Following suppliers' fruitless attempts to
negotiate, LCBO responds with retaliatory measures
TORONTO, July 24,
2024 /CNW/ - The Liquor Control Board of
Ontario's (LCBO) sudden decision
in 2023 to penalize suppliers for non-compliance with contradictory
pricing policies has led to an unavoidable legal challenge from the
makers of familiar brands such as Crown Royal, Canadian Club, JP
Wiser's, Forty Creek, Bacardi rum and El Jimador Tequila.
The collective of spirits suppliers, which together represent
almost 70% of the spirits products sold in Ontario, have filed a court application with
the Ontario Superior Court of Justice to declare a controversial
LCBO pricing term invalid and unenforceable. Simultaneously, the
suppliers have alerted the Competition Bureau of Canada that the LCBO's enforcement of this
pricing term, in their view, is an abuse of dominance with major
anti-competitive implications for pricing and product choice
impacting all Canadian consumers.
"As spirits suppliers, we have always appreciated our
longstanding strategic partnership with the LCBO," said
Cal Bricker, President & CEO of
Spirits Canada. "We are disappointed that we have had to refer the
LCBO's contradictory policies to the courts, but at this time, and
amid retaliatory measures by the LCBO, we have been left with no
other options."
For months, suppliers have been trying to resolve the issue of
the LCBO suddenly levying tens of millions of dollars in penalties
for products sold more than a year earlier. Suppliers have proposed
solutions; the LCBO has failed to do so. Instead, it has continued
to apply new retroactive penalties. When suppliers previously
sounded the alarm about this significant threat to the entire
sector, the LCBO, as the sole purchaser of spirits in Ontario, doubled-down by imposing retaliatory
measures on those specific suppliers.
Key Points:
- The LCBO has taken an unreasonable, contradictory position:
suppliers must meet the LCBO's dictated minimum pricing
requirements, but now are issued penalties if Ontario prices exceed prices elsewhere in
Canada.
- The enforcement of a most favoured customer clause in
conjunction with the LCBO's fixed standard mark-up regime and
minimum retail pricing requirement means, effectively, that
suppliers cannot lower prices to the LCBO; instead, they must raise
prices in other provinces.
- Indeed, the LCBO goes further and dictates shelf space and
merchandising programs based on price bands, like standard,
premium, super premium, and benefitting from consumers' interest in
trading up to more premium quality products while encouraging
suppliers to offer products at a range of price points. This is all
in total contradiction of the purported lowest price
requirement.
- The LCBO itself has previously noted that its policies are at
odds with each other; specifically, it has said that, while other
Canadian jurisdictions may purchase products at a lower cost, the
LCBO would be unable to purchase those same products at the same
wholesale price if the application of its fixed-pricing structure
resulted in a retail price lower than what minimum pricing
allows.
- Spirits suppliers of all sizes have no choice but to comply
with the LCBO's demands or face reprisal. The companies that supply
the majority of spirit products the LCBO sells are pursuing this
court application for the benefit and viability of the entire
sector.
- As the largest purchaser of beverage alcohol in Canada, the LCBO does not seek competitive
pricing for its consumers, instead it takes as much profit as
possible from both consumers and suppliers.
About the companies impacted:
We are Bacardi Canada
Inc., Beam Canada Inc., Brown-Forman Corporation,
Corby Spirit and Wine Limited, Diageo Canada Inc., Forty
Creek Distillery Ltd. (operating as Campari Canada), and
Rémy Cointreau USA,
Inc. Together we represent almost 70% of the spirits
products sold by the LCBO and almost 35% of all products sold by
the LCBO. Here are just a few of the brands we supply to
Ontarians:
Bacardi Canada Inc.
- Bacardi Rum
- Grey Goose
- Martini
- Dewar's
- Bombay Sapphire
Beam Canada Inc.
- Canadian Club
- Alberta Pure
- Alberta Premium
- Sauza Tequila
- Jim Beam
- Maker's Mark
Brown-Forman Corporation
- Ben Riach
- Chambord
- El Jimador
- Ford's Gin
- Gentleman Jack
- GlenDronach
- Herradura
- Jack Daniel's
- Old Forester
- Woodford Reserve
Corby Spirit and Wine Limited
- J.P. Wiser's
- Polar Ice
- Lamb's
- Lot No. 40
- Jameson
- Absolut
- Beefeater
- The Glenlivet
- Chivas Regal
- Kahlua
- Malibu
- Altos
Diageo Canada Inc.
- Crown Royal
- Smirnoff
- Guinness
- Johnnie Walker
- Captain Morgan
- Tanqueray
- Baileys
- Ketel One
- Talisker
- Lagavulin
- Bulleit
- Gordon's
Forty Creek Distillery Ltd. (operating as Campari
Canada)
- Campari
- Skyy Vodka
- Wild Turkey
- Appleton Estate
- Aperol
- Grand Marnier
- Espolon
- Courvoisier
- Wray & Nephew
- Forty Creek
- Frangelico
- Cinzano
Rémy Cointreau USA,
Inc.
- Remy Martin
- Louis XIII
- Cointreau
- Metaxa
- Mount Gay
- St-Remy
- Bruichladdich
- The Botanist
- The Hautes Glaces
- Westland Distillery
- Telmont
- Belle de Brillet
#onpoli #foodandbeverage #lcbo #qcpoli
SOURCE Spirits Canada