Top whisky, rum and gin brands could pull products from LCBO amid pricing dispute

A group that represents a long list of spirit brands is warning that some popular products could be pulled from the Ontario market amid a multi-million dollar dispute with the LCBO.

Spirits Canada issued a press release on Friday morning in which it claimed that it had been “blindsided by a staggering multi-million-dollar retroactive tax bill from the LCBO” which “could drive some consumers' favourite brands out of the market.”

However, in a subsequent statement the LCBO refuted that claim as “inaccurate and highly misleading.”

It said that its contracts with suppliers requires that it be given the lowest price in Canada for all products and that the dispute hinges on “pricing chargebacks” in accordance with the contracts and not “fines or penalties.”

“Ontario consumers are being overcharged by some suppliers. Compared to other jurisdictions, Ontario consumers have paid up to $40 more on select brands of product. Ontarians should not be at an unfair disadvantage from suppliers selling beverage alcohol to other provinces at a lower price,” the LCBO’s statement notes. “LCBO’s contract with suppliers is intended to help drive the lowest or most competitive prices for Ontario consumers. Ninety percent of our suppliers comply with our policies. It would not be fair to let a few suppliers gouge Ontario consumers.”

Spirits Canada is a trade organization that represents nearly 70 per cent of the spirits products sold in Ontario, including well-known brands like Crown Royal whisky and Bacardi rum.

It is accusing the LCBO of “unilaterally clawing back payments on products sold in 2023” based on the claim that Quebec's liquor board obtained similar products at a lower price.

But Spirits Canada claims that the LCBO is relying on a “long dormant clause” to demand the lowest wholesale price when under Ontario law the minimum price that alcohol can be sold for increases every year, pushing up the LCBO’s margin in the process.

“Just this year, the minimum price markup was increased by almost five per cent, widening the gap even further between Ontario and other provinces. As a result, today Ontario consumers are paying $31.15 for the lowest priced 750 ml bottle of vodka, while Quebec consumers only pay $22.25 at the SAQ,” the release states. “Punishing suppliers for circumstances beyond their control is unfair, provides no benefits to consumers, and puts suppliers in an impossible situation.”

In its statement the LCBO said that it is “acting in the best interests” of its customers “to ensure that retail prices in Ontario remain competitive.”

It said that of the 10 per cent of its suppliers that are not currently compliant with their contracts “over 80 per cent” are working cooperatively with the Crown corporation on “payment terms and conditions.”

However, Spirits Canada said that as a result of the dispute its member companies will be “compelled to examine all possible options for action.”

"In 2024, it only makes sense for Ontario consumers to have as many choices as other provinces when buying beverage alcohol, and for distillers of all sizes to be able to sell these products under more transparent and growth-oriented business practices,” Senior Vice President, Public Affairs and Policy at Spirits Canada Lorena Patterson said in the release.