I’m a bit late on picking this up, but the LCBO has responded to recent public outcry and back-pedaled on its decision to raise its minimum tender price for wine. The spin behind the proposed policy was responding to customer demand for higher-end wine, but really it was just fancy procurement-speak for “forcing the consumer to pay more”, or “slowly pricing hobos out of the market”.
The Short Cellar has an interesting take on this debate:
“I applaud the LCBO’s attempt to wean Ontarians to premium wines. Although the cheapest wines have been improving radically in the last 20 years (mainly due to advances in wine-making techniques), they remain simply drinkable. Most cheap wines are cheap because they are mass produced and have a uniform taste, like Coke.
Good wine, on the other hand, is a handcrafted, regional work of art – each with personality, complexity and history that unfolds as you learn to taste it. If the LCBO leads more people to the joy of wine appreciation, then more power to them. Frankly, life is too short to drink plonk.”
Personally, I think it’s a little far-fetched to suggest that the LCBO has such noble motives. This was a crass profit-grab that had nothing to do with wine quality. Let’s not forget that this is a business that nets the Ontario government a handsome $1.2 billion per year, and with its monopoly status over imported wines, the LCBO knows that consumers at the bottom end of the market would have no choice but to pony up the extra dollars to get a bottle of wine. The economic demographic that sticks to the $8 – 10 range isn’t going to respond to a price increase by suddenly becoming more interested in premium wine. Rather, it will either reluctantly start paying the extra $2 for the cheapest wine in the store, or will be turned off wine altogether and stick with a domestic six-pack.
The LCBO already has its Vintages section serving the premium market. If it wants to emphasize those wines, then it should try giving Vintages a higher public profile, and making the section appealing and accessible to the average consumer.
Aside from the tax imposed on average folks who just want a decent table wine, the policy could also have some unintended market effects. Because of its monopoly over a population of almost 13 million people, the LCBO is one of the world’s largest wine buyers, and when it says it will no longer accept tenders below $10, it acts as a disincentive to many winemakers to serve the under-$10 market. This would be a shame because of the huge strides that have made decent wines more affordable in recent decades. Why would we want to discourage that kind of innovation? Fortunately there are enough gigantic institutional wine buyers in the US taking the opposite view, so this shouldn’t make or break anybody.
In my bizarro fantasy world, the LCBO would impose a $20-minimum with an iron fist, which would result in a return to prohibition-era bootlegging and speakeasies. Until then, we’ll always have The Matador.
