Grape Monopoly
While wine shop owners in Alberta get the red carpet treatment, Ontario shops face red tape
In Toronto’s west end, east of Dundas and Dufferin Streets, stands a small storefront filled with wines you probably haven't seen at your local LCBO store. Grape Witches is an importer and seller of wines from the old and new world with an emphasis on natural products that span wider than what is offered by the province’s liquor control board. Ontarians may bat an eye at a small, independent business selling international, region-sourced wines. They may even wonder why it feels like a French Cave à Vin—it may be the chalk lining the glass bottle with the price, or it may be the lack of LCBO signage.
The wine for sale might make Grape Witches look like a wine shop, but as the company’s operations and imports leader Nicole Raufeisen says, it isn’t one in the traditional sense. “That doesn’t exist [in Ontario],” she explains. Rather, the business is a bar that sells bottles to-go. This is a necessary step for Ontario-based entrepreneurs looking to own a stand-alone wine shop.
Take a quick look through the Grape Witches site, compile an order and when it arrives it will be packaged with a piece of candy. “We’ll automatically include a piece of candy because we love you (and it is legally required),” the website states.
According to the Alcohol and Gaming Commission of Ontario, alcohol must be purchased with food.
Ontario is unique in its liquor sales laws, which are controlled at the provincial level in Canada. The alcohol market has been governed by the Liquor Control Board of Ontario since the end of prohibition in 1927.
Although the provincial government has lessened its hold on the liquor market in recent years—including a move to allow pre-mixed canned cocktails to be sold in licensed grocery stores in July 2024—import restrictions remain substantial.
The LCBO reported $7.41 billion in revenue in 2023. This came not only from store sales, but fees that accumulated from independent distributors looking for supply. Even when independent wine sellers, grocery stores and restaurants buy their alcohol from suppliers, it goes through the LCBO.
“Within the province of Ontario, the LCBO is the only real importer,” says Raufeisen. “We act as agents and representatives for the products once they arrive.”
Even as an importing business, she says they have little control over the process. The LCBO controls the shipping, testing, price and the quantity of each wine variety imported at one time.
“It’s a funny situation where this is all mandatory. But the vendors get charged these fees for that happening,” says Raufeiesen. “When the wines are here, they're all stored in LCBO warehouses where we’re required to buy it from the LCBO to then sell it. So it's a very complex process.”
According to the LCBO’s private importer resources page, importers can expect prices three to four times higher than in the country of origin, must pay a 25 per cent down payment on the total order cost and order a minimum of one case for each product. The process can take up to six months.
Additionally, the lab fee for wine and beer based products is $250 plus applicable taxes.
“There's a lot of hesitancy from producers to sell to [us because of regulations],” says Raufeisen. “There's a lot of work that we do to try to make the process easier for them because it is confusing and extremely cumbersome.”
Robin Shaban, the co-founder of the Canadian Anti-Monopoly Project, says their group researches monopolistic companies, such as Google, that have more power than many governments and how that affects society. Shaban says when the government owns a monopoly there can be more control over the growth of the company.
“Alcohol is a tricky market to talk about when we're talking about monopoly and competition, because there are really legitimate and serious public health considerations,” says Shaban. “Public health research is pretty clear that when you lower prices and make alcohol more [expensive], you have an uptick in poor health outcomes.”
According to a study from the Centre for Addictions Research of British Columbia, when the price of alcohol decreases, more is purchased by the population. This, combined with research showing health concerns related to alcohol consumption such as cardiovascular disease and cancers, concerns Shaban.
“I think that there are ways we can make the market more competitive to increase variety and bring benefits to consumers, but that also really has to be balanced with the very real implications of making alcohol more broadly accessible.”
They say the LCBO could be a good tool to keep the market regulated in terms of consumption but keep the variety liberalised. An equilibrium between government health regulations while adding new opportunities to entrepreneurs is needed.
Under the Canadian Constitution, it is the sole responsibility of each province to enact laws and regulations regarding the sale and distribution of alcohol.
In Alberta, the alcohol importing regulation brings much more opportunity for small wine business owners, explains the owner of Calgary’s Vine Styles wine shop Nathalie Gosselin.
The Montreal native moved to Alberta in 2004 after a previous career as a conference manager. After enrolling in wine education on the side, she met her business partner and started Vine Styles.
“I chose Calgary because I couldn't really do what I do in a lot of other provinces because of the LCBO and [Quebec’s] SAQ,” said Gosselin. “I think now things are changing a little bit, but I don't see myself being able to open a Vine Styles in Quebec tomorrow.”
Although she does not have an importing licence, Gosselin works with importers to bring in wine quantities that work with her customer traffic and demand.
“Alberta is still very much involved in the middle of [alcohol sales], but not in the decision making,” says Gosselin. “You can really create the store that you want.”
According to the Alcohol and Gaming Commission of Alberta, “Albertans have unparalleled access to more than 14,000 unique wine products from suppliers around the world.” The LCBO lists 1,832 domestic and imported wines available with 4,955 Vintages wine and spirits products available, according to its 2020/21 Annual Report.
Gosselin is content with her province’s more liberal alcohol restriction. She chooses the wines, how much she wants to buy and has more say on pricing.
“There are still a lot of regulations…that I would love to change, that would be better for what I'm trying to create. But in the end, we definitely have a little bit more flexibility than [Ontario],” said Gosselin.
Back in Toronto, Grape Witches is working to cater a more diverse collection of wine to Ontarians.
“I think my favourite part is meeting the winemakers, hearing their stories, listening to their challenges…and translating that experience when the products arrive,” said Raufeisen. “It’s like being the representative or guide to those stories for folks that is a super rewarding part of the job.”