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According to the Ontario Auditor General report, the LCBO is not using its buying power to negotiate best prices. So by extension, we the public end up paying more then we should had they done their job right.

My thinking is since their margins are so high and their pricing formula (at least their floor pricing) is based on cost, then it actually benefits them to pay higher cost to achieve greater margins. Either that or LCBO management should be fired for incompetence. Either way, Ontario residents are screwed.
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quote:
Originally posted by Stevey:
According to the Ontario Auditor General report, the LCBO is not using its buying power to negotiate best prices. So by extension, we the public end up paying more then we should had they done their job right.

My thinking is since their margins are so high and their pricing formula (at least their floor pricing) is based on cost, then it actually benefits them to pay higher cost to achieve greater margins. Either that or LCBO management should be fired for incompetence. Either way, Ontario residents are screwed.


I have known that for years.....someone should have to answer to this.....where is Shari?
I also heard this on CBC this evening on my way home. Was not in the least shocked. You are correct Machine, it's pretty simple in my view:

1. LCBO is a revenue generating entity for the Ontario gov't.
2. LCBO sets pricing policy that appears to be in the consumers best interest (i.e. fixed markups on cost)
3. LCBO follows their mandate of generating revenue by using the pricing policy to their advantage: not negotiating lower cost by using their buying power and in some cases not listing producers that do not meet pricing thresholds under the guise of social responsibility.

Let's be realistic though, even if this was addressed sufficiently to the public's liking it would probably only impact the sub-$20 bottles and we'd still be paying the same prices as we are now. I suppose the only way to sort this is to get the gov't out of the alcohol business but given how broke this province is I don't even think Hudak would have killed a cash cow like this.
Full article HERE.

Like I said, the only way that this makes sense is if their pricing algorthm is set so that the higher the supplier cost, the higher the gross margin and the higher the profit. But it can't be so high that it turns customers (i.e., you and me) away, thus there's a sweet spot that LCBO tells the supplier to charge, which is higher than the supplier's list price.

So it's a win-win situation for the LCBO and its suppliers, but the public is screwed. It's great to be a monopoly indeed.
quote:
Originally posted by VinToronto:
quote:
Originally posted by Stevey:
Full article HERE.

But it can't be so high that it turns customers (i.e., you and me) away


Away to where? Mad


When I say "it can't be so high," the "it" means that particular wine, not LCBO. Even for a monopoly, there's a price above which people would simply say no. It's not an unlimited ceiling. For example, if the $30 Pipeau is priced instead at $90, it would be sitting on the shelves for a long time until they need to be reduced to clear.
quote:
Originally posted by Stevey:
quote:
Originally posted by VinToronto:
quote:
Originally posted by Stevey:
Full article HERE.

But it can't be so high that it turns customers (i.e., you and me) away


Away to where? Mad


What I meant is even for a monopoly, there's a price above which people would simply say no. It's not an unlimited ceiling. For example, if the $30 Pipeau is priced instead at $90, it would be sitting on the shelves for a long time until they need to be reduced to clear. And in the meantime, Joe Public would end up buying a cheaper wine instead.


I dunno. I get the impression the vast majority of Canadian wine drinkers (outside of AB) will pay the going rate, oblivious to the fact they are being gouged. Without competition, there's no knowing if you're paying a good price or not.

It's interesting to me when Beppi Crosariol lists other provinces' pricing in his reviews as it's the only glimpse we get at a 'competitor's' price:

Château Pontet-Canet 2008 (France)

SCORE: 95 PRICE: $129

What a splendid effort from the 2008 vintage of this fifth-growth red Bordeaux. Good fruit purity and concentration are complemented by traces of mineral and earth. It starts smooth, then astringent tannins tighten their grip in the second act. Cellar it for two decades or more if you can or decant it and serve it with rare beef or lamb chops. The B.C. price is $188.

