Living with one of the largest purchasers and retailers of alcohol on the globe has its advantages. In fiscal year 2014 to 2015, Liquor Control Board of Ontario (LCBO) sales passed C$5bn ($4bn) for the first time, to C$5.2bn. That’s a direct dividend of C$1.8bn to the Ontario government in 2015 – money that’s used to provide the province’s infrastructure, health care, education and more. Teetotaler or not, if you are one of the 13.7m who live in Canada’s most populous province, you benefit from booze.
For those who do enjoy a drink, there are a couple thousand more benefits, chiefly the 24,000 products available through the 651 LCBO stores, 212 agency stores and special order catalogues. Nearly 8,000 employees handled more than 131m transactions in 2014-2015, with a satisfaction rating of 79% for overall shopping experience. Customers are obviously happy; the average transaction value is high, at C$35.38 per customer, and with 33.5% sales growth, it seems the LCBO behemoth is infallible.
That’s why, in late 2015, the Ontario government announced plans to allow grocery store alcohol sales for the first time. It’s a move that some have proclaimed the most significant change to alcohol in the province since the 1927 founding of LCBO and abolition of Prohibition. After a lengthy and thorough Premier-commissioned review, it was concluded that more profits could be extracted by increasing points of sale throughout Ontario. With a pilot project of 60 groceries able to sell beer by early 2016, and plans for 70 licenses to sell wine in groceries to be auctioned off this summer, residents will be able to pick up a bottle of wine with their groceries by autumn 2016. In total, 150 grocery licenses will be auctioned at three-year intervals over the next six years. “We are further strengthening and diversifying Ontario’s wine marketplace,” Premier Kathleen Wynne announced last fall. “People in Ontario will now be able to buy wine with their cheese, at the same place, at the same time, at the same checkout.” Not a novel idea globally, but when you have the size, safety and power of the LCBO at hand, not an insignificant idea either.
Shopping with a giant
By most accounts, dealing with the LCBO is a pleasure, especially compared to other Canadian provinces. From a customers’ point of view, the experience is overwhelmingly positive. The LCBO not only has a reputation of one of the world’s top liquor retailers, but top retailers in general. Bright stores, colourful and clear merchandising, in-store sampling and a broad selection with fair and constant pricing are appreciated benefits, whether you’re in the beverage alcohol business or not.
Much of that successful vision is driven by Shari Mogk-Edwards, vice-president of products, sales & merchandising, and a respected leader in the global wine industry. Mogk-Edwards, a 25-year veteran of the LCBO, oversees a team of 100, including a hand-selected core of four directors, nine category managers and twelve product managers within the four main categories of LCBO operations: spirits, beer and cider, wines and vintages, the latter being the premium wine and spirits category. Though there is a hierarchy on paper, “in practice, we all work very closely as a team. We’re all always on the hunt, travel often in pairs and are in close contact with each other,” notes Mogk-Edwards. “We try and match a person’s attitude, passion and interest to the right position, while those working in Vintages possess an advanced level of wine knowledge. Our managers are our representatives out in the global marketplace, and those relationships and discoveries are directly reflected in our stores.”
Customers experience those discoveries regularly through the ever-changing Vintages release. Every two weeks more than 125 new products are introduced; bi-weekly Release catalogues are available in stores, online and by mail (subscription is free) and include features on varietals, wineries, and regions as well as tasting notes for each new product. Listings include Essentials (the top 100 customer favourites that are always available) up through to limited releases of highly allocated wines, including older vintages and Bordeaux futures. Customers can shop online and have the product delivered to their LCBO store of choice, though the organisation is on track to launch a new ecommerce and home delivery program by fall 2016. “We want to provide more choices and increase the product assortment to Ontario customers,” explains Mogk-Edwards.
