It’s been a while since I’ve written something potentially libellous about the government, so here goes. Recently, a lot (CBC) has been written (Sun) about the poor, downtrodden private liquor retailers (LRS) in BC and their inability to cope with the suddenly much more competitive government liquor stores (GLS), operated by the BC Liquor Distribution Branch (LDB).
The general sentiment in the public runs pretty much exactly as you’d expect from a people who’ve long-perceived private LRSs as extortionate scam artists taking $0.30 of electrical chilling and turning it into $6.50 of markup just because We Want It Now And We Want It Cold, Damn it.
Reality has this unfortunate habit of not being quite as simple as we’d want it, and this is no exception. Much of the markup at private stores was simply due to not being able to purchase product at the same deep discount as GLSs. These unfair rules were made more acceptable to LRSs by the government store employees agreeing to stay home on Sundays, and thus allowing the private stores to have a 1/7th monopoly on the market. That, plus the GLS agreeing to avoid selling cold beer because people are a bunch of rummies who’d just straight chug it in the parking lot if we could.
Until April 1st; on that day, everything changed. The BC Liquor Control and Licensing Branch (LCLB) brought in a “level playing field” for wholesale prices. Everyone got to buy at the ultra cheap government prices, but the government stores now wanted in on Sundays and cold beer. To the private stores, losing Sunday was Not Great, but getting those sweet, sweet government prices would absolutely be worth it. Private stores have lower overhead than the LDB, so by the time the government stores had paid back those fat union wages to their staff, the privates would be out in the profit lead no problem.
Except not. In classic LCLB fashion (remember “Happy Hour”?) there was a gotcha, and that gotcha was the sudden, dramatic increase in wholesale prices that the LCLB forgot to mention was part of the deal. How dramatic? Well, craft beer has gone up from 10-30%. Take Driftwood Fat Tug: before April 1st the cost was $4.20. Now it’s $4.75. Sure, that’s 55 cents to you and me, but it’s a giant freaking slice of the profit pie for liquor stores.
Okay, fine. Things are more expensive for some unexplained reason*, and it sucks to be Joe Consumer, but the private stores will still have lower operating costs and should be able to undercut the big government stores with their on-shelf pricing, right? Well, um… about that… You see, when that Fat Tug cost $4.20, the government charged $5.09 + tax on the shelf. Now that it’s $4.75 they’re charging… $5.09 + tax. In other examples, the government has actually lowered their prices on craft beer despite increasing costs.
Yup, you read that right. The LDB, whose retail stores were bordering on unprofitable before, saw their profit margin drop from 21.2% to 7% and they didn’t raise prices. They still have to pay the same rent, the same utilities and the same union wages for GLS staff. Heck, they now have to pay more money to install and run fridges, because they can sell cold product. How could they possibly turn a profit now, with massively increased costs and no increase in revenue? Shocker: they’re not. The retail arm of the LDB is now being run at a loss.
So, what’s going on here? Well, the LDB isn’t just the retail arm. They also run the wholesale side of the operation. That $4.20/$4.75 debate above is irrelevant when you consider that the wholesale side of the LDB buys it at around $2, both before and after April 1st. All the LDB has done here is to shift the lion’s share of the profit on craft beer from retail to wholesale, which is the part of the industry where they still have a complete monopoly.
Level Playing Field, my ass. This game is fixed. The strategy here is to put the squeeze on the private stores, hopefully forcing more than a few to throw in the towel and sell their licenses. With a glut of licenses hitting the market, the cost to purchase will fall precipitously. Who will benefit, then? What other change happened April 1st?
Yup, grocery stores can now buy an existing LRS license and move it in-house. Before the new policy came into effect, everyone scratched their heads and wondered aloud where the stores would get all these theoretical licenses, especially considering how hard the grocery chains had lobbied for the change. Now it all makes far too much sense.
