LCBO

Information for Suppliers – Doing business in Ontario

The LCBO is divided initially into three major sales and distribution divisions which are:

The General List – Wines, Spirits, Beers and Coolers
Vintages – Wines and Spirits
Consignment/Private Orders – Wines, Spirits and Beers

For our purposes we will consider only wines for all three of these divisions.

The General List

The General List (GL) has as its base many of the moderately priced wines of the world, often produced in relatively large quantities, and which have substantial advertising and promotional budgets attached to them – usually in the $10,000.00 to $50,000.00 CAD a year bracket, depending on a variety of factors.

Indeed, it is virtually impossible these days to consider attempting to obtain a general listing for your wine unless you have serious money to invest in promoting your products here.

Once a year the Department that governs the GL advises the trade of the categories and types of wines which it wishes to consider, their retail price points and other factors. Recently, for example, they asked agents to offer no more than 2 Australian wines for consideration. We understand that 1000 samples were presented to the LCBO for consideration and it is likely that no more than 5 or 6 will actually be listed. So it can easily be seen to be VERY competitive.

If a wine is listed, and if it is able to maintain a satisfactory rate of sales (quota) it continues to be ordered and listed. If not, then it is de-listed with a financial penalty to the supplier—generally 25% of the ex-cellars/FOB price on remaining stocks at the time of its being delisted.

Vintages

Vintages offers the more interesting, and in general, better quality wines from all corners of the world and publishes its needs quarterly, indicating similar guidlines as the GL Dept. Unlike the GL Dept, Vintages does not usually re-order successful wines (it does sometimes, but not USUALLY), so most orders are to be considered “one off” with the hope that sometime in the near future, it will re-order a wine from a subsequent vintage.

Again, just as with the GL, the competitive nature of the proposal process means that most offers will not be considered or, if selected for tasting, bought. From maybe 800 to 1000 offers on paper for a specific wine type (ie Red wines from Southern Italy or White Australian wines) they will choose perhaps 50 to 60 to taste and from those, they will choose between 6 or 10 to buy—depending. There is a performance incentive that suppliers should be aware of, and we will provide further details in our further dealings with suppliers.

Vintages also offers suppliers the opportunity to participate in its merchandising initiatives. So, for a fee, you can obtain space on the front or back covers of its release price magazine which will show a bottle shot of your wine; you can offer “Air Miles”; you can, if chosen, pay a fee ($4,000.00) to be one of its “Wines of the Month” (WOM) for which you can expect an order of 1000 to 1200 cases of the selected wine. The retail prices of WOM wines would generally fall in the $18.00 to $20.00 a bottle.

Strong reviews from the better known journalists will help support our efforts to obtain orders for your wines, so please be on top of these tools to help us help you. Generally speaking, a Gold Medal in such and such a wine competition is not as interesting to their buyers, or the public as are good reviews from Robert Parker, The Wine Spectator, The Wine Enthusiast, Decanter, Gambero Rosso, James Halliday, John Platter, and so on.

Private Stock

This has always been a feature of the LCBO which recognizes that it cannot stock everything. After all is said and done, no matter what the nature is of a retail shop, none of them have “rubber walls”, so there is a finite amount of selection and stock built in to ANY system – be it the free market or a government monopoly. The feature of being able to buy wine privately from source is a long established one. Of course, the final retail price charged is exactly the same as it would be had it been purchased for its shops. There is no price advantage; just a wider selection.

This then expanded to “The Consignment Programme” in which the LCBO allows agents, under supervised control, to order in stocks of wines from their various suppliers. The wine never goes into the retail store system. It remains in the LCBO’s own warehouse and is released in case lots to the agents upon proof that their customers, restaurants, and public alike have ordered it for their own use. Payment is made to the supplier 30 days after the last case of a particular wine has sold out. This means that instead of being paid, say 90 days after shipping wine to the GL or Vintages, suppliers may well have to wait 180 or more days depending on the speed in which the wine sells out, which itself is governed by the quantity ordered.

Most suppliers will see this as the answer to their prayers in being able to sell their wines in our market. However, the truth is somewhat different. Since agents are very tightly monitored regarding the quantity of stock they may have, and since the LCBO may refuse to order wines “immediately” because of the agent’s stock limitations, it is not as easy to bring everyone’s wines in here as it may first appear on paper. So suppliers may well still experience some delays in getting their wines to market.

When an order for a supplier has been placed by the LCBO, then he does have the benefit of at least having the wine in the marketplace when the other options have been ruled out. But it also carries the disadvantage of much smaller orders (25 to 100 c/s as opposed to 300 to 800 c/s) with a much smaller distribution since it goes to a few restaurants rather than into several hundred stores.

For information about its future buying needs go to www.lcbo.com and www.vintages.com