Nothing drives Ontarians to drink like the LCBO. But rather than drowning their sorrows in overpriced booze, readers have deluged me with sobering emails and tweets on a recent column lamenting its ossified practices.

The LCBO not only sets high retail prices, it also rewards some suppliers with higher wholesale prices — bizarrely reducing the profits handed over to Ontario’s treasury. The provincial auditor general ridiculed this antiquated system, but our liquor behemoth clings to the old way of doing things.

Now, frustrated drinkers have provided yet more examples of LCBO inefficiencies and contradictions, which are masked by the massive cash flow and hefty profits flowing from its monopoly status.

A warning to readers: If you are below Ontario’s legal drinking age of 19, or more seriously, if you believe in privatizing the LCBO and dream of cheaper plonk, then read no further.

I don’t believe in breaking up the LCBO or restoring buck-a-beer bargains. Privatizing the LCBO to let a thousand wine boutiques bloom — the good, the bad and the seedy — would create as many problems as it would solve.

But a monopoly should maximize profit for its shareholders — the government and people of Ontario. The LCBO is leaving too much money on the table through wasteful practices across the board.

Here are just two outdated policies that leave me woozy:

• Air Miles that reward drinkers are a tempting tool to buff up your image. But these frequent buyer programs are an expensive marketing tool for businesses to gain an advantage over their competition.

Why would a monopoly use a costly loyalty program to shore up its position against itself? The LCBO insists Air Miles cost the corporation nothing, because after purchasing them from LoyaltyOne Inc. it then resells the points to booze suppliers who absorb the costs.

Forget the accounting magic. The money that suppliers are wasting on Air Miles is money that the LCBO could be capturing by driving down wholesale prices in lieu of a loyalty program.

This is a shell game. The only real winner is LoyaltyOne Inc., which makes a handsome profit at the expense of the taxpayers of Ontario because of higher wholesale prices that reflect the hidden cost of Air Miles.

Loyalty programs push the envelope by encouraging alcohol consumption. That’s why advertising guidelines issued by the Alcohol and Gaming Commission of Ontario (AGCO) specify that “a frequent buyer’s club concept would not be acceptable.” Any “frequent purchase discount program” is also prohibited at facilities that let you ferment on the premises, because it is “considered to be a practice that promotes immoderate consumption.”

Happily for the LCBO monopoly, it isn’t covered by AGCO rules.

• Ian Anderson, a former journalist and federal government official who is now a wine investor and grower, pointed out a couple of anomalies in high-end Bordeaux Futures that suggest “something is seriously wrong” with LCBO practices. He found it “deeply troubling” that the LCBO price for Lafite Rothschild 2009 — a top Bordeaux offering — was roughly 30 per cent below the international price (and far below the usual 25 to 50 per cent premium it charges for comparable wines).

The below-market Lafite sold out faster than most buyers could uncork their bids. The LCBO countered that there was nothing nefarious here: it simply got a better price from the wholesaler for Lafite, and gave precedence to longtime customers.

But why should a few favoured high-end wine investors and connoisseurs be allowed to profit from that huge differential, drunk on arbitrage? Why wouldn’t the LCBO pocket the difference so that all of us could share in the bounty as shareholders?

Loading... Loading... Loading... Loading... Loading... Loading...

As a taxpayer, I’m frustrated by the leakage from Air Miles, sky-high Bordeaux Futures, and mandated increases in wholesale prices. Intoxicated by its monopoly omnipotence, the LCBO needs to clear its head.

Martin Regg Cohn’s provincial affairs column appears Tuesday, Thursday and Sunday. mcohn@thestar.ca, twitter.com/reggcohn.