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Wine at the LCBO at the Manulife Centre. (Charla Jones/The Globe and Mail/Charla Jones/The Globe and Mail)
Wine at the LCBO at the Manulife Centre. (Charla Jones/The Globe and Mail/Charla Jones/The Globe and Mail)

Wine

Restaurateurs put LCBO's fixed pricing on the table Add to ...

Since James Bailey took over as the sommelier at Toronto’s Celestin Restaurant three and a half years ago, he has ordered wine from France instead of Ontario – despite the cost of importing.

The Toronto sommelier and bar manager said he feels the taxes placed on Ontario wine are extremely high, and even though his restaurant orders more alcohol than the average consumer it’s impossible to get a bulk discount with the Liquor Control Board of Ontario.

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Finding a really good bottle of wine for $30 or less is nearly impossible, he said. “Nowadays, how the LCBO placed the taxes and the fixed prices so that they are making more money off of it, it’s becoming a little absurd.”

Mr. Bailey said by contrast, he can get an “amazing” bottle of wine for about $14 to $20 at a restaurant in France or Spain.

And although Celestin tends to serve more wine from France because it pairs well with its French menu, he said he would support more Ontario wineries if the costs weren’t so high.

The Canadian Restaurant and Foodservices Association (CFRA), which represents 33,000 licensees nationally, says this problem has been plaguing the industry for years.

In an open letter to the Ontario minister of finance last week, the association demanded that restaurant and bar owners be given the chance to negotiate wholesale prices with the LCBO.

Right now, the LCBO uses a “fixed-pricing structure,” meaning it doesn’t negotiate for wholesale prices with either its suppliers or its customers. For restaurants and bars who must purchase their alcohol directly from the LCBO, that means they have to try to sell a product they pay as much for, or in some cases more, than consumers do at retail. That makes it harder to make a profit.

The letter comes on the heels of the release of the 2011 Ontario Auditor-General’s report that suggested the LCBO try other ways of pricing their products.

“It’s extremely problematic that there’s no wholesale pricing mechanism for the industry,” said Ron Reaman, the vice-president of the restaurant association’s Ontario branch.

“What we’re saying is, look to the Auditor-General’s report and analysis, and use that, please, to examine the notion of wholesale pricing… It’s time to bring the LCBO into the 21st century and get past those outmoded, outdated means of pricing a product that we sell on a day-to-day basis in our restaurants.”

But Chris Layton, a spokesman for the LCBO, said a number of statements in the CRFA’s letter were unfair.

He said the reason for the fixed-pricing structure is so that “all suppliers are playing by the same rules.” That makes the process more transparent, he argued.

Most important, said Mr. Layton, the letter ignored the fact that licensees get a harmonized sales tax credit from the provincial government, which is something other consumers don’t.

Mr. Bailey said he didn’t know about the HST credit. But Mr. Reaman said while he was aware of it, he feels the HST credit doesn’t go far enough.

He also noted that while restaurants do mark up prices of alcohol to make a profit, there’s a limit to what their customers are willing to pay.

Mr. Reaman said he’s hoping to get the wholesale pricing debate on the table when he speaks to the Ontario minister of finance, Dwight Duncan, on Tuesday.

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