This wine is available for less than $100 in the US. A singular example? Maybe. Indicative of the overall mindset? Probably.
I'm not clear whether the Auditor was referencing all wine the LCBO procures -- or just the wine it buys directly from producer, without using an agent.

I feel bad for the average Ontario consumer who drinks $12 bottles of wine regularly; who could be paying $10.50 or $11 for the same bottle; and who would probably not consume more with a price reduction.

For folks like us who regularly drop $50+ a bottle, I just don't see prices coming down. The pricing formula would be adjusted and we'd end up paying the same.
I agree it's crap - but without the shoot. The auditor has simply publicised what we have all known for many years. It is absolutely frustrating to have Uncle Dalton dictate what wines I can buy, and to know that the money paid for this privilege is used to buy votes for the Liberal party. Getting an occasional Petrus for $2000 doesn't soften my irritation.

I am still completely disgusted with the $300 cheque I received from the Chairman to buy acquiescence to the HST. (That was last year. Why haven't I received any more cheques this year!)
quote:
Originally posted by on the wine:
I agree it's crap - but without the shoot. The auditor has simply publicised what we have all known for many years. It is absolutely frustrating to have Uncle Dalton dictate what wines I can buy, and to know that the money paid for this privilege is used to buy votes for the Liberal party. Getting an occasional Petrus for $2000 doesn't soften my irritation.

I am still completely disgusted with the $300 cheque I received from the Chairman to buy acquiescence to the HST. (That was last year. Why haven't I received any more cheques this year!)


I'm pretty sure it would be no different whoever was in power, since the system has been in place for decades, most of those under a Conservative government. I give the Liberals credit for some positive steps, like BYO and the auctions, while recognizing that those are long-overdue baby steps on a very long road to normalcy, a trip that we will probably never make. Frown
quote:
Originally posted by bman:
quote:
Originally posted by on the wine:
I agree it's crap - but without the shoot. The auditor has simply publicised what we have all known for many years. It is absolutely frustrating to have Uncle Dalton dictate what wines I can buy, and to know that the money paid for this privilege is used to buy votes for the Liberal party. Getting an occasional Petrus for $2000 doesn't soften my irritation.

I am still completely disgusted with the $300 cheque I received from the Chairman to buy acquiescence to the HST. (That was last year. Why haven't I received any more cheques this year!)


I'm pretty sure it would be no different whoever was in power, since the system has been in place for decades, most of those under a Conservative government. I give the Liberals credit for some positive steps, like BYO and the auctions, while recognizing that those are long-overdue baby steps on a very long road to normalcy, a trip that we will probably never make. Frown

The voice of reason follows in the footsteps of my trash-talk! You are right, of course, our system of treating alcoholic beverages as the devil's own brew stems from our Presbyterian origins.

I grew up in Toronto-the-Good where blue laws governed societal behaviour. Pubs had separate entrances for 'Gents' and 'Ladies and Escorts'. I grew up chafing at the leash to get out of here all through my adolescent years. Thank God for all the immigrants from Italy, Greece and Portugal who had such a prominent role in humanising this place.

Now if we could just do the same thing in small-town Ontario, we might just end up with a good place to live!
quote:
Originally posted by on the wine:
quote:
Originally posted by bman:
quote:
Originally posted by on the wine:
I agree it's crap - but without the shoot. The auditor has simply publicised what we have all known for many years. It is absolutely frustrating to have Uncle Dalton dictate what wines I can buy, and to know that the money paid for this privilege is used to buy votes for the Liberal party. Getting an occasional Petrus for $2000 doesn't soften my irritation.

I am still completely disgusted with the $300 cheque I received from the Chairman to buy acquiescence to the HST. (That was last year. Why haven't I received any more cheques this year!)


