LCBO employees picket in front of a LCBO store in downtown Ottawa on July 5.Sean Kilpatrick/The Canadian Press
What if you went on strike and hardly anyone noticed? That’s the dilemma faced by 9,000 unionized employees of the Liquor Control Board of Ontario, who walked off the job last week.
While clerks and cashiers patrol the picket lines, consumers have much less reason than in the past to be panicked by the closure of the 670 provincial liquor stores.
That’s because there are still 628 wineries and winery retail stores selling wine, 82 distillery retail stores selling spirits, 373 breweries selling beer, 448 grocery stores selling beer and wine, and 389 LCBO “convenience outlets” inside small stores in rural areas selling wine, spirits and beer. There are also 437 open Beer Store locations, which are owned by a cartel of private international breweries. And customers can still order online from the LCBO.
This won’t be the “dry summer” the union is threatening, because the LCBO’s monopoly on booze sales is over. What was once a valuable union bargaining chip has been diluted by an opening-up of the retail marketplace by the Ford government. With luck, it could spell the end of the LCBO’s domination of the industry in Canada’s biggest province.
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The LCBO and its striking workers are, at no fault of their own, caught in a time warp that successive Ontario governments have allowed to continue “out of inertia, for fear of public rebuke and for the sake of cash flow,” as this space said all the way back in 2009.
Provincial monopolies such as the LCBO or the Société des alcools du Québec are vestiges of the Prohibition era, when Christian moralizing about the evils of drink informed government policies on the sale of alcohol. The objection that privatization will fuel alcohol abuse is little more than a 21st-century version of that mindset.
Yes, the LCBO and the SAQ no longer hide their products in a backroom and hand bottles hidden in brown paper bags to customers across a counter that has all the charm of a Soviet rationing office. Provincial liquor monopolies have made great strides toward becoming more consumer-friendly operations, with stores that don’t insult people’s intelligence.
But there is no credible reason for any government to control and monopolize alcohol sales.
The LCBO’s argument, latched onto by the union representing the striking workers, is that profits from retail sales go directly into the province’s general revenues, instead of into the pockets of greedy private vendors.
Governments, though, are supposed to raise money through taxes, not by competing with the private sector for sales. Otherwise, why not have the province sell groceries, cigarettes, cars and lawn-care services, too?
In reality, the $2.5-billion profit the LCBO delivered in 2023 is a hidden tax on Ontario consumers that comes at the cost of high prices and an intrusive booze-eaucracy.
The LCBO uses its monopoly to force producers to pay for onerous testing before their goods can go on shelves, and hits them up for warehousing and shipping fees.
At the same time, its control over the retail market is weakening. The Ford government says the LCBO will continue to operate as the province’s main retailer of spirits for now, but it is expanding beer, wine and pre-mixed cocktail sales in stores and big-box grocery chains. Domestic wineries, distilleries and breweries – a growing sector in Ontario and Canada – will continue to be able to sell direct from their locations.
Let’s hope Ontario doesn’t stop there. If there is a model for it to follow, it’s in Alberta, where all retail sales are private, and the government limits itself to warehousing and wholesaling easily registered products that are spared Ontario’s time-consuming and expensive testing process.
Thanks to its markup at the wholesale level, Alberta Gaming, Liquor & Cannabis handed the provincial government $825-million in 2023 on wholesale revenue of $2.8-billion. On a per capita basis, that is on a par with the LCBO’s $2.5-billion contribution, but without all the inefficiencies and bureaucracy.
Consumers in Alberta enjoy 20 per cent more products, at more than 500 more liquor stores, than Ontario consumers do – all at prices that are generally a few dollars cheaper for a 750-ml bottle of liquor thanks to the magic of competition.
Why any province would cling to an outdated provincial retail liquor monopoly in 2024 is incomprehensible. If this summer is the beginning of the end of the LCBO, that will truly be something to cheer.