LCBO shifting focus to pricier wine, spirits
The Canadian Press
Published Sunday, January 13, 2008 12:41PM EST
TORONTO - Ontario consumers looking for a simple bottle of plonk in the coming year will find the province's liquor store shelves increasingly crowded with pricier wines, spirits and premium beer to meet the demand of more sophisticated boomers.
While the LCBO says they won't stop stocking bargains or looking for cheaper table wines, the province's liquor stores are shifting their focus towards the more costly premium brands that have been driving sales in the last year.
"The reality of the marketplace is that consumers are trading up,'' LCBO spokesman Chris Layton said in an interview with The Canadian Press.
"There is a growing sophistication in the marketplace and that's global in nature. It's not just confined to Ontario. The growth that we're seeing in our sales is in the over-$10 ranges.''
Sales of wines priced between $12 and $15 drove up sales $17.6 million, says the LCBO's most recent annual report, which vows to "trade consumers up beyond the $8 price point for a 750 ml bottle.'' Wines priced between $15 to $20 jumped by 15 per cent, accounting for $64 million in sales for 2005-06.
That desire to satisfy the picky palate seems to have helped keep the LCBO's bottom line. The increased sales of expensive tipple "helped offset'' declines elsewhere, the annual report said.
The expensive tastes of discriminating Ontario consumers aren't just confined to wine.
While sales of standard brand spirits declined by 1.4 per cent, sales of premium bottles jumped almost 6 per cent. People who used to buy blended scotch a decade ago are now being drawn to pricier single malts, Layton said.
"A single malt will carry a price tag that might be double or triple that of a blended scotch,'' said Layton, adding consumers can thank baby boomers for driving this trend.
"What we've been trying to do is respond to the market and to the growth in certain segments of the market. That tells us what consumers are looking for. The growth has been to higher-quality wines, spirits and beers."
Although the LCBO has limited shelf space, the increased focus on costlier booze won't come at the expense of cheaper cocktails, Layton said. The LCBO currently stocks 310 wines under $8 and will continue to scout out bargains, he said.
Liquor stores are also going to look at giving more profile to affordable beverages through better signage and eye-catching displays, Layton added.
But some critics are wary. Conservative Frank Klees said the LCBO has a responsibility to offer consumers a wide selection of beverages, from plain table wine to the rarest Chateauneuf du Pape.
"This is a monopoly that determines what Ontario consumers have available to them and at what price,'' Klees said. "The affordability issue is one that the LCBO has a responsibility to keep foremost in mind.''
How the LCBO allocates shelf space is ambiguous enough without having to make room for pricier bottles, Klees said. Ontario wines have trouble getting space at the best of times without having to compete with expensive imports, he added.
"How will the LCBO go about creating shelf space?'' he said.
But some Ontario vintners are hoping an "up-market'' focus will actually mean better exposure for homegrown wines. Bill Milliken, with the Ontario Wine Producers Association, said many Ontario vineyards gave up trying to compete with cheap, mass-produced imported wines.
Most now produce high-quality wine which comes with a higher price tag but they still have trouble getting shelf space at the LCBO, he said.
Given the demand, Milliken said Ontario should model itself more after Oregon, where the state's wineries make "the best wine they can make'' and the average price is $25 a bottle.
"And they sell it,'' he said. "It's good wine and there is a market for it.''
New Democrat Peter Kormos, whose Niagara-area riding is home to several wineries, said the new focus on higher quality wines means the LCBO has a delicate balancing act to perform.
"It's very important that the LCBO promote the quality wines that are being produced in Ontario. Some of them are in the price range of $15 to $20. But people are getting good value for dollar,'' he said.
"At the same time, (for) consumers who want to purchase the basic level of wine with modest prices, the LCBO has to ensure that they're available.''