May 25, 2007

Wonder Wine?

Who decides what wine stocks the shelves of the LCBO

by Jessica Allen

The Dominion - http://www.dominionpaper.ca

A wine agent has to submit an extensive application, including a marketing plan and a product sample, before these wines may be sold in Ontario. Photo: Jon Bowen/Creative Commons

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Last week at a Toronto restaurant, you had a memorable bottle of Vino Nobile di Montepulciano—so memorable that you wrote down the name, and have now decided it will go perfectly with the meal you are planning for a dinner party. You make your way to one of the 25 Liquor Control Board of Ontario (LCBO) retail stores in Toronto to find a bottle. The first shop you hit has a bottle of Carmenere from Chile; the next has a Hungarian Pinot Gris; all of them have Blue Nun white wine from Germany…but none have your Vino Nobile, not even the gigantic outlet on Summerhill. You decide to go for your fall-back, no-fail standard—a decently-priced South African Shiraz—only to discover the LCBO no longer carries it. Plan C has you resigned to finally grabbing the Californian Pinot Noir that you bought last week because of a glossy promotion in the LCBO’s Food and Drink magazine. Considering the time you have squandered scouring the city, you might be wondering how exactly the LCBO decides what the province’s oenophiles drink, and why you never found that bottle of Vino Nobile.

It’s complicated. With the Ontario liquor board having the distinction of being the largest single buyer of beverage alcohol in the world, one can imagine how winemakers the world over dream of courting it with their elixirs. The journey from foreign vineyard to Ontario vintner is an elaborate affair that is decidedly market-driven, one that involves private agents, LCBO buyers and LCBO tasters. As The National Post’s wine and spirits columnist Michael Vaughan laments, “agents and producers alike stand in line hoping to receive the blessing of [the LCBO]—all too reminiscent of groveling orphans begging for more gruel please, sir. ”

Chris Layton, Media Relations Coordinator for the LCBO, explains that “The LCBO functions like any other major retail buyer; we figure out what the customer wants through extensive consumer research.” LCBO buyers need to stay on top of trends (think Pinot Noir after 2004’s sleeper-hit film Sideways) and are hired for their expertise in sales, not wine. Fortunately, their corporate palettes are not involved in the tasting of the products, which require the sophisticated noses of the board’s expert panel—the majority of whom have accredited wine knowledge and have already worked as in-store LCBO product consultants.

Unfortunately, the LCBO’s market-driven selection process means you probably won’t see your stand-by Shiraz sold in Ontario again. While you may have been delighted with the robust character you got for such a reasonable price, too few consumers shared your enthusiasm to secure its continued shelf life. In its current Vintages Product Needs Letter, the LCBO explains that 75 per cent of a new wine’s stock has to be sold within the first two months, and 100 per cent within the first three, for it to survive. Not only is this frustrating for wine drinkers with obscure or unpopular preferences, it’s even worse for the agents, who have to pay a 20 per cent rebate if a wine they bring in doesn't sell out in the allotted two months.

In order to safeguard against such penalties, wine agents refer religiously to the LCBO’s “Product Buying Plan.” Based on consumer research and marketing trends, the plan outlines the wines buyers are likely to accept. It is heavy on phrases like “contemporary packaging and approachable brand image,” whereas specific varietals are only mentioned twice: Zinfandel, Sauvignon Blanc, Pinot Grigio and Pinot Noir for the U.S., and “no Chardonnays are required at this time,” for Chile. With these factors in mind, over 500 independent Ontario wine agents traverse the globe looking for products that might interest the LCBO. These oenophiles—and most of them do indeed love what they sell—find the suppliers and facilitate the sale of the wine to the LCBO, who then sells it to the customer.

For a wine to be sold in Ontario, an agent has to submit an extensive application, including a marketing plan and a product sample, which an LCBO buyer then assesses, passing the sample on for the Grading Panel to taste. At this point, some forty expert tasters gather in the Organoleptic Evaluation Room on the 3rd floor of the old Toronto LCBO warehouse near Queen’s Quay. The room’s white walls ensure that the colour of the wine can be properly assessed. Testing blind, tasters look for defects in the products and determine whether the wines taste the way they are billed. Once the wine passes this test, the agent is required to submit an even more detailed “LCBO Product Profile and Marketing Plan.” The product then heads to the laboratory where chemical analyses are performed, and the packaging (including the label), selling units, and shipping cartons are reviewed. Only at this point do buyers issue a purchase order specifying the terms and conditions of the purchase. When the wine arrives from the supplier, it is held in the warehouse until a second lab test is completed and the final price is determined.

