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Menzies versus the LCBO


I thought readers would enjoy the following exchange between writer David Menzies and the Liquor Control Board of Ontario (LCBO). The initial article (and replies) appeared in the Financial Post and exposes the LCBO’s sham environmental programs. The LCBO replies and this provides Menzies with another opportunity to gore them. Interesting stuff.
Fake ‘green’ campaign kills real jobs
July 30, 2008
The LCBO’s anti-glass crusade is all about optics, not facts
By David Menzies
More than 400 employees of the Owens-Illinois glass plant in Toronto received a shock on Tuesday when they discovered their factory is being tossed upon the scrap heap of obsolescence come September.
What killed the plant? A robust loonie? Skyrocketing energy costs? Nope. The silent assassin is none other than the Ontario government’s liquor monopoly and its disingenuous pursuit of a bogus “green” strategy.
In a nutshell, the Liquor Control Board of Ontario (LCBO) now deems glass bottles to be environmentally-unfriendly. Waste is measured by weight in Ontario, and glass is heavy, so out with glass. As a result, the LCBO is actively strong-arming suppliers to opt for other forms of packaging. As Owen-Illinois CEO and chairman Albert Stroucken notes in a July 2, 2008 letter to Premier Dalton McGuinty, the LCBO has been “aggressively encouraging — and in some cases effectively forcing — our customers in Ontario and in other jurisdictions to switch from using glass packaging to so-called ‘alternative’ materials such as plastic and aseptic cartons.”
Unfortunately for Owens-Illinois workers, the LCBO’s anti-glass campaign is all about optics, not facts. The LCBO’s recent self-congratulatory marketing push hailed its campaign as “Enviro Chic: The Evolution of Packaging.” The liquor monopoly crowned itself a green champion thanks to a policy of “challenging” its suppliers to reduce packaging. When a government monopoly “challenges” a supplier, this is akin to issuing an edict, as Mr. Stroucken suggested.
The LCBO’s green master plan boils down to a weight reduction scheme by coercing suppliers to drop glass bottles in favour of light-weight aluminum, Tetra Pak and plastic. “Look, Ma. No waste by weight.” But putting containers on a diet creates another problem, which is massive waste that can’t be recycled and must be land-filled.
Consider the LCBO’s push for wineries to eschew glass bottles in favour of Tetra Paks. Undeniably, a Tetra Pak carton is lighter than a glass bottle; however, the recycling rate for Tetra Paks is downright abysmal. According to Waste Diversion Ontario, a minuscule 12.7% of Tetra Pak packaging was recovered in 2005, meaning 87.3% ended up in landfill. And Tetra Paks, like Toronto’s garbage, must be shipped out of the province for processing since there aren’t any facilities to recycle the stuff in Ontario.
Also of note, Tetra Paks are derived from virgin pulp and aluminum. As such, the manufacture of Tetra Pak containers requires excessive energy consumption and needlessly depletes natural resources. By comparison, almost 100% of all refillable glass bottles are recovered. “The LCBO has not produced any credible, validated third-party assessment of the environmental claims it is making regarding alternative packaging,” notes Stroucken. Owens-Illinois’s Toronto and Brampton plants are situated within 100 kilometres of every major beverage alcohol producer in the province, making it a localized packaging solution.
Unfortunately, given its monopoly position, the LCBO’s strong-arm tactics have paid off. “We were recently advised that as a result of commercial pressure by the LCBO, a major beverage alcohol producer in Ontario is switching from competitively-priced glass packaging to plastic bottles,” notes Mr. Stroucken. The LCBO, it seems, is taking greenmail to a new level.
Tetra Paks, moreover, typically contain foreign-made alcoholic beverages, such as French Rabbit wine (which isn’t even sold in France). The reason: the LCBO prefers foreign wine over the domestic product as it perceives Ontario vintners as a competitive threat due to their on-site wine stores. This is why Ontario wines are treated as second-class citizens at LCBO stores. According to the Wine Council of Ontario, Ontario wines can account for up to 30% of total LCBO wine sales. Yet, many LCBO stores give Ontario wines as little as 14% shelf space.
As a fake green corporation, the LCBO has managed to dodge bottle recycling. All bottles sold through the monopoly must now be returned by consumers to another company in Ontario’s bizarre alcohol market, The Beer Store, a retail monopoly owned and operated by Ontario brewers. Having dodged the recycling bullet, the LCBO is now looking for an environmental win and thinks it has found it in Tetra Paks and schemes that reduce its output of waste by weight. Hundreds of local manufacturing jobs are jettisoned along the way.
The premier, apparently, does not care about the Owens-Illinois Toronto plant nor the abusive business practices of a crown corporation. Meantime, the LCBO publicly congratulates itself for false green triumphs.
Financial Post
David Menzies is a Toronto writer.
For LCBO, the glass is half empty
Re: Fake ‘green’ campaign kills real jobs, David Menzies, July 31.
