Whisky Journeys & Privatization
Like my last post, this one may be a bit long-winded as I have a couple of subjects I'd like to touch on. Firstly, I've updated my review of the Auchentoshan Three Wood to include a recent dissenting opinion from Jason Debly. Secondly, Martini, over at DMC & ME, did actually get to Paris, and stopped in at La Maison du Whisky, where he picked up a bottle of Auchentoshan 1975 (a 35 year-old whisky; it was their last bottle, the display bottle). This brings me to my own "whisky journey", which, while not as exciting as Martini's was at least somewhat fun. In late April, I was sent out to Calgary (how exotic!) to deliver a lecture at a training session for a partner organization. Having spent a lot of time far too much time reading All Things Whisky, I thought that since I was in Calgary, I should stop by the Kensington Wine Market and see what I could find.
To say that I was not disappointed with KWM would be an understatement. The selection there was phenomenal. The LCBO, even with its "specialist" 'Whisky Shops', just can't compare with the diversity and depth of the KWM stock. KWM had far more world whiskies (various expressions of Amrut, Nikka, Penderyn, etc.; I picked up a bottle of the English Whisky Co. Chapter 6, which isn't available in either Ontario or Quebec), and far more of the standard distillery expressions, and they even sell memberships in the Scotch Malt Whisky Society (and arrange SMWS tasting events on a regular basis, too).
That being said, for all that prices are supposedly cheaper in Alberta, where the sale of spirits and other alcohol has been privatized, I noticed that the prices were actually fairly similar (+/- a few dollars here and there) to what they are in Ontario and in other parts of Canada; some things were cheaper, some were on par, and some were even more expensive. For example, a non-exhaustive comparative list (an * indicates the lowest price point):
Interestingly enough, several of the expressions available at KWM were also for sale at a store at the Calgary Airport (not the Duty Free Shop), where they were priced even higher! The Duty Free Store was woefully understocked and lacking in variety when compared to KWM and even the LCBO. Yes, things were cheaper (a 1L bottle of Talisker for $52!), but as I was not departing Calgary on an international flight, I could not purchase anything there. However, looking at the prices above, it should be fairly evident that while the privatization of liquor sales may lead to greater selection at specialist stores like KWM, it doesn't necessarily lead to lower prices.
Which brings me to my next point: according to recent news reports (as in today), the LCBO posted record sales for the 17th straight year, and paid the Ontario government a dividend of $1.63 billion (CAD) (see story here). This has lead, in the comments on the CBC site, to the usual calls for privatization to encourage competition, etc., and complaints about the LCBO raising its prices too often. Yes, the LCBO has a monopoly in Ontario (see this very insightful article on connosr distilled about the LCBO), but when you look at the prices in other parts of the country, notably BC, and even in Alberta, you can see that here in Ontario we're not really paying much more than people are in other provinces, and in some cases we're actually paying less. Moreover, the LCBO is obligated to conduct reviews of its prices, and in fact, is forced to raise some of them annually in order to meet is legislated/regulated minimum pricing scheme. There is a very good explanation of the recent price hikes at the LCBO over at The Scotch Blog. I encourage you to read what they have to say, and then follow this link (if you didn't follow it from their article) to the provincial regulations governing the LCBO's pricing scheme.
Overall, however, whisky prices have been slowly rising, and this price increase isn't just a Canadian phenomenon. For an American point of view on this, check out what TheScotchNoob has to say (and remember, even if we have to pay higher prices for whisky here in Canada as a result of a 'social responsibility' mandate, we're don't have to shell out hundreds of dollars a month in health insurance premiums like our neighbours to the south, so things balance out a bit). Interestingly, if the government and the LCBO decide to act on the Ontario Auditor General's report (see the article back at The Scotch Blog), which suggests that the LCBO leverage its buying power to reduce wholesale costs, prices might actually drop...but don't hold your breath...
As for privatization, I should point out that this $1.63 billion (CAD) dividend is based on the LCBO's profit and does not include the provincial taxes that make up part of the the price of a bottle of whisky, and which are collected by the LCBO and then remitted to the province. Think about this for a minute: if the government privatized the LCBO, all it would receive from the sale of alcohol would be the sales tax portion, plus the corporate income taxes paid by the various retailers. There would be no more dividend...and that $1.63 billion dividend comes from net profit (i.e., total revenues minus overhead such as capital costs, salaries & benefits paid to employees, wholesale costs for purchasing stock, etc.)! I'm not an economist, but I can't see how sales taxes and corporate taxes paid by private retailers would come anywhere close to equalling what the LCBO currently contributes to Ontario's coffers (either directly or indirectly).
To say that I was not disappointed with KWM would be an understatement. The selection there was phenomenal. The LCBO, even with its "specialist" 'Whisky Shops', just can't compare with the diversity and depth of the KWM stock. KWM had far more world whiskies (various expressions of Amrut, Nikka, Penderyn, etc.; I picked up a bottle of the English Whisky Co. Chapter 6, which isn't available in either Ontario or Quebec), and far more of the standard distillery expressions, and they even sell memberships in the Scotch Malt Whisky Society (and arrange SMWS tasting events on a regular basis, too).
