Wednesday, January 13, 2010

Win, Win, Win

It’s a stretch but a statement in the January 1st Globe & Mail article The Wine World's African Queen touches on one of the current alternatives for addressing Ontario’s looming deficit: Selling the LCBO. The last time the Ontario Government sold off a public utility the Ontario citizen was exposed to monopolistic tariffs of a cross Province expressway. Now… how does an article on a South African winemaker contribute to this discussion?

The article described LCBO’s proclivity to source South African wines from large corporations with a focus on revenue rather than quality. A story similar to ones I heard firsthand several years ago from a number of small New Zealand winery owners - and more recently from owners of small Niagara wineries. There is often no upside to climbing the steep incline of LCBO’s requirements to market their wines. The small winery owner finds himself managing shelf inventory across outlets and accepting the full impact of slow sales.

Norma Ratcliffe, an Edmontonian and the first female winemaker to become commercially successful in South Africa says in the article: “They're (stodgy managers of Canada’s government controlled liquor monopolies) out of touch. If they don't sell the wine in a certain period of time, they don't care, they still get their paycheque. They favour volume brands from South Africa - real plonk. Nobody here would touch it. We've been fighting this for a long time.”

Selling off the LCBO in whole or part could be the slippery slope of losing control of existing products and services. Instead of less plonk on the shelves the appetite for increased profits would drive more plonk and at higher prices. And why on earth sell off a Cash Cow?

So let’s keep the status quo with the LCBO raking in even higher tax revenue as public appetite for wine increases. The plonk drinking (an endearing term) Ontario consumer would continue to receive both products and services found satisfactory in the past.

But how are the consumers looking for wines of distinct and genuine qualities to be satisfied? Whenever I discover an enjoyable wine, perhaps during a restaurant meal, I search LCBO stock as a followup. Not finding the wine in Vintages I phone the restaurant often being given the supplier’s name, usually an Agency in the Greater Toronto Area. Then it’s a quick Google for a complete list of wines distributed by that Agency. Unfortunately one legislated quirk Agencies abide by is that their wines must be sold by the case - there’s no mixing of wines. For a wine I’ve already tasted a case of twelve can be a quick sale - pick it up, have it delivered or route delivery through an Outlet.

What of the other 100 or so wines sold by the same Agency? And what of the other 20 or so Agencies in Ontario - sole distributors of equally delightful wines? How do I justify purchasing a full case of a wine that I haven’t tasted?

I haven’t found a solution within the current system - but there could be with one act of legislation . One so simple. One to benefit everyone that why it hasn’t been enacted is a mystery that only a bureaucrat could explain. It would be a Win, Win, Win: for the wine consumer, for the Agencies and for both municipal and provincial Governments.

Allow Agencies to open Wine Bars: Retail stores offering wines, wine tastings, wine flights along with appetizers - and live local music. Most large cosmopolitan cities give colour and character to their local communities through these social outlets.

Agencies could solve the revenue holdback until the sale of a wine. Agencies could reduce impact of cottage wineries having to negotiate terms of marketing and the managing of wine inventories. Agencies are already motivated to stock value wines and now would have an outlet to prove their value. Agencies would properly cellar wines so as to protect their investment in stock. Agencies could even be a trigger to solve the interprovincial anarchy preventing cross border wine purchases. As the example in the video, let free enterprise bring life back to the serious wine consumer - it would be another revenue source for existing Agencies. 

Only the lack of the will to change, a resistance to join the rest of the word in treating wine as a social beverage not a revenue leverage, is preventing this from being a Win, Win, Win. The “stodgy managers of Canada’s government controlled liquor monopolies" could quickly get in touch with a modern public by accepting a change.

My opinion, Ww

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