The Liquor Control Board of Ontario (LCBO) has hit back at claims from a major Canadian spirits industry trade body it is “squeezing suppliers” for profit.
Spirits Canada, an industry association with Diageo and Brown-Forman among its members, said LCBO was “abusing” its “market dominance” after distillers were hit with a “retroactive tax bill”.
The LCBO insisted it has been looking to receive “a small number of suppliers” for due payments after the distillers fell foul of sales terms. The board said the contracts were in place to “drive the lowest possible price for Ontarians” who are “being overcharged by some suppliers”.
The authority said that the payment requests sent to suppliers were not a “retroactive tax bill” but rather pricing “chargebacks” in line with its contracts with suppliers.
LCBO said 10% of suppliers were “non-compliant” and claimed “over 80%” of those companies had “since acknowledged breaching their contracts”. The authority said it is now working with those suppliers on payment plans.
Spirits Canada’s members also include Bacardi, Suntory Global Spirits and Campari Group. The trade body says it represents 70% of the spirits products sold in Canada and 35% of SKUs sold to LCBO.
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By GlobalDataThe trade body said its members were “blindsided” by what it called a “staggering multi-million-dollar retroactive tax bill” issued by LCBO.
Spirits Canada challenged LCBO’s claims that it was looking for the payments due to Quebec’s pricing. It said that Quebec had “long applied” a lowest retail price system and that Ontario has a mandatory minimum retail price that raises prices each year.
“As the sole buyer and seller of all beverage alcohol for Ontario consumers, the LCBO’s conflicting policies are overcharging both suppliers and consumers again and again,” Lorena Patterson, Spirits Canada’s SVP for public affairs and policy, said.
“This could drive some of consumers’ favourite brands out of the market. The LCBO’s actions act against the interests of consumers by forcing them to pay an ever-increasing, opaque mark-up scheme. Further, the LCBO is abusing its market dominance to force individual suppliers to raise prices in other provinces to match the floor price the LCBO sets; this punishes consumers across Canada as a result.”
Canada has 13 different authorities across its ten provinces and three territories that are tasked with regulating alcohol sales and distribution.
LCBO added: “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. When suppliers do not honour our legal agreements on consumer protection, the only people that lose are Ontarians.”
