Liquor privatization documents reveal secret government consultation

The biggest pre-distribution liquor warehouse in B.C. was consulted by the provincial government before it joined the bidding for Liquor Distribution Branch logistics, documents obtained ...

The biggest pre-distribution liquor warehouse in B.C. was consulted by the provincial government before it joined the bidding for Liquor Distribution Branch logistics, documents obtained under Freedom of Information reveal.

The documents show that bureaucrats toured the ContainerWorld warehouse in Richmond on March 16, two weeks after owner Dennis Chrismas and lobbyist Mike Bailey met with liquor minister Rich Coleman on March 2. It was the first step in consultations with six stakeholders that were kept secret by the B.C. Liberal government.

A PowerPoint presentation for an April 18 briefing for Minister Kevin Falcon and four Deputy Ministers at Coleman’s office said:

  • Brewers Distributor Ltd. was “concerned with negative impact of government policies on beer sales.”
  • Sleemans “suggested improvements include inventory transparency and revenue collection by the Province.”
  • Mark Anthony Group mentioned “unintended consequences of outsourcing and impact on economic development policies in B.C.”
  • Vincor mentioned “Impact of flat mark-up based on volume on value-based B.C. wines and imported products.”
  • Alberta Gaming and Liquor Commission advised B.C. to “ensure sufficient controls in place through: performance management through (key performance indicators), forecasting supply/demand, retain revenue, customs/excise, and audit functions.”

The documents said the biggest anticipated impact of the privatization would be on ContainerWorld. It was eventually one of six companies that submitted bids and it qualified for the four-company shortlist. The privatization was prematurely halted Sept. 27 when the B.C. Government and Service Employees’ Union negotiated a new two-year contract.

The government was planning to phase out the network of eight pre-distribution warehouses under the private distribution monopoly, thus jeopardizing ContainerWorld’s viability. The presentation mentioned “successorship rights of LDB employees” was a concern for ContainerWorld.

ContainerWorld workers are represented by Teamsters Local 31. Under a private monopoly, based on a March 21 memorandum of agreement, the government required BCGEU members to follow the work.

The request for proposals was published April 30. No specifics about the industry consultations were mentioned at a May 9 industry information session hosted by then-LDB general manager Jay Chambers and chief financial officer Roger Bissoondatt. During the meeting, Chambers said “there will not be a formal consultative process with industry.”

“We're on a very tight time line,” Chambers said. “There has been a lot of input provided by companies already as to what they envision the model to be. Suppliers, associations and retailers. We've got a pretty good handle of where those groups see themselves going.”

The April 18 ministers’ briefing presentation also mentioned that the “real estate disposition will be completed separate” and that the net would be $40 million.

The government also considered the Alberta distribution model, in which the AGLC-owned warehouse in St. Albert is leased to private monopoly Connect Logistics Services for $2 million a year.

“CLS revenue derived from handling and storage fees charged to suppliers; fees are approved annually by AGLC,” said the presentation. “CLS profit margin established in contract; profits realized over set margin are split 50/50 between CLS and AGLC.”

Connect parent Exel Logistics, a leading bidder for LDB, had lobbied the B.C. government since 2005. Kuehne + Nagel and Metro Supply Chain Group were also on the shortlist.

BMackin@biv.com

@bobmackin

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