I'm pretty sure it would be no different whoever was in power, since the system has been in place for decades, most of those under a Conservative government. I give the Liberals credit for some positive steps, like BYO and the auctions, while recognizing that those are long-overdue baby steps on a very long road to normalcy, a trip that we will probably never make. Frown

The voice of reason follows in the footsteps of my trash-talk! You are right, of course, our system of treating alcoholic beverages as the devil's own brew stems from our Presbyterian origins.

I grew up in Toronto-the-Good where blue laws governed societal behaviour. Pubs had separate entrances for 'Gents' and 'Ladies and Escorts'. I grew up chafing at the leash to get out of here all through my adolescent years. Thank God for all the immigrants from Italy, Greece and Portugal who had such a prominent role in humanising this place.

Now if we could just do the same thing in small-town Ontario, we might just end up with a good place to live!


Not sure I've ever been called the voice of reason. Voice of many other things, but never reason.

And you are right about it all. I remember going into the LCBO, where there was no booze in sight. Instead there was a table of laminated pages of catalogues of stuff for sale, and little pieces of paper and pencils to write the number and description of the bottle you wanted, which you got a few minutes later from a hidden room in the back. In a paper bag, of course. Crazy
http://www.thestar.com/news/ca...olicy-doesn-t-add-up

Commentary from Toronto Star. Sad, but funny part:

You have to wonder what a winery in Italy or Chile would think if an email arrived from the liquor board during negotiations, complaining that their proposed wholesale price was too low — and beseeching them to reconsider:

“Sir, we respectfully request that you bump up your wholesale price. The LCBO would feel guilty profiting from bigger markups. Kindly avoid low bids in future.”

Doubtless the winemakers of the world would raise a glass to toast the generosity, obstinacy and lunacy of Ontarians handing them more money.

But they already know the LCBO’s dirty little secret: It robs Peter (you and me) to overpay Paul (winemakers).
quote:
Originally posted by Stevey:
http://www.thestar.com/news/ca...olicy-doesn-t-add-up

Commentary from Toronto Star. Sad, but funny part:

You have to wonder what a winery in Italy or Chile would think if an email arrived from the liquor board during negotiations, complaining that their proposed wholesale price was too low — and beseeching them to reconsider:

“Sir, we respectfully request that you bump up your wholesale price. The LCBO would feel guilty profiting from bigger markups. Kindly avoid low bids in future.”

Doubtless the winemakers of the world would raise a glass to toast the generosity, obstinacy and lunacy of Ontarians handing them more money.

But they already know the LCBO’s dirty little secret: It robs Peter (you and me) to overpay Paul (winemakers).

If that were true, then all those winery owners would be blowing kisses our way. But I find quite the opposite. I have found many smaller winemakers in my travels who seem to abhor the LCBO and refuse to have any dealings with them.

If this tongue-in-cheeck criticism has any validity, then the LCBO must be screwing things up from both ends.
More HERE from this continuing saga from Martin Cohn of the Toronto Star. In his reference to the 2009 Lafite, he confirms what some have been saying here that the Classics lottery is rigged and LCBO gives preference to "longtime customers."

Such backroom dealings and favoritism to a selected few "friends" just reeks of a shady business to me and government agencies such as LCBO should be above this. I guess I'm being too idealistic.
quote:
Originally posted by Stevey:
More HERE from this continuing saga from Martin Cohn of the Toronto Star. In his reference to the 2009 Lafite, he confirms what some have been saying here that the Classics lottery is rigged and LCBO gives preference to "longtime customers."

Such backroom dealings and favoritism to a selected few "friends" just reeks of a shady business to me and government agencies such as LCBO should be above this. I guess I'm being too idealistic.

I 'won' some of the DRC in the last Classics lottery. Two weeks later after I had paid for it, they phoned me and said that I would not be getting it. I half-jokingly asked who they were giving my wine to, but was told that this was not the case. But I wonder what the real story was...
quote:
Originally posted by Stevey:
More HERE from this continuing saga from Martin Cohn of the Toronto Star. In his reference to the 2009 Lafite, he confirms what some have been saying here that the Classics lottery is rigged and LCBO gives preference to "longtime customers."

