LCBO’s complete screw up on paper bags a sign of problems

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When you are the CEO of a major company, and your biggest shareholder has to correct your actions twice in just a few months, you might want to dust off your resume.

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That’s the position George Soleas, president and CEO of the Liquor Control Board of Ontario, finds himself in.

First, Ontario Premier Doug Ford had to chastise the LCBO over its decision to get rid of paper bags for customers – that was in April.

And this week, Ford had to tell the government liquor monopoly to find an Ontario supplier just as they had been instructed to do months ago.

Ford’s letter in April telling the LCBO to bring back paper bags for consumers had a tone that suggested the Premier was annoyed.

“The environmental merits of this decision are questionable at best. Paper bags are an easily recyclable alternative to single-use plastic, which is why the LCBO adopted them in the first place,” Ford wrote to Soleas on April 7 telling him to bring back the bags.

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In July, Finance Minister Peter Bethlenfalvy, whose ministry is responsible for the LCBO, laid out the need for the government agency to promote Ontario products both on store shelves and in procurement, including in securing a supplier for paper bags.

In early October, the LCBO signed a two-year deal with Quebec-based firm Rosenbloom Inc. That moved prompted Ford to send another letter to the LCBO, this time to the man who oversees Soleas, board chair Carmine Nigro.

“Unfortunately, the LCBO’s recent decision to source paper bags from a company outside Ontario goes against our government’s direction, as outlined in a letter that the Minister of Finance sent to the LCBO on July 9. Ontario’s forestry sector is fully capable of meeting the demand for paper bags and ensuring that these products are made in Ontario by Ontario workers,” Ford wrote.

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The Ford government has been promoting a made in Ontario and buy Ontario policy since the middle of the COVID-19 pandemic. It should have been clear, especially given the letter from Bethlenfalvy, that the LCBO was expected to give preference to Ontario suppliers.

It’s doubtful that Quebec, which recently passed a bill giving preference to homegrown companies in government contracts, would have their liquor monopoly award a contract to an Ontario supplier over a Quebec one.

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It hasn’t been a great year for the LCBO, which had its first strike in their 97-year history.

That strike showed problems with their online sales, their ability to supply the restaurant industry as promised, and their delivery system. It also put the LCBO under the kind of scrutiny in comparison to other government liquor boards that it had rarely seen.

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Ontario’s per capita return to taxpayers is just $159, well behind Alberta’s privately run system at $178 per person or Saskatchewan’s $187 per person in their newly privatized system. In fact, Ontario’s bloated LCBO gives taxpayers the second lowest return in the country, only beating out tiny Prince Edward Island.

This lower per capita dividend comes even as the LCBO charges higher prices. A 750ml bottle of J.P. Wiser’s Deluxe Whisky is currently selling for $23.98 in Calgary but will set you back $32.45 at the LCBO – that’s an $8.47 difference for a product made in Windsor!

Higher prices and lower dividends mean one thing, the LCBO is a bloated and inefficient organization – one that can’t even get their paper bag contract right.

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There is also the issue of the lawsuit they are facing from some of the biggest names in the business, including Bacardi, Beam-Suntory, Brown-Forman, Corby, Diageo, Forty Creek Distillery and Rémy Cointreau. They are claiming predatory practices and allege the LCBO is involved in illegal activities by retroactively charging distillers huge fees.

The case is still before the courts and the LCBO claims they are simply ensuring fair prices for Ontario consumers, but that argument is undermined by the higher prices charged in stores. While the lawsuit is fronted by the larger distillers, smaller companies say the LCBO’s activities have the potential to put them out of business.

Problems with paper bags are just the tip of the iceberg when it comes to problems at the LCBO. Instead of sending letters to the CEO and board, maybe it’s time Premier Ford looked for new leadership at the organization.

blilley@postmedia.com

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