Selling Wine and Beer

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  • Here is my take on what should happen to the NSLC, it all could be run from the Finance Department!
    It is time that the government gets out of the business of selling and wholesaling of all beer, wine and spirits. The province could take the value out of the business and create entity that will better serve the public, Nova Scotia’s fledgling farm wine industry, local micro-brewers and tourism.
    Monopolies in all cases are not the best business model. There costs are usually less efficient than private corporations. The best model is competition among private corporations. There are at least 4 or 5 companies that would be willing to pay top dollar to have a portion of this pie. By creating competition within NS and with no government interference the same or more monies would accrue to the government, as demonstrated by the Alberta model which falls short of what NS could have.
    The sale as a split up operation will pull in $800,000 to $900,000 million, based on the $222,000 give back to the government, which could be used to pay down the debt.
    Taxes on the products could allow the government to take out $222,000 and much more if the model is maximized. Each purchaser 4 or 5 companies should be required to carry 10% of their inventories in Atlantic Canadian wine, beer and spirits.
    The private store model should be re-initiated, so that good quality wines will be available to all including public, restaurants, clubs etc. The threshold for these stores should on a higher original cost than the bulk buy, which should go to the government as a franchise fee. Minimum
    inventories of at least $400,000 should be maintained to keep the franchise and they must carry at least 10% Atlantic Canada alcohol products and have a turnover of at least 4.
    In the next 10 years the NS Wine Industry will grow 5 fold. If the present system is allowed to stay as is, it will inhibit that growth because almost all of the expanded production will need to be exported.
    In a NS Wine Industry report, it shows that with only 18 wineries there are almost the same number of employees as the NSLC and they are all outside of Halifax. When we look at Niagara on the Lake, Finger Lakes in NY, and California, the tourism that this industry creates could be a great job creator in NS.

    Brian Knight | March 30, 2013 | Reply

  • Bill,I usually agree with your comments but not this time. I do agree that our province must balance its budget and that currently,control of liquor distribution helps us with that. But instead of controlling an industry and reaping monopoly profits,why not leave it entirely to the private sector? As Bastiat pointed out,think of “what is not seen” as well as what is seen. What businesses do we not see due to our government monopoly? If a private liquor distribution industry resulted in lower prices and thus more dollars left with liquor buyers,would they not spend it elsewhere and thus boost other businesses?

    Steve Chipman | March 21, 2013 | Reply

  • If you look at the Alberta example wrt privatization you see that the annual revenue to gov’t as a result of privatization is 687 million. Prior to privatization revenue was 404 million. There was also an increase in liquor retailers from 803 to 1,987. That’s a increase in employment of over 100%. The tax revenue from payroll alone should be factored in. Just so you don’t think i’m making this up, please check out the link from the Alberta Gov’t website.
    http://www.aglc.gov.ab.ca/pdf/quickfacts/quickfacts_liquor.pdf
    Thanks,
    Robert

    Rob M | February 18, 2013 | Reply

  • TMG (too much government). Consequently it has to be paid for.
    There is only one taxpayer, so there would be great efficiencies in one flat tax on him/her and reform all the other forms (“money spinners”). Trouble is… as Romney found out…there now exist a majority 47 % special interest…that have their rights.

    gordon a.... | February 18, 2013 | Reply

  • I thought you were more sensible. The solution is not more tax but less government. Balanced budgets, what a joke. The third leading expenditure item is interest on debt provincially.
    This country needs a limit on career politicians, capped I suggest at eight years, and that is in total be it municipal, provincial, or federal. That’s a start. Compensation in the public service
    for anyone earning over $100,000 should be independently reviewed and serious questions asked such as could the individual actually be paid by anybody else locally at this rate. If the answer
    is no then I am sorry take this or go to Toronto. Functionaries at the water commission making $ 200,000 is a case in point. The list is endless. Public service. What a joke. I called planning in Halifax to find out setbacks and height restrictions for a building lot, and waited 24 hours for an answer. That is the norm. Privatise everything but the most essential. Every government job comes at a heavy cost. Something as simple as driving a bus, in terms of training, 7-10 days, carries a heavy premium. Three levels of government for less than a million people. It is not sustainable and when the chickens come home to roost God help us. See unemployment in Spain, see the collapse of medical care in Greece.