Such backroom dealings and favoritism to a selected few "friends" just reeks of a shady business to me and government agencies such as LCBO should be above this. I guess I'm being too idealistic.


Some of the Star writer's comments in his most recent article were overly simplistic, to the point of being inaccurate. For example...

-- AirMiles are in no real way an incentive to over-consume alcohol (re:" loyalty programs push the envelope by encouraging alcohol consumption"). 1 AirMile is awarded for every $30 spent at the LCBO. An AirMile is worth about 12 cents in terms of cash redemption value. Basically, the LCBO is giving back about 40 cents for every $100 spent. To get the equivalent of $5 in AirMiles currency, I'd have to spend $1250 at the LCBO. Does anyone with a brain think the LCBO is encouraging alcohol consumption, or abuse, at this marginal AirMiles accumulation rate?
-- AirMiles give marketers/agents a mechanism to test the effectiveness of non-price based reductions. I.e. as a marketer, I can decide if I want to take a buck off as an LTO, or offer, say, 10 bonus AirMiles, and see what pulls better.
-- Giving past purchasers of certain few wines preferential access to a new vintage is what most businesses do anyway for the "regulars". In fairness, access should be lottery based for all past purchasers of said wine. I have been the beneficiary in a few cases, and would thank the LCBO for not breaking up the few verticals I have going.

Indeed, the LCBO should negotiate the lowest price with suppliers and certainly not encourage any to raise their wholesale prices.

More than anything Martin Regg Cohn talked about, I want the entire consignment buying process to be revamped. Consumers in Ontario should be able to buy single bottles of any wine from an agent, as they do from the LCBO -- not be obligated to buy a case. Almost overnight, agents would see consignment sales increase, and the LCBO would make every penny it normally would along the way. And we consumers would be thrilled to taste a variety of wines agents have and which we're now avoiding because of the case purchase mandate.
quote:
Originally posted by Darcy Kelley:

-- AirMiles are in no real way an incentive to over-consume alcohol (re:" loyalty programs push the envelope by encouraging alcohol consumption"). 1 AirMile is awarded for every $30 spent at the LCBO. An AirMile is worth about 12 cents in terms of cash redemption value. Basically, the LCBO is giving back about 40 cents for every $100 spent. To get the equivalent of $5 in AirMiles currency, I'd have to spend $1250 at the LCBO. Does anyone with a brain think the LCBO is encouraging alcohol consumption, or abuse, at this marginal AirMiles accumulation rate?
-- AirMiles give marketers/agents a mechanism to test the effectiveness of non-price based reductions. I.e. as a marketer, I can decide if I want to take a buck off as an LTO, or offer, say, 10 bonus AirMiles, and see what pulls better.
-- Giving past purchasers of certain few wines preferential access to a new vintage is what most businesses do anyway for the "regulars". In fairness, access should be lottery based for all past purchasers of said wine. I have been the beneficiary in a few cases, and would thank the LCBO for not breaking up the few verticals I have going.


This.
quote:
Originally posted by Darcy Kelley:
Consumers in Ontario should be able to buy single bottles of any wine from an agent, as they do from the LCBO -- not be obligated to buy a case. Almost overnight, agents would see consignment sales increase, and the LCBO would make every penny it normally would along the way. And we consumers would be thrilled to taste a variety of wines agents have and which we're now avoiding because of the case purchase mandate.

I'm 100% in agreement with your thoughts.

But can you imagine the new offshoot arising from MADD - might be called something like - MOTHERS GONE WILD! I'll be looking for their DVD on late night infomercials.
quote:
Originally posted by Darcy Kelley:
Some of the Star writer's comments in his most recent article were overly simplistic, to the point of being inaccurate. For example...

