This past week, I had the pleasure of spending some time in Victoria, BC. I love going to Victoria, which – as I’ve been assured by a favorite adolescent – is “like a whole other country.”
While in Victoria, I stopped in to the liquor store at the Strathcona Hotel, which features one of the better selections of single malt on the West Coast (and is an exclusive retailer for the Scotch Malt Whisky Society). After spending far too long in the shop trying to decide how to take advantage of my limited ability to bring back spirits duty free, I struck up a conversation with one of the clerks.
I asked him to point me toward something unique and that I might not be able to find elsewhere, and he pointed me to a bottle of single malt from Vancouver Island’s very own Shelter Point Distillery (which he said reminded him quite a bit of Bruichladdich “Laddie” – high praise indeed). We chatted for a bit, and he asked me where I was from. Telling him I was traveling from Seattle (after all, not that far away), he immediately launched into a two-pronged rant about (1) how much he enjoyed Westland Distillery’s single malt whiskies and (2) how frustrated he was that his shop hadn’t yet found a way to carry them.
This is curious, and also unfortunate. In my home state of Washington, clients commonly tell me that they value highly their foreign distribution as it is consistently one of the most profitable aspects of their business. Yet here I was, hearing that a very reputable retail outlet (the shelves of which I suspect any single malt distiller would love to occupy) – approximately 86 air miles from the distillery – couldn’t stock the product. Why was this?
The clerk didn’t elaborate as to why he couldn’t stock Westland – but I had a suspicion. And on returning home to the states I confirmed my worst fears. BC operates in what we would call a “control state” mode; the British Columbia Liquor Distribution Branch – a government agency under the B.C. Ministry of Justice – is the exclusive wholesaler of spirits in the province. It determines what products may be sold within the province. It also determines the prices at which products can be sold in the vast majority of liquor stores within the province (state-run BC Liquor Stores). And while the few private retailers that exist within the province (like the liquor store at the Strathcona) have the ability to set their own prices – they’re obviously constrained by the fact that they can only purchase from the Liquor Distribution Branch.
Let me say this as tactfully as I can. I strongly dislike this model – not only from the perspective of a consumer who believes that the control model stifles innovation and competition within the industry, but also from the standpoint of a HoochLawyer who tries to help his clients navigate the system. Say what you will about the challenges of working with a large for profit mega-distributor (and there are certainly challenges in doing so), but the fact is that the mega-distributor still wants to sell products. A DSP may have a conflict with its distributor in the terms of its relationship (e.g., fights over termination provisions or expectations as to how a brand will be marketed), but at least both parties have the same general goal: profitable sales.
Governmental authorities, on the other hand, regularly seem to confuse their role as an industry participant with policy concerns. This leads them – in my opinion – to become the spirits industry equivalent of a futon: an uncomfortable couch which can, if necessary, act as a dreadful bed. By trying to do two things at once, it succeeds in doing neither particularly well.
HoochLaw 