “Control” is so prominent in the name. Surely that’s all changed after more than 80 years! What is their mission now? I’ll bet very few of you have any idea what it might be, in part because it’s so contradictory. While they still have the mandate to control and restrict the sale of alcohol, they are also a major retail organization with the need to maximize sales and profits. According to the LCBO website, its mission statement is:
“We are a socially responsible, performance-driven, innovative and profitable retailer, engaging our customers in a discovery experience of the world of beverage alcohol.”
Clearly the fourth point (“profitable”) is the most important because the very next paragraph boasts that:
“Sales in fiscal 2010-11 were $4.55 billion and the LCBO delivered a $1.55 billion dividend to the Ontario government.”
OK, no wonder a mind-numbingly long succession of Ontario governments have chosen to do next to nothing to reform or replace the LCBO – they love the money too much. So what about their number one mission objective – “social responsibility?” That phrase primarily means preventing alcohol sales to minors while incidentally campaigning against drinking and driving and so forth. So how are they doing? Well, a recently published study sent out secret shoppers, both underage (15-18) and legal age (19-24), to the government run LCBO, the privately operated Beer Store chain, and privately owned convenience stores (purchasing cigarettes in this case), in order to test their dedication to the prevention of underage drinking. The results were: convenience stores only sold to minors 1 time in 8; the Beer Store record was 1 in 5; and the LCBO came dead last at 1 in 4. There was a similar trend, in terms of carding, for the legal age customers. Oops.
The other mission objectives are to be performance-driven and innovative. For performance-driven, read “profit maximization” (see above.) As for innovation, not much has happened since the requirement was dropped that every drinker in the province had to be licensed and under surveillance (for more information, check out the Punched Drunk website), and since the service model evolved from purchase order forms and a furtive booze-in-a-paper bag philosophy to normal retail self-serve. Sure, they’ve added some new purchasing vehicles over the years (Classics catalogue, Shop Online, etc.), but what about evolving the stores to resemble normal retail wine stores elsewhere in the world, with case discounts, sale prices on more than bin-ends, quality in-store tasting events, and delegation of some power to product consultants so they can stock independently?
But reform will be hard. Successive political parties have always made noise about how the LCBO should be privatized and liquor laws modernized, while they were in opposition. But as soon as they get into government, they can’t resist the profits. As usual, when trying to understand human behaviour, remember Jerry Maguire’s immortal words: “Follow the money.”
P.S. – For more on the subject, check out the latest newsletter from Michael Pinkus, the Grape Guy, at OntarioWineReview.com.
