Modernization of Ontario\’s wine distribution and regulatory system has hit the news today as Ontario PC leader, Tim Hudak, has come out publicly in favour of at least some degree of privatization (see: PC Leader Hudak Urges Sale of Alcohol in Ontario Grocery, Convenience Stores). In addition, many Ontario wine producers are mounting a campaign to allow private wine stores within the province in order to increase their distribution and reach new markets. This campaign also received coverage in today\’s Globe from Beppi Crosariol: Wine Producers Lobby for Private Stores in Ontario. Beppi\’s article included a good analysis of the government revenue issue … which usually pops up as soon as anyone mentions privatization. Those who believe that privatization will reduce government revenue simply do not understand the economics of liquor in Canada. For a primer, see my earlier article Canadian Liquor Economics 101 which explains why privatized or partly privatized systems make more money for government than systems with government retail. But for more recent numbers, see Beppi\’s article where he reinforces the point by noting that Alberta\’s privatized system makes more money for government than Ontario\’s state retail system.
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