That being said, for all that prices are supposedly cheaper in Alberta, where the sale of spirits and other alcohol has been privatized, I noticed that the prices were actually fairly similar (+/- a few dollars here and there) to what they are in Ontario and in other parts of Canada; some things were cheaper, some were on par, and some were even more expensive. For example, a non-exhaustive comparative list (an * indicates the lowest price point):
- Glenmorangie 10 - $58.99 (KWM*), $67.00 (LCBO), $63.50 (SAQ), $69.95 (BCLiquor)
- Johnnie Walker GL - $84.99 (KWM), $79.95 (LCBO), $61.50 (SAQ*), $74.99 (BCLiquor)
- Johnnie Walker BL - $44.99 (KWM*), $49.95 (LCBO), $46.75 (SAQ), $49.99 (BCLiquor), $45.99 (NBLiquor)
- Jura Superstition - $73.49 (KWM), $59.95 (LCBO*), $73.75 (SAQ), $74.99 (BCLiquor)
- Jura Prophecy - $110.99 (KWM), $89.95 (LCBO*), $109.99 (BCLiquor)
- Glenlivet 12 - $44.99 (KWM), $46.95 (LCBO), $46.50 (SAQ), $48.99 (BCLiquor), $39.99 (NBLiquor*)
- Aberlour 10 - $39.99 (KWM), $44.95 (LCBO), $42.00 (SAQ), $48.99 (BCLiquor), $38.99 (NBLiquor*)
- Bowmore 12 - $47.99 (KWM), $51.50 (LCBO), $54.25 (SAQ), $59.99 (BCLiquor), $45.49 (NBLiquor*)
- Talisker 10 - $73.49 (KWM), $74.95 (LCBO), $73.50 (SAQ), $79.99 (BCLiquor), $62.99 (NBLiquor*)
- Lagavulin 16 - $99.99 (KWM*), $109.95 (LCBO), $106.75 (SAQ), $124.99 (BCLiquor)
Interestingly enough, several of the expressions available at KWM were also for sale at a store at the Calgary Airport (not the Duty Free Shop), where they were priced even higher! The Duty Free Store was woefully understocked and lacking in variety when compared to KWM and even the LCBO. Yes, things were cheaper (a 1L bottle of Talisker for $52!), but as I was not departing Calgary on an international flight, I could not purchase anything there. However, looking at the prices above, it should be fairly evident that while the privatization of liquor sales may lead to greater selection at specialist stores like KWM, it doesn't necessarily lead to lower prices.
Which brings me to my next point: according to recent news reports (as in today), the LCBO posted record sales for the 17th straight year, and paid the Ontario government a dividend of $1.63 billion (CAD) (see story here). This has lead, in the comments on the CBC site, to the usual calls for privatization to encourage competition, etc., and complaints about the LCBO raising its prices too often. Yes, the LCBO has a monopoly in Ontario (see this very insightful article on connosr distilled about the LCBO), but when you look at the prices in other parts of the country, notably BC, and even in Alberta, you can see that here in Ontario we're not really paying much more than people are in other provinces, and in some cases we're actually paying less. Moreover, the LCBO is obligated to conduct reviews of its prices, and in fact, is forced to raise some of them annually in order to meet is legislated/regulated minimum pricing scheme. There is a very good explanation of the recent price hikes at the LCBO over at The Scotch Blog. I encourage you to read what they have to say, and then follow this link (if you didn't follow it from their article) to the provincial regulations governing the LCBO's pricing scheme.
Overall, however, whisky prices have been slowly rising, and this price increase isn't just a Canadian phenomenon. For an American point of view on this, check out what TheScotchNoob has to say (and remember, even if we have to pay higher prices for whisky here in Canada as a result of a 'social responsibility' mandate, we're don't have to shell out hundreds of dollars a month in health insurance premiums like our neighbours to the south, so things balance out a bit). Interestingly, if the government and the LCBO decide to act on the Ontario Auditor General's report (see the article back at The Scotch Blog), which suggests that the LCBO leverage its buying power to reduce wholesale costs, prices might actually drop...but don't hold your breath...
As for privatization, I should point out that this $1.63 billion (CAD) dividend is based on the LCBO's profit and does not include the provincial taxes that make up part of the the price of a bottle of whisky, and which are collected by the LCBO and then remitted to the province. Think about this for a minute: if the government privatized the LCBO, all it would receive from the sale of alcohol would be the sales tax portion, plus the corporate income taxes paid by the various retailers. There would be no more dividend...and that $1.63 billion dividend comes from net profit (i.e., total revenues minus overhead such as capital costs, salaries & benefits paid to employees, wholesale costs for purchasing stock, etc.)! I'm not an economist, but I can't see how sales taxes and corporate taxes paid by private retailers would come anywhere close to equalling what the LCBO currently contributes to Ontario's coffers (either directly or indirectly).