Tag Archives: Prohibition

The Legacy of Prohibition

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Ontario suffered under the Ontario Temperance Act (“prohibition”) from 1916 to 1927.  Although it was repealed over 80 years ago, its legacy is still with us.  Repeal was not a reaction against temperance, since that concept still informs much government thinking.  Instead it was a realization that the province could reduce expenditure (by eliminating all that crime arising from selling and drinking alcohol) and increase income because of the vast profits to be made by assigning the retail role to itself.  What has been the legacy of that period and that transition?

A mass of information can be found at puncheddrunk.ca.  One interesting point that you may not know is that, until 1975, the Ontario government tracked every person’s every alcohol purchase through the purchase order forms that each customer needed to fill out to buy alcohol at the LCBO.  If Big Brother felt that you were buying too much, you were cut off from all purchasing, province wide.  These surveillance forms were only phased out with the advent of self-serve stores in the late 1970’s.

Moving on to the present, my view on the current situation is as follows:

  • The government’s schizophrenic approach to temperance encourages a public attitude that alcohol is just a little bit naughty.  As a result, over-consumption becomes a goal for younger consumers.  The more mature approach would be to treat consumption as a component of everyday life where, for example, wine is an integral part of a good meal and a picnic in a public park can be accompanied by a picnic wine.  Prohibitions should not be placed on alcoholic beverages themselves, but on the misuse (drinking and driving, drunkenness leading to violence, etc.);
  • All alcohol is equally demonized.  Although the main impetus behind Prohibition was to curb the drunkenness arising from the consumption of whisky in saloons, the result was that beer, cheap wine, fine wine, cheap whisky, fine single malts, and fine cognac were all tarred with the same brush.  Other jurisdictions (e.g. Quebec) have recognized the differences by, for example, allowing private beer and wine sales;
  • Prices are artificially high.  It was recently disclosed in the Ontario Auditor General’s Annual Report that the LCBO sometimes encourages its suppliers to charge higher prices to the LCBO than to other customers so that it can maintain artificially high retail prices and thereby maintain the guise of “social responsibility.”  This revelation has slid off the Teflon LCBO like water off a duck’s back because the government figures that it is in their interest not to interfere with or reprimand the LCBO in any way at all in case profits should be affected;
  • Prohibition is clearly alive and well in the guise of several legislative attempts to place warning labels on all alcoholic beverage containers.  In this case, however, kudos to the government for resisting the pressure.  Such an effort is superfluous nowadays as anti-drinking-and-driving campaigns and informational campaigns about the effects of alcohol on pregnant women have achieved universal and very public awareness.  For the consumer, the downside isn’t really the additional expense per se, as trumpeted by the beverage industry.  Instead, such legislation further solidifies the hold on the industry of large (often multinational) companies that can easily handle the label modifications and that have the ear of the government.  Conversely, it marginalizes the small quality producer, whose product is generally used in exactly the kind of way that should be encouraged, i.e. as an integral part of a good meal.

Even in the United States, the former poster child for Prohibition, most states have decided that consumers of alcoholic beverages may actually be adults.  Wine is sold privately, sometimes even on sale or with case discounts, and you can enjoy a rosé with that picnic in the park.  The LCBO’s paternalistic attitude should be treated as the anachronism it is, with no place in our modern cosmopolitan society.  There is plenty of legislation in place to deal with misuse of alcohol:  by all means keep alcohol from young children, but don’t treat all adults as children too!

For more on this subject, you might want to take a look at this article by Connie Woodstock.

Mission LCBO

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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.