    CS | February 18, 2013 | Reply

  • First I’d like to inform you that I never bother to respond to articles which sometimes hit a nerve, but yours on top of everything else printed on the subject over the past couple of weeks was the last stray…

    I have been brewing the odd batch of wine for a number of years and have not yet tried the services of U-Brewers since there are none located close enough to me to make it worthwhile.

    What pushed my button in your article is that it appears evident from your past life experiences you have not experienced home brewing and seem to know little about why many people brew their own (beer or wine) and that you are making assumptions home brewers will eventually throw the NSLC out of business. Also I suspect that if you do drink wine ocassionally that you don’t have a problem with affording to pay our NSLC inflated prices, but not all of us have the pleasure do so.

    I would like to inform you that a great amount of home brewed wine and beef would not be replaced with NSLC bought products, but that a lot of folks would simply do without instead of paying the inflated prices which our Provincial Government forces on its population. Chances are that the tax revenues derived from the U-Brew sales and service are as much as the limited amount which would be paid through NSLC sales on the limited substitute purchases.

    Also keep in mind that there are many folks who cannot physically handle the 20 ltr. fermenters and carboys or they may be living in small apartments where it is not practical to brew their own and these folks now find that they can finally do like others and have access to “homemade” wines and beers.

    As for your comment on the government adding an additional tax to U-Vint products, that comment is stupid and shouldn’t even have been print it in your article.

    As a former CEO you must know that WE ARE ALREADY WAY OVERTAXED ON GOODS AND SERVICES AND THAT OUR TAX DOLLARS ARE SO POORLY MANAGED that it is high time the government look inside their operations to fix the problem instead of trying to grab another piece of skin from our hard working hands.

    I hope that you take the time to better inform yourself on this subject (and or others for that matter) before you decide to go to print in the future.

    Bernie Boudreau | February 18, 2013 | Reply

  • Read your article today in the Chronicle Herald. I must admit I was more than shocked by your small town archaic approach to the recent progress made on the U Vint business. Have you done any research upon which to base your conclusions? If you were to research the impact of U Vint business on the LCBO in Ontario you would have found it to be virtually inconsequential. Have you researched the tax impact on any of the provinces who have embraced U Vint without the archaic and business terrorizing regime of the Nova Scotia government? I suggest, Mr Black your basis is made upon a few very weak tax findings.
    Did roll your own cigarettes affect the tobacco industry; of course not.
    Not everyone, and in fact a very few will roll their own cigarettes, with the “majority” of the public choosing to buy their ready made and fancy packaged cigarettes from retail businesses in Canada. Retail business saved and tax dollars still earned on cigarettes. I purport the same will be for U-Vints.
    The majority of Nova Scotian’s will still choose to pay the exorbitant taxes to the NSLC and Provincial government and I suggest your ridiculous concern for the Nova Scotia tax base will prove entirely unfounded.
    Mr Black, my father owns and operates a small, but extremely successful vineyard here in Nova Scotia and I can assure you he will not be impacted in any way by the U-Vint business in Nova Scotia.
    I generally read your columns, Mr Black, and with interest, but this time, you have it all wrong.

    Quentin Brown | February 17, 2013 | Reply

  • “Good day, Mr. Black
    I have followed your pronouncements with interest since you left Maritime Life and would love to see you win election at some point.
    I have always thought you would be the voice of reason – from a business perspective, but must admit that your recent article has me confused. Please don’t think for a moment that I am doubting your business acumen or experience.
    Here are my comments…………….
    1. I believe the Canadian (by Province) practice of distributing wine, beer and spirits through government “commissions” is virtually unique in the western world.
    2. I would suggest that the organisation is top heavy with management and over staffed with many over paid. In the private sector productivity would be much higher and I doubt you would see the exquisite office spaces enjoyed by many in management currently.

