LCBO reports record $1.1 billion in profits

The Ontario government's biggest cash cow got a little fatter last year as the LCBO reported record profits for the seventh straight year…The government announced in September that it would sell limited LCBO franchise opportunities in under serviced, rural or tourist areas only.

The Toronto Star
November 30, 2001

LCBO reports record $1.1 billion in profits
Caroline Mallan

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The Ontario government's biggest cash cow got a little fatter last year as the LCBO reported record profits for the seventh straight year.

The LCBO's annual report this week shows the chain of liquor stores poured $1.1 billion into provincial coffers for 2000-01 — an increase of $50 million.

But despite the good news in tough economic times, Finance Minister Jim Flaherty was nonchalant about the windfall.

"I don't get too excited about the LCBO showing a profit," he said, adding it's not hard for a business with a monopoly on the sale of wine and spirits.

News of record sales and profits comes just as the Conservative government is contemplating selling the LCBO to help stave off a multi-billion dollar deficit next year.

The Conservatives were first elected in 1995 on a commitment to look at selling off assets, such as the liquor stores, but since then the chain of 601 outlets has become so profitable that the Tories have backed away from their plans.

However, Flaherty said the Conservatives must determine if the Ontario taxpayers are getting a big enough return on their ownership of the stores.

"Were you to franchise part of the LCBO, would you get additional money as franchise fees, the answer is yeah, you would," Flaherty said, adding that no decisions have been made.

In straight profit, the liquor stores gave the province $850 million, plus $255 million in provincial sales taxes.

"This is the third straight year our combined dividend and the contribution has topped $1 billion," LCBO Chair Andy Brandt says in his annual report, which plans to boost that amount by at least $25 million more next year.

Sales of liquor, wine and beer in liquor stores rose 7 per cent last year and Brandt says growth for the coming year should be almost 5 per cent despite the slowing economy.

Much of the financial boom at the liquor stores has been credited to Brandt, who has stressed newer store design and better customer service during his 10 years on the job. But Flaherty said making money off booze is not that hard.

"Andy Brandt is a great guy and all that but how can you lose money in a monopoly alcohol business in the province of Ontario or anywhere else in the world," he said.

The government announced in September that it would sell limited LCBO franchise opportunities in under serviced, rural or tourist areas only.

The province already has about 108 so-called "agency stores," most north of Parry Sound, which operate in conjunction with an established retailer.


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