Scaling far beyond the local community, another key initiative of LCBO operations is sustainability. In this regard they have used their size to forge a green way globally. According to Mogk-Edwards, “We have accomplished a great deal environmentally, and as a major retailer, it’s our responsibility to do so. Mandating lightweight glass has been the single most successful initiative we’ve undertaken, and we’re proud of its positive impact on the world.” They instigated a standard 420g maximum bottle weight for most wine bottles, for wines costing less than C$15.00. So far, almost 90% of the nearly 100m bottles sold – more than 900 different wines – meet the weight standard, resulting in a 7m kilogram annual waste reduction and a 20% reduction in greenhouse gas generation.
Working with the LCBO
Though employees are members of the mighty Ontario Public Service Employees Union (OPSEU), a safety mechanism detrimental to wine culture in other provinces, the alcohol knowledge base among LCBO staff is relatively high, especially when it comes to the directors and category and product managers. For Richard Dittmar, vice president & managing partner of Trialto Wine Group, “They are fantastic to deal with as buyers. They are wine savvy and available to actually talk to people.” A 25-year liquor industry veteran, Dittmar led the national group’s expansion into Ontario in 2006, and has since relocated there from British Columbia. One of his mandates is to continue to strengthen his agency’s relationship with the LCBO. “Compared to BC [British Columbia], they are fantastic communicators. The LCBO is very collaborative with importers and agencies, and the transparency of the operation is impressive.” From his point of view, “they aren’t resting on the laurels of being a monopoly, as is the case elsewhere. They are committed to wine, marketing, and retail, in a way that many government protected businesses are not.”
The LCBO also works diligently to engage the local wine media, recognising that having respected and knowledgeable tasters review all wines works in their favour. According to David Lawrason, Toronto-based wine critic, journalist and educator for the past thirty years, their effort in this way has been a success, particularly with the tasting labs. “A select and LCBO-accredited group of published wine writers are permitted to preview new releases at the LCBO,” he says. “It has been happening for 30 years, and is a most enlightened program. Virtually every Friday media taste in a proper environment, with over 100 wines opened for sampling, in any fashion, grouping or sequence the individual writer wishes.” These wines are available to taste in advance of store release, allowing the media time to publish notes before product hits the shelves. “It is bold from the LCBO point of view,” remarks Lawrason, “because the media can and does question the quality of LCBO purchases.” He adds, however, that as writers always prefer to promote the best quality and value, the upside outweighs the down in the end. “Writers do not feel beholden to the LCBO despite its largesse, because the LCBO is a public government agency and monopoly, and the media is the natural check and balance.” According to Lawrason’s own experience, “It is a huge benefit to personal tasting development – grouping and comparing by variety, style, country, week after week, month after month. I think it makes Ontario wine writers among the most internationally knowledgeable and balanced on the planet.”
Having a knowledgeable and current wine media fuels the wine culture. “Ontario buyers are very sophisticated and used to shopping an open market of choices,” says Mogk-Edwards. “It propels us to keep up on trends worldwide, and keeps our jobs challenging and exciting.” Dittmar agrees with the sentiment, sharing that Trialto’s separate portfolio of rare and allocated wines, Liquid Art Selections, does very well in Ontario, and the company dedicates significant resources to building and strengthening their team and listings to meet demand.
Lawrason has a different view. “It is still an immature market overall, but rapidly growing and thirsty for knowledge,” he says. “We don't breathe wine through our pores as happens in Europe and many other places, but once engaged we are intense, if somewhat academic in approach. The flowering of the Ontario wine industry is having a huge impact on consumer knowledge and confidence; we are becoming a province of wine drinkers.”
LCBO at a glance
- 651 LCBO stores
- 212 LCBO agency stores
- C$10bn estimated value of Ontario’s total beverage alcohol market
- 24,000 products available
- 28.1% of sales come from wine
Want to submit samples?
The LCBO has created a trade resource website, doingbusinesswithlcbo.com, that provides detailed information and documentation for agents and wineries wanting to work with the LCBO.