-- AirMiles are in no real way an incentive to over-consume alcohol (re:" loyalty programs push the envelope by encouraging alcohol consumption"). 1 AirMile is awarded for every $30 spent at the LCBO. An AirMile is worth about 12 cents in terms of cash redemption value. Basically, the LCBO is giving back about 40 cents for every $100 spent. To get the equivalent of $5 in AirMiles currency, I'd have to spend $1250 at the LCBO. Does anyone with a brain think the LCBO is encouraging alcohol consumption, or abuse, at this marginal AirMiles accumulation rate?
...


It's the perception that a program that gives more "rewards" for purchasing more that's the issue here regardless of any real benefit or lack thereof that the math says. Air Miles is one of the worst rewards program out there, but they have stats that say they're effective regardless of what "anyone with a brain" may claim otherwise - just like $29.95 will sell more than $30.00.

But the major claim the writer makes is not even this. It's that the AM program is not cost free even if they pass that cost up the supply chain, because wherever that cost sits, it's eventually passed on to the consumer and we all pay. So at the end of the day, remove this cost from the equation and your margins are better off.

I see nothing the writer says that is inaccurate.
quote:
Originally posted by futronic:
This might have more to do with the agent, but I just got an offer for 2005 Aldo Conterno Barolo Riserva Granbussia for $485 per bottle. WTF? Zachy's, who always have prices, list it for $350.

Ridiculous. I would bet you could get it elsewhere in the US for south of $300.

And then the minimum purchase was a 6-pack case?!?! LOL
quote:
Originally posted by vijay:
Jan Wong article in the latest issue of Toronto Life continues to drive this issue home.


Link here

This -- what the LCBO won't advertise to the public & what we wine geeks have known for ages -- slotting fees exist. "Wineries must submit marketing plans—including how much they will spend on advertising in Food and Drink—before they can obtain coveted shelf space at the LCBO," per Wong. With a friend like that, what small winery needs enemies?
Anyone else think that in some way this is a bit poorly conceived?

- Tries to establish that LCBO locations with more expensive leases, more features, luxury finishes, should have higher prices? Part of the basis for this is that gourmet shops near the Summerhill store charge more for food than shops near Cedarbrae Mall. But what isn't being taken into account is that the food is inherently of a higher quality, thus is higher priced. The Sumemrhill location probably moves more higher end product than the Cedarbrae location, no injustice there.

- Why are gift bags being called in to question? It's obviously a cash cow and is convenient for consumers. Because there are so many different styles for different holidays? It's called opportunity and I'm glad that a corporation that I'm a stakeholder in is taking advantage of it.

- Canada's population is 4.1% of the US? Hmmm....
quote:
Originally posted by Wine Canuck:
- Canada's population is 4.1% of the US? Hmmm....


Pretty sure it said Ontario, not Canada, though I don't think the number is correct either in that regard.

Regarding gift bags, I think the point is that it's hypocritical of the LCBO to sell them, much the same way as it is for it to advertise. If the primary justification for the LCBO's existence is "social responsibility" in ddiscouraging excessive consumption of alcohol, then it shouldn't be advertising or coming up with ways to encourage people to purchase alcohol i.e. buy it as a gift - we have a fancy gift box/bag for you to put it in. I'm completely ignoring why a monopoly is advertising in the first place, which is absurd even for one without an alleged social responsibility mandate.

Maybe the subtle distinction I'm missing is that we're supposed to buy, just not drink booze in Ontario. Roll Eyes
Last edited by csm
Gift bags aside, I think we can all agree on the basic premise that they are not using their buying power to gain products a better prices. I sent them a few emails today to remind them of this, using a product on VSO as an example. I encourage all of you to do the same. We will not gain any points complaining on this board. If anyone is in IS/IT we should see if they can scuttle a mass email campaign that will create numerous complaints for them to address and make it a webform that can be accessed by the public. Perhaps there's already a web/form application for this? Let's just pick an example of a wine that is marked up a bazillion percent and use that for every complaint. Surely we can find something from Cali that fits the bill?

