Today, a tentative deal was reached between the Liquor Control Board of Ontario and OPSEU, the union representing more than 6,000 full-time employees at over 600 liquor stores across Ontario. Earlier this summer, workers threatened strike as the LCBO worked towards replacing full-time, permanent employees with casual workers who would receive a fraction of the pay, and benefits the unionized workers currently receive. The strike would have been the first-ever in the LCBO’s 82-year history, and saw customers rushing the stores to stock up in the event that negotiations broke down.
LCBO stores across Ontario were left barren Tuesday, June 23, 2009 as customers scrambled to stock up. Photo: Darren Calebrese / The Canadian Press
According to the Canadian Press, on Tuesday the LCBO saw it’s largest single day retail sales in the company’s history, with sales estimated at $60-million, leaving shelves everywhere barren as bars, restaurants, and the public scrambled to stock up before the 12:01AM Wednesday strike deadline.
Impact to Licensees
Being in charge of the LCBO orders for one of Niagara Falls, Ontario’s busiest bars and restaurants, the challenge this week was attempting to predict consumption in the event of a strike. House spirits, normally ordered 4 or 5 bottles at a time, were instead ordered by the case, and popular liqueurs we sell were stocked to, in most cases, twice the typical par stock for our weekly orders. While the current inventory at Johnny Rocco’s is likely larger than I have ever seen it, the order was based on an assumption of two weeks without access to the LCBO. What would happen if negotiations took much longer?
In 2008, the LCBO recorded sales in excess of $4.27B dollars, with a profit margin of 48.3 per cent going to the government of Ontario. Should consumers be prohibited from the purchase of wine and spirits from the province’s major (and nearly exclusive) supplier, the impact to the economy could be devastating, but sales directly through the LCBO won’t be the only loss of revenue. Purchases of alcohol through licensed establishments is subject to a 10% liquor tax, compared to the normal 8% provincial sales tax, and amounted to a staggering $398M in revenue for the province this past year.
Taking Money Away From the Province
So where would all that money go? While an LCBO strike may be considered new territory for Ontario, it is certainly not the province’s first exposure to a restriction on the purchase of wine and spirits. Prohibition, introduced to Ontario in 1916, prohibited the sale of wine and spirits in the province until well into 1927. At a time when the average expendable income was on a steady decline, not dissimilar from the present, it’s worth noting that consumption flourished. Illegal bars, known as speakeasies* sprung up everywhere, and liquor smuggling evolved into an extensive underground economy.
Fast forward to the present, and while the consumption of the alcohol itself isn’t being legally restricted, in the event of an LCBO strike, with liquor sales being exclusive to the LCBO, it may as well be. As stocks depleted for both the consumer and the bar or restaurant, it’s reasonable to estimate that the impact to the Ontario economy could potentially be devastating. At the time of year when alcohol sales and consumption are at it’s peak, thousands of licensed establishments could find themselves struggling to keep themselves afloat in an already struggling economy.
Luckily for Ontario, the spirits won’t stop flowing this summer. With the LCBO’s 6000+ employees busily restocking shelves in preparation for Canada day, a few good cocktails could be just what the province needs to beat the heat this summer.
For More Information on the LCBO strike, I recommend the following:
National Post: “Liquor stores ‘like Christmas’ as LCBO strike looms”
Canada.com: “LCBO workers ready for strike action”
Globe and Mail: “Ontario liquor store strike averted”
*The term ‘speakeasy’ was a term born of prohibition to describe an establishment illegally serving alcohol. This bar would have very little to distinguish itself or to identify it as a bar from the outside, and news of it would pass through word of mouth between patrons, who were encouraged to “speak easy” of the location, for fear of it being discovered by the police.
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