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Jan Wong: Why the LCBO—the antiquated, paternalistic monopoly that’s deliberately gouging us—has got to go

Body Politics

On a recent Sunday afternoon, I stopped by the LCBO’s flagship Summerhill store.
A glorious 35,000 square feet of creamy Italian porcelain floors and sparkling lights, the refurbished Canadian Pacific Railway station is adjacent to a cluster of gourmet shops that affluent shoppers call “The Five Thieves.” Here you pay dearly for ready-to-heat osso buco or a square of chocolate cake sprinkled with edible gold leaf. Despite its prime location, this outlet, the LCBO’s largest, is no pricier than any other location in the province. You pay the same fixed $12.60 for a 2009 Louis Bernard Côtes du Rhône here as you would at Scarborough’s lowly Cedarbrae Mall.

Nice, huh? But wait—you and I are paying for those pot lights, the Martha Stewart–style test kitchen (used for cooking demos and wine appreciation classes) and the standalone tasting bar, not to mention the lease on this prime piece of real estate. We all pay—whether we’re teetotalers or boozehounds—because higher overhead reduces the annual dividend the LCBO remits to the province. That in turn means less money for everything from social services to infrastructure.

According to a recent report by Ontario’s Auditor General, Jim McCarter, the liquor monopoly is also minimizing profits by failing to use its enormous clout to negotiate the lowest possible wholesale prices from suppliers. Instead, the LCBO does something unique among retailers. It decides on the retail price it wants to charge for a product, and then asks suppliers to raise or lower their wholesale costs accordingly. Why? The LCBO claims it’s merely fulfilling its duty to be socially responsible—that by keeping prices high, it’s trying to discourage consumption. And yet, as McCarter reported, alcohol sales have gone up 67 per cent in the last decade.

LCBO. It rolls off the tongue like an unoaked chardonnay, lulling us into overlooking what the initials actually stand for: Liquor Control Board of Ontario. The LCBO’s motto might as well be, Drink lots! But not too much! To understand its conflicted ethos, you have to go back to 1927, the year Ontario emerged from Prohibition. Still fretting that unfettered liquor sales and low-priced alcohol would lead to alcoholism, crime and general chaos, Queen’s Park primly established a state monopoly with a
mandate: temperance.

Today, the LCBO downplays the control aspect while struggling to satisfy its dual mandate of turning a profit without turning people into drunkards. The subliminal message of Food and Drink, the LCBO’s free magazine, remains paternalistic: don’t drink on an empty stomach. The hypocrisy is astounding. The LCBO goes further than most stores in trying to persuade you to buy its product for every social occasion short of a toddler’s birthday party. What other retailer has dreamed up 300 styles of gift bags, boxes and bottle-friendly containers in the past five years? Chris Layton, an LCBO spokesman, says the gift bags earn $3.5 million a year—although consumer interest is now shifting to gift cards.