    3. There seems to be a constant rebuilding of liquor outlets – always the latest and always fancy. Not that they are not enjoyable for the customers but I also understand that the buildings many locations are housed in are part of very attractive deals with grocery chains – for obvious reasons.
    4. If the business was cut to the roots and distribution privatised as well we would see a greater range of products, better pricing and no less net revenue for the government.
    5. In many countries in Europe the system is very simple – Bill and Jon could start a Gin Importing company, pay the appropriate fees and meet the regulations – if we make money – all is well. If we do not market and sell properly we go out of business. The average retails of wines and spirits would change from a few government outlets to a variety of supermarkets and specialty retails.
    6. Look at the salary scales for NSLC employees and tell me where in the private sector could they properly be matched.
    7. I would respectfully suggest that in reality the NSLC is comparable to the Capital Health running Tim Hortons – except that the latter can’t jack up their prices as required.

    Basically if the whole operation were privatised (not just retail but importation and distribution as well) we would see more people employed (albeit at realistic wages) a lot less liability from the pension and benefits programs for civil servants. The net return to the province would probably exceed current levels – without the baggage.

    We need more jobs, less government, fewer unions and a damn sight less civil servants if we are ever going to make it.

    So you can see that I am amazed that someone with your background would back the NSLC bureaucracy against the private sector – please tell me I am wrong.

    REPLY BY BILL:
    Jon thanks for your comment. There have been several others in the same vein.
    I do not doubt that expenses matter but it is wrong to assume that is the main point. A bottle of wine that costs $10 in Florida can easily cost $20 in Nova Scotia. If you took out 100 percent of the NSLC expenses it would still cost $17.
    So yes expenses could be reduced but the big reason for price differences is the tax and profit margins.”

    Jon Denman | February 17, 2013 | Reply

  • I often disagree with Mr. Black but I do concur with his take on this to some extent. Not so much on the tax revenue loss but rather on the shocking lack of insight offered in the media. Commentator “PS” above mentioned his experience in Ontario years ago with these operations. Perhaps then he is also aware that it was a disaster there, with cheap wine being made in these places and finding its way into licensed premises re-labelled as something else to fleece unsuspecting customers. Or unscrupulous operators pre-making the swill and selling out their back door as finished product just to bypass the LCBO. Is this really what we want? Something with no oversight or health inspections or age checks? I think not.

    The argument that the dear old folks who use these outfits are too feeble to lift the product is quite hilarious. How the heck to they get their multiple cases of finished hooch into their apartments? Give me a break, that is a BS argument. They are just looking for cheap low-quality booze. Same with the small business argument. While the individual stores may well be small businesses, the industry in Canada is concentrated in the hands of a few large Ontario corporations who flog their excess concentrate.

    I found the chief media darling in this, Mr. Harrington, a particularly nasty sort yet he appeared daily in the media and was made out to be some kind of hero. People need to give their heads a shake. It is all well and good to buy into the hatred of anything govt-related that the radio talk shows and online comments on news websites engender, but there is no getting away from the reality that we need govt services and govt needs tax revenues to exist. Mr. PS should know that the salaries of all public entities are now public thanks to Graham Steele and if he bothered to look them up we would find that the real gold-plated execs are found at places like the school boards and health authorities. I was shocked at how little the NSLC types make by comparison except for their CEO.

    Keith P. | February 16, 2013 | Reply

  • Bill, When living in Ontario some 25 plus years ago , we could go to the wine store , pay for a kit and then pay to rent the equipment and the space to store the wine till it was bottled. NS is 20 years behind the time . There are all the seniors, then those in Apartments who often cannot make wine at home . So in a year from now, we expect to hear much the NSLC will have lost because people made their own wine . How publishing the revenue and expense detail of NSLC in the meantime , the cost of their silly ads at Xmas ,and their exec salaries .And BTW, NS is also far behind on many other fronts by not expanding their agency stores ( who get paid peanuts) and in privatizing . Alberta has done both, and everyone is making money , check out the shares on the Toronto exchange. NS is way behind on many other fronts as people protect their turfs . At the same time, NS doesn’t even enforce many other of it’s laws where they are loosing millions .

    PS | February 15, 2013 | Reply

  • What would the effect be on net back to the Prov. if the NSLC got out of the retailing end of the business, including the high cost store labour rates and the store-front properties, and confined themselves to the distribution role as in Alberta? Would the Province be losing anything other than unionized labour votes?

    John O. | February 15, 2013 | Reply