David Menzies’ July 31st opinion piece, “Fake ‘green’ campaign kills real jobs” is another blatant attempt to discredit the LCBO by distorting the truth to support his bias.
He pins the sole blame for the Toronto plant closure of American glass manufacturer Owens Illinois (OI) on the LCBO, even though the company itself cites surging energy costs, a strong Canadian dollar and the U. S. economic downturn as the prime reasons. He also doesn’t mention that OI previously announced plant closures in New Brunswick, France and Germany. According to OI, this contraction is a result of an ongoing review of its “global manufacturing footprint.” No reference to LCBO.
Despite these challenges, OI announced on July 31 that its second quarter profit had climbed 60% and 2008 is shaping up to be a record year.
Far from being anti-glass, in fiscal 2007-08 the LCBO sold almost 287 million litres of products in glass containers, or the equivalent of 382.2 million standard 750-mL bottles — an increase of 4.7 million 750-mL glass bottles over the previous year. Since 2005, the LCBO has made available fewer than 230 products in new or repackaged formats (PET, aluminium and aseptic containers).
The reality is suppliers make their own business decisions as to packaging. The LCBO has worked with a handful of suppliers to offer selected products in lighter-weight packages, but these products account for less than 4.6% of all LCBO volume sales. Most of these are imports, packaged outside of Ontario, not products that would impact a glass manufacturer in Toronto.
Mr. Menzies also uses selective, outdated data to try to discredit Tetra Paks. Some 30% of beverage alcohol Tetra Paks are now being recycled through the Ontario deposit return program. The 12.7% figure he cites represents all types of Tetra Pak containers including fruit drink boxes and pre-dates deposit-return. This government recycling program has also benefitted OI by significantly increasing the amount of glass available in Ontario for reuse.
The LCBO would be pleased to discuss with OI and other glass producers ways to help us in our efforts to shift to lighter-weight glass bottles.
Fanciful conspiracy theories aside, the fact is the glass bottle will be the dominant format in LCBO stores for years to come.
Chris Layton, LCBO Media Relations Co-ordinator, Toronto.
David Menzies responds: Alas, once again the control freaks at the Liquor Control Board are stretching the truth some more. Let me count the ways:
Firstly, the LCBO notes non-glass packages “… account for less than 4.6% of all LCBO volume sales.” This is misleading at best. While the statistic may be true on a dollar sales basis (dollars of booze sold) on a unit sales basis (the number of containers sold) here are the facts: – Unit sales in non-glass containers exceed 22%, with 7.8% of that in aseptic cartons (Tetra Pak containers) and PET plastic; – 90% of sales growth between 2006 and 2007 was in non-glass containers (aluminum, PET and Tetra Paks) while the remaining 10% was in glass.
Secondly, suppliers are indeed coerced into so-called “alternative packaging” using LCBO listing polices as inducements. Just consider the January 31, 2006 letter penned by Lyle Clarke, the LCBO’s project lead for “environmental strategy.” In the letter sent to Linda Franklin, the then-president of the Wine Council of Ontario, Mr. Clarke notes the following:
“Assuming the WCO were to indicate a desire for the LCBO to lift the moratorium for Ontario wine, the LCBO would be pleased to discuss a comprehensive strategy for the expansion of the LCBO’s offering of Ontario wines in this format [alternative packaging] … As I noted, it is very important for the LCBO to maintain a premium image for wines in alternative packaging, and therefore, the Wines Category will not purchase any new products, including extensions of existing brands, that are not priced in the premium segment. However, Wines [Category] will replace any existing SKU if the supplier is proposing to completely convert from glass to non-glass formats such as Tetra Pak for that SKU, regardless of its price positioning in the market.”
When the only distribution channel in the province dangles increased shelf space to its suppliers on the proviso that they switch to non-glass packaging, surely this cannot be considered anything but coercion.
Thirdly, the LCBO cites a 30% recycling rate for Tetra Paks in the deposit-refund system. Actually the recovery rate is 30% but there is no dedicated Tetra Pak recycling available in Canada. Tetra Paks are therefore being blended into other cardboard collected by The Beer Store. Of every kilogram of Tetra Paks recovered, only 50% can be recycled with the plastic and aluminum going to landfill. It gets worse: the Michigan plant that was recycling Ontario’s Tetra Paks no longer accepts such trash. As such, those Tetra Pak containers are now shipped half-way around the world to Korea and China for processing. The carbon footprint for that initiative is surely Sasquatch in size.
Bottom line: The LCBO clearly strong-arms its suppliers and floats misleading data so as to make it seem like it is doing something progressive for the environment, all at the expense of local jobs. And as long as the LCBO can continue to delude its ministerial masters that its environmental policies make sense, one shouldn’t be hopeful that tangible change is in the cards. All of which is perversely ironic given that the ostensible policy reason for the very existence of the LCBO is “social responsibility.”


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