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Publishers want to cork wine mag
the Globe and Mail, May 3 2005
Food & Drink is a glossy magazine of recipes and ideas for home decorating and entertaining that is an extremely popular item in Ontario liquor stores, where it is offered to customers for free. In 2004, Food & Drink was the 10th-largest-circulation magazine in Canada, and in the 2003-04 fiscal year, it took in $3.8-million in advertising from beverage companies as well as automobile, perfume and household-product retailers. The Canadian Magazine Publishers Association (CMPA) says this money would have otherwise gone to private-sector magazines and it is asking the Ontario government to eliminate advertising from the publication. However, the LCBO says the magazine is a key promotional tool and using advertising offsets its cost to Ontario taxpayers.
Over the last 12 years, Food & Drink has gradually been transformed from a catalogue into a full-sized magazine geared towards promoting LCBO stores. However, Mark Jamison of the CMPA says it has one major advantage over private-sector magazines: It doesn't need to turn a profit. He says the magazine's big budgets for production, design and editorial content, and its exclusive access to LCBO retail outlets make it attractive to advertisers. Food & Drink also doesn't have the expense of maintaining a subscription base.
"This is a situation where a government agency is offering a service that's subsidized," says Jamison. "Our magazines cannot be subsidized. We have to break even or be profitable. It's very unfair and we think the government shouldn't be in the business of competing with its own citizens."
Brian Segal, president and CEO of Rogers Publishing, says his company has doubtlessly lost money to Food & Drink over the years. Rogers owns a stable of consumer and trade magazines, including Maclean's, Chatelaine, Flare and Canadian Business.
"This is a publicly held monopoly that is siphoning off a substantial amount of ad revenue from other magazines in Ontario," he says. "The LCBO is free to publish anything they want, but if they're producing a magazine, they should produce it without ads."
It's a subject that makes Walter Sendzik, publisher of the Vines Magazine, very angry.
His St. Catharines, Ont.-based publication has been covering wine and food for the past six years. Sendzik says the existence of Food & Drink makes it impossible for Canada to produce a top-quality magazine along the lines of the U.S. publications Food and Wine, and Gourmet. He says Vines Magazine has struggled to build a circulation of 20,000 while the LCBO gives out over 500,000 copies of its magazine for free, and he estimates he loses an average of $300,000 a year in advertising to Food & Drink. Sendzik is also frustrated because he's been denied permission to sell Vines in LCBO stores.
"I have spent six years and a considerable amount of money and we haven't got a lot of return," he says. "We're just breaking even. We can't compete with Food & Drink on photography and on printing. . . . Ultimately it hurts the consumer, because Food & Drink has wine suggestions, but not critical reviews."
LCBO spokesman Chris Layton says the magazine has been one of the LCBO's most successful initiatives and helps the agency fulfill its mandate of generating revenue for the government: He estimates the magazine led to a $5-million boost in beverage sales last year. Layton says the ad revenue offset the costs of producing the magazine, which benefits Ontario taxpayers. He doesn't buy the CMPA's arguments that advertising revenue would fall to private-sector magazines if Food & Drink weren't running ads.
"Food & Drink is valued by beverage suppliers because they see it as a vehicle that can reach their key audience -- LCBO customers," says Layton.
"There is no real private-sector magazine that directly competes with that audience. Without Food & Drink, most of the ad revenue would be directed to other marketing vehicles, like displays, in-store promotions and newspaper inserts."
Layton says Food & Drink contributes to the Ontario publishing industry by contracting out design, photography, writing and printing to private Canadian suppliers. The LCBO has turned down requests to sell Food & Drink on newsstands, he says, preferring to keep it as a promotional vehicle for its stores.
The Beverage Alcohol System Review is looking into all aspects of the distribution and sale of alcoholic beverages in Ontario, and it will present its recommendations later this spring. The Ministry of Economic Development and Trade, responsible for the LCBO, won't comment on the Food & Drink debate until after the panel presents its findings.