The wine trade deal recently announced by Christy Clark at the Premiers Conference in Whitehorse is a disappointment.
It allows online sales of B.C. wines in Ontario and Quebec through the LCBO and the SAQ but it will not materially increase access to these markets for British Columbia’s internationally acclaimed wines.
Truly opening up the Canadian market to B.C. wines requires that B.C. wineries be allowed to take orders from and ship wines directly to customers across the country. Premier Clark’s new deal does not do this, but instead inserts the LCBO and the SAQ as middlemen between producers and consumers. The result is a new sales channel that is disappointingly slow, inconvenient and expensive.
Details of the trade deal have not been confirmed, but it looks like nothing more than an add on appendage to Ontario’s recently announced e-commerce portal. The new portal allows Ontario consumers to order liquor on line 24 hours a day for home delivery or pick up at the nearest LCBO outlet. Sounds simple and convenient but the devil is in the details.
The LCBO is not proposing to increase its stock of B.C. wines on shelves. Rather, a B.C. winery (or a BC bottler of “bottled in Canada” product) can apply to list one or more products on the LCBO’s new e-commerce site. Some red tape is involved — submitting a vendor profile, registering in the New Product Submission System, having the product safety tested in the LCBO’s Quality Assurance lab, complying with any LCBO specific labelling and format requirements and appointing the LCBO as its exclusive agent in Ontario.
If an online customer orders a case of B.C. wine (only case lot orders are permitted), the LCBO will in turn order the wine from the winery farm gate and the winery must then initiate delivery to an LCBO warehouse within 24 hours.
The LCBO will apply its usual 73.5 per cent mark up on out of province wines. This will result in an extremely high price for the wine in Ontario unless the B.C. producer reduces its usual wholesale price and settles for a lesser margin. In addition, the producer must pay a freight charge of about $20 to ship the wine from B.C. to the LCBO which will further increase prices or erode margins.
This exorbitant pricing might be justified if it was accompanied by extraordinary service. Unfortunately, this is not the case. In an Internet world where an Ontario consumer should be able to order a case of Okanagan wine on line and receive courier delivery the next day, the LCBO time frames are ridiculously slow.
The LCBO offers customers the opportunity to pick up internet orders from their local LCBO store and expects that 80 per cent of customers will chose that option. Strangely, however, this can result in frustratingly long fulfillment times, presumably resulting from inefficiencies within the LCBO’s own internal distribution systems. For orders fulfilled by the LCBO it will take one to four weeks for the order to be ready for pick up. Where the product must be ordered by the LCBO It will typically take four to seven weeks for the order to be ready for pickup.
The LCBO will also provide home delivery within two to four days for a delivery charge of $12 plus tax. If the customer is not home to personally sign for the wine, the order will be left for pickup at the closest Canada Post outlet. This is silly. Private market dial-a-bottle delivery services already exist in Toronto that promise pick up and delivery of liquor from a LCBO store within an hour.
This new deal offers B.C. wineries far less than the deals that Premier Clark has achieved with Manitoba, Saskatchewan and Nova Scotia. These provinces allow B.C. wineries to ship directly to consumers. Clark got off to a good start with Wynne in 2013 by giving her a contraband case of B.C. wine at a Premiers’ Conference in Niagara-on-the-lake, but she needs to go further. Her current trade deal falls far short of what is required to open the Ontario and Quebec markets to B.C. wines.
Al Hudec
Oliver