Friday, August 5, 2016

The Shape Of Things To Come?

Over the past several years, I have become a bit of an aficionado of bourbon. Given that most of my life I have never cared for the taste of straight liquor, how I came to fancy it is something of a mystery, but it is now my hobby that whenever I see a new listing in the LCBO (Liquor Control Board of Ontario), if it is within my price point, I will buy it. The other frequent purchase is red wine.

My imbibing habits are really not the subject of this post; rather, it is a disturbing trend I have noticed upon visits for the past several weeks. Product prices are rising, not by ten or twenty cents, but by dollars. For example, a bottle of Barefoot Merlot, a California wine, was retailing about six weeks ago at $9.95. It then went up to $10.05, and quickly jumped thereafter to $10.95. A bottle of Eagle Rare bourbon, (a rare purchase for me, given its price) jumped from about $49 to $54.65. I could give numerous other examples, but I think you get the picture.

Given the relative stability, even upward trend of the Canadian dollar, these increases on American products cannot be attributed to currency fluctuations nor simply a cash grab by the province. I believe there is something more insidious at work.

I believe that the Ontario Liberal government, should it win re-election in 2018. is planning to privatize the LCBO, surely one of our crown jewels, given the huge profits that go into the provincial treasure each year. Indeed, in fiscal 2013-2014, it made a record profit of $1.74 billion, more than our formerly wholly-publicly-owned Hydro One.

What is my evidence, other than the rising prices that would make the LCBO's sale even more attractive to private investors? Consider the pattern:

Before privatizing Hydro One, the government engaged in a series of price increases for electricity, culminating in the current peak rate (weekdays 11 a.m.-5 p.m.) of 18 cents per kilowatt hour. One of the reasons cited is that Ontarians' conservation efforts reduced Hydro One's revenues. Left unsaid is the fact that lower profits would have also resulted in a lower IPO when the first 15% of Hydro One was sold off.

But wait. There's more.

Ontario Premier Kathleen Wynne has made a big play to offer a wider distribution of beer, which will ultimately be available, but only in six-packs, in 400 grocery stores. Prior to that, she had expressed public outrage over the virtual monopoly enjoyed by the privately-owned Beer Store, whose proprietors are multinationals: Molson-Coors, Labatt (owned by Anheuser-Busch InBev) and Sleeman (owned by Japan’s Sapporo). At the time, she suggested a licensing fee would be imposed on that monopoly. Needless to say, that never happened, but the fact that beer is now allowed, albeit in limited distribution and quantity in grocery stores, suggests an effort to change the public perception about the virtues of privatization.

Next, there is the recently-announced LCBO delivery service. Finance Minister Charles Sousa said,
the creation of shows the government-owned liquor agency's commitment to evolve and modernize, and will provide greater convenience for consumers.

"The virtual shelf space now available to small wineries and breweries is fantastic," said Sousa.

The online sales site will be a huge boost to Ontario wineries, breweries and cider producers, predicted LCBO president and CEO George Soleas.
As well as a boost to their already fat bottom line, no doubt, thereby enhancing its attractiveness to future private investors.

Consider as well the recent hiring of Bonnie Brooks as the LCBO's new Chair. Known as a turnaround-queen, she joined Hudson Bay in 2008, becoming
its first female president and CEO. Brooks is known for engineering a turnaround for the retailer, dropping its moribund apparel brands and bringing in mid-to-high end fashion products.

Brooks was set to retire from her role as vice-chairman before agreeing to take on LCBO role. She said this new opportunity would allow her to help “build on the great work that has already been done, and to take this exciting retail powerhouse to the next level,” with its expansion online and its new role as wholesaler to grocers.
Cynics like me would suggest that she has really been hired to complete the transformation of the LCBO prior to the start of privatization.

Expect no mention of these plans before the next election. Just as the privatization of the very profitable Hydro One came out of the blue, a cowardly and costly way to avoid tax increases while bringing in her balanced budget in time for the next election, my prediction is that Kathleen Wynne will once more betray the people of Ontario should she win another majority mandate

It is a sad thing when a citizen comes to look upon his government with suspicion and loathing. Yet it is an odium that the premier and her tired regime have justly earned.


  1. The BC government toyed with this idea. They even allowed the opening of plenty of private liquor stores, usually adjacent to a pub. It didn't work. The public wanted the government stores kept open. Many (like me) felt the wine selection was vastly better at the provincial stores. The government folded. Last year my town even got a premium store with a wall of cold beverages - mainly beer, some wine - and an even broader selection of products. They also extended the hours to 9 p.m. and the store is open 7-days a week including holidays. Sweet. I prefer the government stores because I think they do a better job of fending off underage buyers. Also their staff are properly paid with decent benefits. That sort of thing still matters to me.

    1. We have very knowledgeable staff at the LCBO, Mound, and, depending upon the store and the area's demographics, quite a varied selection of products. Like B.C., the staff is paid fairly well and have good benefits.

      Contrast that with Alberta. Whenever we visit our son, I make it a practice of going into their privately-operated stores, where the prices are generally higher than here, and the product selection poorer. I believe staff working there are paid minimum wage.

      The choice seems clear, but the ideologues will always insist that the private sector can 'do it better.' The problem is, reality shows otherwise.

  2. Wynne is a flagrant bribe taker like the Clintons. She'll want to wait before weed is legalized and sold at the LCBO before privatizing.

    Since this is a horse race between the Wynne and Brown with the Toronto Star already campaigning for Wynne, I will be voting Brown for sure. First time in my life I voted Con. But clearly the 'lesser evil' given the immense corruption of the present Neo-Liberal dynasty.

    1. The next election is going to be a challenge for me, Anon. At this point all I can say is I will not vote for Wynne. Her betrayal of all the people of Ontario via the privatization of 60% of Hydro One is something I can neither forgive nor forget.

  3. It's about time that these provinces got with the program and gave the private sector the opportunity to turn those liquor store sinecures into "jobs that Canadians won't do".

    This is just another example of surplus wages that have been sticking out, exposed on open ground, for far too long past the time that they should have been turned into profits. The wealth creators of B.C. and Ontario should be ashamed of themselves.

    So let's get the ball rolling so we can get to the Labour Market Impact Assessment phase and bring on the TFWs.

    1. Your ironic commentary is much-appreciated, John.