In just over a week the entire liquor landscape is set to change in British Columbia. On April 1 government will institute a new wholesale pricing system for all liquor products. The goal is to level the retail playing field among the original private wine shops; LRS (licensee retail store) beer, wine, and spirits stores; the old government agency stores; and the remaining 200 BC Liquor stores. In essence, everyone will be buying their product at the same wholesale price.
It's all part of the government's plan to modernize the province's liquor laws, but it's safe to say retailers are not very happy with the plan as it is being rolled out. The new wholesale price is in fact just another tax mark-up that will be applied to all products before they are purchased by the retail trade.
On the surface the new mark-up looks good because it is lower than the current tax built into the price of your favourite beer, wine and spirits. The difference is that now all re-sellers, including government stores, will add their operating costs and profit margins after the tax to come up with a final retail price.
It's a clever use of smoke and mirrors to make the tax and the price of wine look lower than it is because the wholesale cost of your favourite wine will be 10-to-40 per cent lower than the current retail price. But not for long. It returns to the same level or higher once the retailer adds their margin.
BC Liquor stores will now purchase their product from themselves at the wholesale rate before adding on their operating margin, a number that has been the subject of much conjecture among wine distributors.
Government is committed to not changing the retail price, but that means they would have to operate their stores on a break-even basis. If that happens almost every private wine shop's business would be threatened. It also begs the question: Why would the citizens of B.C., who effectively own all BC Liquor Stores, want to operate daily without making any money?
When the cry for a true wholesale price by retailers was made, most everyone in the business was calling for the Alberta model where a flat tax of just under $3 a litre is applied to all wines regardless of its landed price. That wholesale price is then made available to the trade, agents, distributors and restaurants to run with as they see fit. The result is a wide selection of wines at an even wider selection of prices and endless places for one to buy wine at whatever price they can negotiate. A true open market.
On April 1, most of that will pass B.C. by. There will be no wholesale price for restaurants and not only will the backbone of our tourism industry be forced to pay retail for its liquor, they will only be able to buy their product from a central government store that historically has been extremely inefficient in reacting to the ever-changing needs of restaurants. I guess levelling the field in Victoria means keeping the lucrative restaurant business for itself and forcing the hospitality industry to pay retail for this product.
In the days leading up to April 1, government has already lowered its new wholesale markup once when it looked as if prices would jump significantly and now, as we approach April Fool's Day, they have publically accused suppliers and distributors of raising their prices so that the new wholesale mark-up would look as if it was raising prices. A classic, and public, he said/she said argument has ensued between Minister of Justice Suzanne Anton and the trade.
While most of this is going on behind the scenes, consumers will notice a big difference in government stores prices on April 1 with regard to the 10 per cent PST on liquor, and the five per cent GST. As well as badgering suppliers and producers to cut their prices, government is moving to help its cause optically with new pre-tax shelf pricing, coincidentally appearing on April 1.
Prices will drop 15 per cent, plus the bottle deposit, but the savings will last only from the shelf to the cash register. That means an attractive $12 shelf price turns to $13.90 when the PST, GST and bottle deposit are added back in.
Some have said government wants you to know the true price of the product although they conveniently hide their mark-up tax (87 per cent on the first $11.75 and 27 per cent on the remainder) within the wholesale price.
It's a mess to say the least, and as poorly as the wholesale mark-up was conceived, the rollout and launch among the trade has been disastrous.
As I write this, I'm in Germany at the annual ProWein wine show where some 6,000 global producers meet to show their wares. Nobody is happy with what's going on in B.C. and many top producers are contemplating skipping the market until the B.C. Government and trade get their house in order.
While they do, I'll leave you with a few picks to start a great spring. I really have no idea what the price of these wines will be, but I doubt they will be a penny less than what I'm quoting, which, after all the hubbub leaves, you will still be paying some of the highest prices in the world.
Bleasdale Mulberry Tree Cabernet Sauvignon 2012 $17. First established in 1850 at Langhorne Creek, this cabernet over-delivers black fruit, cinnamon bark spice and dried floral notes that persist throughout its big cassis flavours. Drink now with pork or lamb kebabs.
Santa Carolina Sauvignon Blanc Reserva Leyda Estate 2013 $14 is a favourite sauvignon blanc. Consistent and value packed. If you like lively grapefruit, canned jalapeno, juicy melon and lemongrass aromas and flavours, load up before the price jumps.
Quails' Gate Gewürztraminer 2013 $17. One of the best yet from Quail's Gate with a floral/lychee fruit nose and juicy citrus, honey, peach and pink grapefruit flavours. Perfect with Asian salads.
Trapiche Pure Malbec 2012 $18 is a newly listed malbec fans will love from its blackberry and blueberry nose to its ripe black fruit and damson plum flavours. All piercingly "pure" because it is free from oak. The wine is fermented wild and aged in concrete. Beef is the ticket.
Anthony Gismondi is a globetrotting wine writer who makes his home in West Vancouver, British Columbia. For more of his thoughts on wine log onto www.gismondionwine.com.
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