That, combined with the LDB’s long term plan to get out of retail, adds up nicely. It was hard to justify when the GLSs were making money hand over fist, but now that all the actual profits are nicely safed away in the distribution/wholesale monopoly, it just got easier to politically sell the idea of privatization. Screw the LRSs and throw a bone to the grocery store lobbyists, all while building a case for a massive capital sell off on the retail side.
If all you care about is what your case of Bud costs, and you’ve managed to read this far, this is where I break your heart. When the government liquor store sell off starts, it will result in one of two things. One: grocery stores will pick up their licenses (April 1st ALSO provided for moving GLS licenses into grocery stores) or Two: private firms will pick them up.
When those private firms open their newly acquired books, how long do you think it’ll take before they fix that whole “no profits” angle by raising prices? With the discounted competition from the GLS no longer there, and the only realistic competition being the obscenely expensive Save-On-Foods down the street, how cheap will that case of Bud be now? Only time will tell.
* In a marvellous alignment of conspiracy models, it’s rumoured that the macro liquor brands have had unparalleled access to the LCLB and Premier’s Office during formulation of this new pricing scheme. Whether or not that’s true, what is definitely a fact is that macro beer and wine are much, much less affected by the price increases. As a result, stores are dropping craft lines and fleeing to the less loss-leading macros. Suck it, selection!
UPDATE: The “unparalleled access” is Neil Sweeney. He’s a Deputy Minister in the Premier’s Office, but was also previously the Director of Public Affairs at Labatt Breweries. Here is his LinkedIn profile. As conflicts go, this isn’t the worst it could be, but nor is it the best. Sure he isn’t (likely) being paid by Labatt anymore, but keep in mind that he very almost certainly holds a good chunk of stock from his previous job, and is still a friendly face to the remaining management team at Labatt.
In short, the beer in Vietnam is shit. Truly awful. And no, the high humidity and heat did not alter my taste buds to appreciate flavourless dreck like absolutely everyone insisted it would. At several points during this trip, I found myself sweating out my last remaining ounce of bodily fluid, panting like a dog in danger of imminent heat stroke, and I still had no desire to quench my thirst with cheap lager any more than water. Plus, once the danger of dehydration passed, I would have absolutely murdered the shit out of a double IPA.
Woe to me, though, as Vietnam plays home to a wide variety of beers but hops are not a primary ingredient in any of them. For local brews, there are lots of options to drink for a wide range of prices, and here is how bad each of them are.
Bia Hoi — This translates to “Fresh Beer” in English, perhaps playing off the widely held belief in Vietnam that “fresher is better.” This is a philosophy which is hard to argue with when it comes to vegetables and unrefrigerated street meat but makes less sense when talking about beer. This no-name domestic lager is marketed as “brewed fresh today” and then sold to unsuspecting locals and tourists alike for anywhere from $0.30 to $1.50 per glass, depending on how much of an unsuspecting tourist you are. Based on my five samples, I’d peg that thirty cents per glass mark at about five dollars overpriced. This insipid backpacker-fuel is easily the worst beer in a country not exactly known for great brews. That, plus the fact that any beer actually brewed fresh today would be sickly sweet unfermented wort, means that the marketing strategy shows off the ignorance of the brewer, distributor, server, and consumer all at once. Sure, it’s cheap as hell, but just because something is cheap doesn’t mean you want it, nor should have it. If you don’t believe me, I have a $0.10 punch in the nose to sell you.
Bia Hanoi, Bia Larue, Bia 333 — All are pretty dismally bad: watery, slightly sweet takes on that global workhorse, the American Premium Pale Lager. Of the three, 333 and its Coors Lite-inspired “doesn’t honestly taste like much” approach might be the best of the lot. Of course, a “Best in Show” prize of this sort is a dubious honour, at most.
Bia Saigon — Available in several horrible variants, the “Lager” version wins for both creative naming and actual flavour. I had one can of this that sort of, maybe, resembled a watered down Czech Pilsner, and that instantly made it the best locally brewed beer I had in Vietnam. Subsequent attempts to try this beer again exposed me to the dreck that constitutes their other lines (“Special” and “Export”), and also informed me that my not-awful opinion of “Lager” was either a fluke, or the subject of altered taste buds due to low-grade food poisoning.
