Liquor Reform In British Columbia

By David Hull. The release of John Yap’s report this week on liquor reform in the province has focused on one point. The sale of alcohol in grocery stores.

Forbid a grown responsible adult could have a beer or glass of wine while at the beach. A topic for another musing.

Already Yap’s grocery store recommendation has all the makings of another implementation cock-up. Governments seem incredibly adept at taking really good ideas and throwing a wrench in the works on the implementation phase.

HST: Great taxation policy. A very positive step in modern first world taxation. Terrible, terrible implementation. The result. Good policy thrown out with the implementation bathwater.

A “store within a store” is not what the people responding to Yap’s request for input wanted when they asked for liquor in grocery stores. They envisioned their experiences in Washington, Oregon, California and many other US states. Milk, meat, beer, diapers, wine, eggs, spirits bread…shopping done. Off to the check out.

A store within a store. Come on John Yap! People asked for convenience. Not some clumsy system imposed by a paternalistic government who refuses to accept the citizenry of our province as mature and having come of age.

The government needs a big big overhaul in the distribution and retailing of liquor in BC.

First off the government is hugely dependent on liquor generated revenue. Not a problem. The Government can set a tax rate at the final consumer point of sale and take what they need with their eye on the next election.

The government runs a chain of liquor retail stores where a large number of them are not financially self sustaining. They are propped up by profitable stores and revenue gleaned from the distribution system.

The government insists on running a system where the vast vast majority of alcohol products in BC are handled, cross docked, warehoused and distributed through their system. Their idea to outsource this work was just perpetuating a silly system. Thank goodness that contractual bullet was dodged.

Those that think/insist that the government MUST handle liquor adding an inordinate and unnecessary cost for some notion of protection of the public are simply, undoubtedly, wrong.

Narcotics, guns, ammunition, snack food, tobacco, and all sorts of products with overtones of public guardianship concern are sent from the manufacturer to the retail outlet via private distribution.

It makes no sense that, for example, that a big distillery cannot ship a pallet of product directly to a large retailer or to a wholesaler in the liquor business for distribution to retail outlets. Essentially every other retail product is handled in this way. If you need help figuring it out call Jimmy Pattison he will show you how it is done.
So John Yap here is the plan. Take a page out of the Alberta and Washington State playbook and march British Columbia in a modern age commensurate with a mature society.

Get out of the liquor warehousing and distribution business in BC. Let for profit businesses that are in, and know how to run successfully, wholesaling and distribution provide the service. It is crazy that the government of BC is the third largest purchaser of alcohol in the world. (Government of Ontario number one) The wholesale cost of product will be reduced by the elimination of ineffective extra handling imposed by the government. Consumer wins. Government wins. End of high priced government employees, huge benefits, and pensions.

grocery store wineGet out of out the retail liquor business. At the same time you announce that liquor will be permitted in the general area of grocery stores (no clumsy store in store nonsense) you announce that ALL government ran liquor stores will be closed within six months.

I honestly think that this government that encouraged millions and millions of dollars of investment in private liquor retail outlets has a duty of care. Embracing the free enterprise model is fine as long as the government is out of the way in distribution and wholesaling and is not competing with private retail outlets with their own, subsidised in many cases, stores.

Existing private liquor stores will have the potential blow of liquor in grocery stores softened by the closing of all government stores. From announcement to last store closing in Alberta was six months. It can be done if you have the political will and testicular fortitude.

Get out pricing and mark up regulation. Remember, the government can make all the money it wants with liquor sales tax at the end consumer point of sale. If a winery has a glut of product it wants or needs to liquidate what is wrong with offering a deep discount to a retail outlet who can pass that pricing on to the end consumer. If a big liquor retailer buys whiskey by the pallet it only makes sense that they command a better price from the distillery. Everyone seems to enjoy the buying power of WalMart and Canadian tire. Why not in the liquor industry.

Free enterprise. Market forces dictating. The potential for profit or loss. John this is the cornerstone of the BC Liberals. Embrace the spirit of your right wing convictions and make a difference.

So John there is the plan. You will face a huge outcry from the unionized government employees displaced. Hopefully many can be absorbed in other ministries or offered early pensions. There will be some one time, known, fixed costs that can be accounted for easily.

Existing private liquor retailers are protected. The potential for expanded profitability for retail liquor stores will be greatly increased. Retail prices should trend downwards. Expanded convenience with liquor in the main isles of grocery stores. The government relinquishing their paternalistic heavy handed control of liquor sales and distribution. A big win!

David D. Hull is a member of the BC Liberal party (at least as of this writing) and has over 30 years of business experience with small and medium enterprises and with multinational corporations. A specialist in organizational and change management he has also been a lifelong student, and participant, in politics and government. Hull has in spent the majority of his life in very public roles in business, City Councillor, representative of business interests through the Province and Canada, and most recently with the Abbotsford Chamber of Commerce.

Leave a Reply