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Beer and wine, risk and reward

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It came as some surprise Thursday when the province announced it was revamping liquor laws to allow, among other things, the sale of beer and wine in grocery stores. It’s a pretty deft political move for the province, a measure that sounds like it could have been a plank in the Progressive Conservative election campaign platform this fall. Only it won’t be a Tory plank, because the NDP’s already done it. Clever, clever.

Still, this is a surprise because it’s going to piss off a couple of important constituencies. One is a core constituency for the NDP. The other is a constant thorn in the side of the Manitoba Liquor Control Commission.

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First and foremost, anything that moves the sale of alcohol out of government-owned liquor stores and into private wine stores, off-sales and, now, grocery stores, is very unpopular with public sector unions, and that’s a constituency right at the heart of the NDP’s cerebral cortex. Unfortunately, it’s good business for the Manitoba Liquor Control Commission.

The MLCC gets the same amount of money from the sale of a bottle of beer at an off-sale as it does if that bottle of beer is sold at a government liquor store. But at the off-sale, MLCC does not have to pay the costs associated with opening, operating and staffing a liquor store. So, off-sales in any form is really easy money for the crown liquor concern. It is not, however, very popular with the labour organizations that represent the people working in MLCC warehouses and stores, for obvious reasons. The more off-sales, the less imperative there is to create unionized jobs.

But that's not the only group that will be angry. Private wine stores have served notice they are unhappy with the decision to move alcohol into grocery stores. For many years, the six stand-alone private wine stores have enjoyed a pretty sweet deal from the province, making good money selling wine not available in government liquor stores while not having to worry about competition from a proliferation of other wine stores. They have flourished. However, despite their resounding success, the province has never opened up the market to additional competition. Not even in communities such as Brandon, which is desperately underserved in terms of specialty wine. Why hold the line on private wine sales?

The wine stores won a landmark legal battle against MLCC for unfair trade practices 2006. That produced a number of concessions for the wine stores, including a larger profit on the wine they sold and a gentleman’s agreement there would be no expansion of the private wine store market. Government has been reluctant to discuss this because of a gag order on the out-of-court settlement, but just about everybody in the industry knows the province had tacitly agreed to leave the six private wine stores alone for the foreseeable future. It appears now that the province has finally seen that future, and it involves beer and wine in grocery stores.

As a political and fiscal policy, allowing grocery stores to offer limited selections of mostly Canadian and Manitoba-made beer and wine (Manitoba wine?) is a winner. It’s a popular pre-election strategy, and likely steals a small plank from the Tory platform. And it’s really good for the MLCC business plan.

However, it’s not clear yet how much trouble the province has earned from unions and private wine stores. The former constituency has already absorbed a wage freeze this year and may see the expansion of off-sales as a straw that comes dangerously close to breaking the camel’s back. The wine stores do not make for an important electoral constituency, but they have hit above their weight when it comes to being cranky and demanding. It’s pretty likely the stores, which have proven to be quite litigious in the past, will find some way to sue the province for something.

On the other hand, my house is one block away from a Safeway and anything that puts me a few hundred metres closer to a cold beer has to be good policy. No?

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