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OpinionWhy the $^#%! Do Spirits Cost So Much in Ontario?

February 4, 2020by Brendan Waller0
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There is no doubt, there are tons of benefits to working with the LCBO. They are one of the world’s largest spirit importers. They have spent decades defining import processes, consolidation points around the world to make it easy – well, logistically – to get spirits into the Province of Ontario.

But time and time again, haven’t you wandered down the LCBO aisles and looked at that shiny new looking bottle and do a double-take? It can be especially jarring at times when you’re in the Whisky Shops these days and look in the glass display cases. Ouch, right?

Now, before you go all “Stupid government… ripping me off… monopoly this, monopoly that” let’s break down some of the costs associated that ultimately determine the price:

Currency Conversion

This one really should not come to any surprise. When bringing something in from say the USA, the United Kingdom, etc as of this writing our dollar just isn’t as strong against the US dollar, the British pound or the Euro – At $1.31, $1.73 and $1.46 respectively, check out XE.com for the current conversions. So right out of the gate, even if the per is cheaper, when converting to CAD we’re already facing an uphill battle.

Besides, that conversion can seem even more extreme at times due to case quantity – 6 or 12 being the norm.

Trade Agreements

This one is less apparent. As some of us know – those who geek-out on international and national trade agreements – Certain agreements have been struck for the processing of goods across national and international borders.

The USMCA, which is a terrible acronym, by the way, nee NAFTA, CETA agreement with the European Union and yes, even between our Provinces, we have trade agreements. So depending upon the Country of Origin, like currency, the price adjusts.

The Taxes

Here’s where people start feeling ill.

Never has there been a dirtier word than “taxes”. Like any good crossing a border, there are several taxes, duties and fees that get included in goods brought into the Province of Ontario.

  • Environment Fees
  • Duty Rate
  • Excise Rate
  • HST

Freight Rate

So… We’re all done, right? We have a final price, right…? RIGHT?!

Not yet, all we have talked about so far are the numbers of the product before shipping and landing in Ontario. Where are you shipping from? Is there a Consolidation point? Do you have to Air Freight it in, rather than ground shipments? Are bonding companies involved? What is the minimum you can order, how does that change as volume grows?

All of these factors again impact the price of the bottle at the end of the tally.

Markup

For better or ill, whether the LCBO was a private organization or a Provincial entity, profit plays a part in the cost. Like any business, the LCBO has set a markup on their landed cost of the spirits. They don’t hide their profits either, want to learn more about how they did in 2018-2019, check out the LCBO’s Annual Report.

Long and short of it, there are A LOT of moving parts to import whisky and spirits into the Province of Ontario. As I started with, I am incredibly fortunate to have their systems as it removes a lot of the confusion. Have their been hurdles? Of course! In my many, many discussions with people within the LCBO itself I heard statements like:

“I know this is frustrating!”

“If you want to make a business out of this, make sure it’s not just trying to sell spirits.”

It is why Whisky Quarterly Ontario is shaped how it is. Focused on unique, craft whiskies and spirits as well as the membership model. It allows us to utilize the many benefits of the LCBO infrastructure and bring in quality spirits that are not otherwise available in Ontario, and, are all being processed legally by all the aforementioned tally of costs. I have been incredibly fortunate to have dealt thus far with so many great people in the LCBO itself. It has truly given me a better grasp of why things cost what they do.

Will things ever change in the Province of Ontario? Only time will tell. There are definitely arguments both for, and against massive change in the liquor world in Ontario. In the meantime, let’s just enjoy some craft distilleries together – Sláinte!

Brendan Waller

A lover of his family, entrpreneurial ventures and ideas – And a great peated scotch.

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