Rochefort 8 — Okay fine, it’s brewed in Belgium and yes, it cost me damned near $15 for a 33 cl bottle, a price that–when considered in context of average prices and wages in Vietnam–would translate back to something like $100 for a pint in Vancouver. Still, this was by far the best beer I had in Vietnam, and even given the crazy price I’d absolutely do it again.
General Advice— In case it wasn’t clear, don’t drink the freaking beer in Vietnam. If you don’t trust me and, much like spoiled milk being passed around at a frat house, absolutely have to try it for yourself, do yourself a favour and only try beer on draught or from cans. Bottles are often left out in direct sunlight, and I did not encounter a single one that wasn’t light struck.
If you absolutely must drink something, mixed drinks and hard liquor are all cheapish. Mid-range whiskeys of a variety of styles and qualities are pricier than the local beer, but all substantially cheaper than the same thing being served at home (~$3-$5). Scotch and Bourbon are especially ubiquitous in that region of the planet, so much so that the duty free shop at Taipei-Taoyuan International Airport looks like a high-end outpost of the Scotch Whiskey Heritage Museum in Edinburgh.
For something lighter, reasonably good wine from Chile, France and Australia can be found, but only at a modest discount over North American prices. This excludes the local vino (prefaced with “Vang”, or Viet for “winery”) including the semi-ubiquitous Vang Da Lat, which is available for a tiny fraction of the price of good wine, and not without cause.
Personally, I did not try this offering, as it was only ever proposed to me as a drink choice by a snickering Sharon, who upon cross-examination proclaimed it to have “a certain odeur de sewer.” Most moderately respectable Viet bottle shops and restaurants don’t even deign to carry it. A little bit of online research reveals that this particular type of wine has been known to be poured for well regarded sommeliers… while they were drunk… by snickering friends. They did not finish the glass.
So yeah, drink whiskey while in Vietnam.
Now on to a brief note on local beer festivals. Unfortunately, I’ve had to part ways with Farmhouse Fest due to a conflict with this here blog. It basically boiled down to the other partners at Farmhouse Fest wishing to exert a level of editorial control over this blog to avoid me from, well, doing what I do best and going all Chuck on the breweries and importers associated with the festival, the festival itself, other festivals, the weather, banjo-playing hipsters, and society in general.
When faced with this reality, I offered to withdraw my participation and the other partners accepted that offer. BarleyMowat.com has been built on the principle of being beholden to no one but this bitter, opinionated bastard, and in the end I just wasn’t willing to move on that front. Other, more reasonable, people might have offered up some sort of control, but other people aren’t as stubborn and short-sighted as I am. Plus, other people smell weird. You ever notice that? But, I digress.
I end my participation in that endeavour amicably, and wish the remaining crew nothing but the best of luck with their excellent festival. On the plus side, not having to work on June 27th frees me up to, you know, actually enjoy the fest which is pretty good compensation for watching it evolve from the outside in.
Well, I’m outta here. I leave tonight for my annual vacation. After last year’s brief experimentation with a beer-friendly location (Belgium) we’re right back into the tepid light lagers of the tropics. Specifically, this time Sharon and I are off to Vietnam.
While Vietnam is not without it’s own, unique, take on beer, it doesn’t take much research to realize that it’s all pretty awful. If the idea of “street beer served as green as possible in plastic jugs” doesn’t thrill you, there are a few established breweries around Hanoi (the biggest city I’ll visit), and I imagine I’ll even try their beer. I might also go to the blatant Pilsner Urquell ripoff just for the novelty.
However, the fact that these breweries all seem to specialize in that wonder of wonders, light tropical lager, doesn’t mean I’ll like them very much. Don’t expect much of a beer post when I get back, is what I’m saying. I’ll likely head over to the on Belgian bar I found online and spend my time there. Chimay is sort of authentic Viet, right?
Check you suckers later.