Ok...
To borrow an over-used expression of late, let's unpack this issue.
Most of us can agree that while the existing systems for beer/wine distribution are not terrible, they aren't ideal on several fronts.
What fronts are those?
Location Convenience: Principally this is an issue of how far you have to go to get your booze. In Cities like Toronto, if you drive, the distance is invariably no big deal; though for many who go car-free these days, the walk can be a bit much. While for those in small towns, the issue may either be no outlet at all, or one operating poor hours (close at 6pm on weekdays) (Sunday noon-4).
Product Selection: While in truth, single-outlet selection is better in most large LCBOs and Beer Stores than all but a very few booze-carrying outlets around the world, since they all carry a similar 'general list' of products, the variety among all outlets collectively is less. This means a poorer selection of micro-beers, and elite-level or obscure wines.
Price: Partly a function of monopolies, more substantially due to taxes and minimum price policies, wine + beer do cost more, particularly when compared to much of Europe, but also parts of the U.S. (particularly beer) and Quebec (beer again).
A quick review on-line of prices for your favourite wines will show the LCBO to be surprisingly competitive within Canada, and not that far out of step with most of the U.S. But there is less selection at the low end of the price range that you might find south-of-the-border.
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So...what can/should/will we do about the above?
Well, before we propose to gut the system, we need to understand why it is the way it is.
I'm not going to give a lecture on prohibition, LOL, but we do need to see why change is difficult.
First, on the Beer Store, the current system is very efficient for brewers and allows for full take-back and re-use of bottles.
Could this be done at convenience stores or grocery stores? Yes, it could. For those who remember deposit/return on glass pop bottles, been there/done that.
But it is barrier to entry, and of course, the more stops the brewer's trucks need to make, the more the distribution cost.
Ontario can break the monopoly, but needs to examine the implications for deposit/return, costs and of course, taxes. While a great deal of tax is on the product itself, The Beer Store is subject to provincial corporate taxes. Convenience stores, as small businesses, pay a much lower tax rate. Perhaps we can/should live w/that; but its likely we wouldn't. Which means taxes would rise in some other way to pay for that revenue loss.
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On the LCBO, the revenue stream to the gov't is a function of liquor taxes, but also corporate profit.
Privatizing gives you a one-time cash injection, but deprives you of on-going profit of over 1 Billion dollars.
But if you privatize, logically the value in the business is as-is; but surely you would have to end the monopoly, which would greatly de-value the asset you seek to sell?
Making up for it by hiking liquor taxes or charging for 'store licences' is possible. But see Alberta for what that's done. Prices are higher, not lower. You do have some additional locations, but that's not necessarily a trade I would make.
Its worth noting the LCBO is rather more efficient than people give it credit for, aside from logistics and being the largest purchaser of most wines/liquors in the world, its employees aren't nearly as well paid as you think. The Full Timers get wages in the high-teens per hour + benefits. But the part-timers get Min. Wage and no benefits so far as I understand. The latter also makes up the majority of the work force.
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So what to do to resolve the various concerns?
My suggestions:
Convenience and Product Selection: Allow VQA stores, similar to BC that would sell only Ontario Wine, about 250 of them (new) + allow existing grandfathered Ontario wine stores to sell the full VQA range (instead of only their own product).
Gently nudge the LCBO to open a few more 'boutique' stores in urban areas.
Allow a few more 'agency' stores in under-served areas.
Change the regulations to allow retail liquor sales after 6pm on a Sunday.
Enlarge LCBO beer selection, with a focus on micro-brews and product not available through The Beer Store.
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Allow the equivalent of VQA stores for Ontario-Brewed Microbeer.
Test convenience stores sales, but limit the number of stores to 250 province-wide for now, with the requirement they participate in deposit/return.
Total: 500 new beer-buying locations.
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Price: Abolish the minimum price for beer (currently about $28 on a 24) and replace it with a simple rule, Thou Shall not sell Below Cost. This is the rule in New Brunswick.
While the LCBO will tell you it doesn't have a minimum price per say, it does have a 'de facto' minimum price. Ditch the 'socially responsible' nonsense and direct the LCBO to carry wine as cheap as $5 per bottle where it makes economic sense to do so.
Next, keep the percentage of price taxes on beer and wine, but eliminate the volume-based taxes. These have a disproportionate affect on low-price products. ie. 30c per Litre of wine, or .24c per bottle has a more noticeable effect at $7.00 per bottle wine vs say $23.00 per bottle wine.
Right now there is a rule that Ontario wineries and wine stores can NOT by law under-price the LCBO on an identical product. This rule should be removed.
Finally, add a bulk-buy policy similar to many U.S. wine stores where buying wine by the case gets you a 10% discount.
By charging for the additional retail licenses, plus a sales boost, most lost revenue should be recoverable; if not, hike HST 1% that would do it cleanly.
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That's my 2 cents.