While Layton insists the relationship between the wine agents and the LCBO is positive, the agents would certainly be happier sans the extensive paperwork, the emphasis on strong marketing plans, and “the draconian LCBO rules” that prevent them from selling less than a case to any entity. Moreover, because of the volume that the LCBO requires to stock its some 600 outlets, small winemakers, both international and local, resent being excluded from the agents’ search. On the other hand, anybody old enough to remember an LCBO retail outlet in the sixties might be inclined to agree with The Globe and Mail’s Eric Reguly who called it “the country’s most improved retailer.” Established in 1927 after prohibition was repealed, the first shops were intentionally foreboding; after all, they were not in the business of selling alcohol, but controlling its sale and consumption. Like filling a prescription at the pharmacy, the customer would write down his or her selection from a scant product list and a staff member would fetch it. The first self-service store opened in 1969, but it wasn’t until the ‘90s that stores were renovated and brightened up and every employee began to receive mandatory product-knowledge training. Most exciting for wine enthusiasts was the introduction in 1985 of Vintages, a separate fine-wine section of the retail outlet, to satisfy the growing demands of a more sophisticated Ontario wine-drinking public.

Even though Vintages releases about 2,800 new products a year, poor product range persists as the principle complaint about Ontario’s liquor board. In the most recent edition of Toronto’s CityBites magazine, writer Stephen Tempkin compares the selection of a number of French wines available at the LCBO with Quebec’s government-run SAQ (Société des Alcools du Quebec). In each of the 11 cases, the SAQ, which also supplies dépanneurs and grocery stores, had more variety. Tempkin reasons that “the greater number of competing retailers in any given market, the better the overall selection is likely to be.” Take Alberta—the only province that has opted for privatizing the sale and distribution of alcohol in Canada. The total selection of liquor there increased by 72 per cent between 1993—when the Alberta Gaming and Liquor Commission went private—and 1995. However, Dr. Trevor Harrison, a sociology professor and the research director of the Parkland Institute (an Alberta think tank), insists that the selection for consumers has actually declined because most private stores carry standard brands, not rare or exotic wines that only satisfy niche markets. In Alberta, there may be hundreds of German white wines available in different locations—at varying price points. In Ontario, Blue Nun will be available in every city at $9.15 a bottle. Layton is also quick to remind that given the LCBO’s prominent position as the largest purchaser of beverage alcohol in the world, prestigious wine producers come to the Board, whereas they might not approach a smaller retailer. “Over the years, [Vintages] has established good relations with high-end suppliers of good reputation.”

Despite its much-bemoaned selection, the LCBO tries to ensure that Ontario wine buffs have options. If you can’t find an LCBO wine at your local store, it can be shipped to any outlet you wish, free of charge. Moreover, the entire stock is computerized, so you can check ahead of time to see if they even carry the wine you want (www.lcbo.com). If they do not, private ordering is an option, although most people would prefer waiting in line at the passport office than involve themselves in the paperwork and time required (up to six months). Your best bet for superior selection, and a way to bypass the bureaucracy, is something of which few consumers are aware: anyone can purchase directly from one of the over 500 wine agents in the province who are eager to sell you their wine-finds, often including boutique-style gems. Josh Parnt of wineonline.ca notes that “most articles discussing the inherent flaws of the LCBO seem to ignore this very fact.” You might even luck out and discover that your Shiraz has an Ontario representative. Though the process requires that you order a one-case minimum (12 bottles), you can usually mix and match bottles, and cases can often be delivered at no charge to your doorstep. And if you still desperately want that bottle of Vino Nobile, ask the restaurant owner and just maybe he’ll be kind enough to tell you which agency supplied him.

More wine for thought:

A resource for those who want to make their own wine
Canadian wine stats
Wine information and education
Canadian wine industry
List of Ontario wine agents

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