Here's a snippet of my complaint. Most recent correspondence at the top, so if you want to read it in order, start at the bottom.

Volpe Pasini Zuc di Volpe Sauvignon Blanc 2009 [Incident: 120514-001044]

Tue, May 15, 2012 at 11:31 AM
To: helloLCBO <lcbo-service-en@frontlinesvc.com>

Hi Susan, I am still not satisifed with this response. The fact remains that this bottle is available commercially in Europe for less
than half of what it is being sold for on VSO. Vintages would surely have the ability to buy it for less than the European retail price if
they were buying 20+ cases. LCBO is clearly not negotiating the best prices for their customers. They are happy to purchase at inflated prices as they operate on fixed percentage markups.

Regards,
Vijay

On 5/15/12, helloLCBO <lcbo-service-en@frontlinesvc.com> wrote:

> Response Via Email(Susan) - 05/15/2012 11:17 AM
> Hello Vijay,
>
> Thank you for contacting LCBO Contact Centre about Volpe Pasini Zuc di
> Volpe Sauvignon Blanc 2009
> Sorry the link did not work, this one should:
> http://hellolcbo.com/app/answers/detail/a_id/1251
>
> If we have not fully addressed your question, please reply to this email
> leaving the subject line intact, or follow this link
> "http://hellolcbo.com/app/answers/contact" for numbers to call a Contact
> Centre Agent .
>
> Best Regards,
>
> Susan
> helloLCBO
>
> Customer By Email - 05/15/2012 10:25 AM

- Hide quoted text -
> Hi Susan, thanks for your prompt response.
>
> The link you sent does not work. I am aware of your pricing
> policies. There has been extensive news coverage about your pricing
> policies and this is a fine example of how it is failing customers.
> LCBO/Vintages has tremendous buying power that they are not taking
> advatage of. Given that you have in excess of 200 bottles available
> online (and probably more when it was first put online), I can't
> imagine that you had to purchase this wine at a premium that would
> ultimately command a 125% increase over retail prices in Europe.
> Please file
> this as a complaint. Feel free to close the ticket however I am going
> on record as not being satisfied with this response. I do understand
> that this is a canned response that you have been directed to give me,
> so certainly nothing personal in terms of the level of service I have
> received from you.
>
> Regards,
> Vijay
>
> On 5/15/12, helloLCBO <lcbo-service-en@frontlinesvc.com> wrote:
>>
>> Response Via Email(Susan) - 05/15/2012 09:57 AM
>> Hello Vijay,
>>
>> Thank you for contacting LCBO Contact Centre about Volpe Pasini Zuc di
>> Volpe Sauvignon Blanc 2009
>> Hopefully there following link will assist you in understanding our
>> pricing:
>> Auditor General Q&As: LCBO Pricing Practices
>> : http://hellolcbo.com/app/answers/detail/a_id/1113
>>
>> If we have not fully addressed your question, please reply to this email
>> leaving the subject line intact, or follow this link
>> "http://hellolcbo.com/app/answers/contact" for numbers to call a Contact
>> Centre Agent .
>>
>> Best Regards,
>>
>> Susan
>> helloLCBO
>>
>> Customer By Web Form - 05/14/2012 09:10 PM
>> This wine is being advertised on VSO for $37. It is available in Europe
>> for
>> $16-$17. Any reason it is being marked up by 125%?
>>
>> http://www.wine-searcher.com/f...nc+zuc+di+volpe/2009
Missed that re: popultaion, good catch.

I still don't really see the connection between the concept of giving alcohol as a gift and excessive consumption though. I guess it's a chicken/egg thing. I see giving alcohol as a gift already being a social norm and the LCBO providing a convenient solution to people who arrive at an LCBO without a gift bag. Just because someone shows up at my house with a bottle of wine, doesn't necessarily mean that one more bottle of wine will be opened than would have otherwise.

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