LDB bidder mystified by B.C.’s abrupt halt to privatization

Washington sales up after private sector takes over

A vice-president of a bidder for the Liquor Distribution Branch’s warehousing and distribution said “it’s a mystery” why the privatization was suddenly halted September 28.

“We’re disappointed in the abrupt cancellation,” Chris Jarvis of Metro Supply Chain Group told Business in Vancouver.

Metro was one of four shortlisted companies.

The government shelved the controversial privatization, claiming it was because of a new two-year, provincewide deal with the BC Government and Service Employees’ Union (BCGEU). (See “Shelved liquor privatization plan applauded – BIV issue 1198; October 9-15.)

The tentative agreement, signed September 27, was hatched behind closed doors coincidentally during the same week the joint LDB/Citizens’ Services evaluation committee met with bidders. The request for proposals schedule said the evaluation committee was supposed to recommend a successful proponent for the Treasury Board’s approval and announcement on or about October 16.

Jarvis said Metro has requested a post-mortem on its bid.

“We are interested in figuring out how we can improve our position next time, should there be other B.C. bids,” Toronto-based Jarvis told BIV.

The government did not say it was permanently shelving privatization. The key clause in the BCGEU tentative agreement says the “LDB will continue to operate a provincewide distribution system for the term of the ... master agreement.”

Jarvis would not say how much it cost the company to tender its bid.

Metro was shortlisted on July 20 with ContainerWorld, Exel and Kuehne + Nagel. BIV found ContainerWorld and Exel had hired lobbyists and donated money to the ruling BC Liberals.

An October 2009 internal Exel memo obtained by BIV said Exel considered buying the ContainerWorld warehouse in Richmond. ContainerWorld has a business relationship with an Italian company owned by Exel’s German-based parent, Deutsche Post DHL.

Meanwhile, the Washington state government reported price and sales increases of spirits after it privatized liquor sales and distribution in June.

Sales by volume for hard liquor were up 11.8% to 3.6 million litres in August, on a year-over-year basis. Sales were also up 11% for the May to August period. Consumer purchases at retail stores increased 16% by volume, but restaurant purchases were down 1.3%.

The average retail price grew 10.1% from $22.46 per litre in August 2011 to $24.73 per litre in August 2012.

“Businesses appear to continue to be using up substantial inventory they stockpiled in May, the last month state liquor stores were in business,” according to the Washington State Department of Revenue. “They purchased 46.7% more spirits in May 2012 than they did in May 2011.” •

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