Thursday, January 31, 2013

LCBO Sniffing Alcohol Fumes

When not price-gouging beer, wine and spirits purchasers, the Liquor Control Board of Ontario (LCBO) indulges in its own brand of fuzzy thinking. The recently harmonized sales tax lowers the tax rate on LCBO products from the current 12 percent to eight percent. This indicated a lower retail price.

Now begins the mixed message known as fuzzy thinking: Prices increased. Big Brother LCBO claimed a "social responsibility" preventing it from lowering prices to a level that would encourage alcohol abuse. As if lowering prices a few pennies would produce more drunk drivers, more broken homes or more productive hours lost. The Board did not explain how it determined the price level that would discourage alcohol abuse.

Yet at the same time, the LCBO sold wines and spirits at discount prices of up to four dollars. In February 2013, a slick 16-page insert in daily newspapers, screamed: "Discover savings in every aisle", "Collect more all month long", "Bold value", "Save $6.00" on cognac, $3.95 on rum (increased to $5 in 2014) and so on for 12 pages. And the following week, a 40-page booklet extolled the social importance of hosting a party "like a bon vivant" with Southern Cocktails. And radio advertising with a women's dulcet tones promising the good life.

How does lowering prices by a few pennies discourage alcohol abuse, while much larger discounts do not? According to the Ontario Finance Minister, the smaller price decrease would be reckless. No word what he thought about the steeper discount prices, and the ceaseless promotion.

Purportedly for "social responsibility" reasons, the Board has also increased its mark-up on imported wines from 64 to 71.5 percent, and on domestic wines from 58 to 65.5 percent. This is the business ruse of using a new system to increase profits, as occurred when Canada went metric, as currently occurring while the one-cent coin is withdrawn from circulation.

Fuzzy thinking is elevated to an art form when the LCBO hides behinds the skirts of Mothers Against Drunk Driving. The Board claims a close association with organizations formed to promote safe consumption of alcohol. How does it explain to mothers the discounts and promotions?

Premier Dalton McGuinty did not deny the charge of price gauging. This will all look good for LCBO nabobs when they next demand fat pay increases or bonuses.

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