Beer, Bags and Profit

Politicians continually amaze me with their lame attempts to spin what they say in an attempt to make it more palatable to their employers, the general public. There have recently been two such examples; beer and bags.

As documented in a recent Toronto Star article, the minimum price for a case of beer was raised to $25.60 from $24.00, an increase of 6.7%.  It was also noted:- “That 6.7 per cent increase in the floor price of a case, bottle deposit excluded, has nothing to do with supply-and-demand, production costs, overhead or distribution expenses.”

In other words, let’s give the breweries some additional profit. Of course, it also has the real potential of increasing the provincial retail sales tax collected on every case of beer sold at the new price.

The article also includes this tidbit of spin:- “ the Liquor Control Board of Ontario sets minimum prices as part of its "social responsibility" mandate established in 1993. Translation: If alcohol is too cheap, you may abuse it.”

To cite this reason lacks credibility unless they truly believe a 6.7 cent/bottle increase could make a substantial decrease in the beer consumed. Surely, no politician, or executive of the LCBO, really believes the public will buy into such nonsense.

Be honest, it’s all about profit, which after all isn’t a bad thing.

A January 12, 2009 article in the Globe & Maildelves into Loblaws jumping the gun by 6 months on charging 5 cents/bag used to carry your weekly purchases.  The hope is that more and more people will opt to use reusable bags.

None other than expert Mayor David Miller estimates “the average Toronto household uses about eight plastic bags a week. On a yearly basis, that translates into about 460 million plastic bags that end up as landfill or litter.”

The question is to what extent will consumers buy into the concept or will they just pay the price for the sake of convenience. At least in Toronto, there are now two options:-

• Use reusable bags:- Elimination, or substantial reduction of plastic bags is the objective of the whole exercise. When one considers the economics involved it is surprising all grocers, chains and independents, did not opt for this approach years ago. Plastic bags cost approximately 2.25 cents/bag. If Miller’s estimate is correct, that means there is an opportunity to reduce costs, in total, by $10.35 million; i.e. profit, which is after all the objective of all businesses. To top it all off they get to brag about how “green” they are.
  
  There other issues consumers must also consider with this approach. How do they carry those items such as meat and fish, now placed in separate plastic bags because of potential leakage and or smell? Do they pay 5 cents for them also or must they buy and carry smaller bags in which to put these types of items.  How often must reusable bags be cleaned and sanitized to remove spillage, leakage or whatever? Where do the bags for waste paper baskets and under-sink bins etc in their home come from now? Buy more bags, and in Durham, they may need to be transparent. Dog owners, particularly those who walk their dogs, will need to purchase plastic bags for stoop and scoop purposes. As a dog owner, for several reasons I have rejected the idea of taking a plastic bag to collect the poop, dumping it down the toilet and then cleaning the plastic bag.

• Pay the price for convenience:-  Using Miller’s estimate of 8 bags per week of the average Toronto household, the cost will be 40 cents, certainly not a “green” approach but tempting at that price. As one homemaker put it “"I spend $300 a week at Loblaws. Now they want me to pay for the bags, too?” On the assumption a bag will carry on average $10.00 worth of items, I suspect having to tote 30 reusable bags into the store would be more of an issue than the $1.50 to buy them.
  
  Interestingly, as I expect grocery chains realize, this is even a more profitable approach for them. In addition to reducing their costs by $10.35 million as noted above, if all 460 million bags are purchased at 5 cents/bag, there is another $23 million/year to be made.

It is now the Toronto consumers’ choice; is saving 40 cents/week plus changing one’s habits worth making our environment somewhat “green”er?  

In the spirit of openness, take a peek at The Truth About Plastic Bags website for another perspective on the issues most often put forward about plastic bags.
 
From my perspective, if plastic bags are truly such a large problem why hasn’t the Province acted to ban them in a manner that doesn’t make the providers the only true economic winners.

Comments

[Sam Jones]

Hi Bruce,

Wow!Great post,sounds very interesting :)).This is Sam a community member at BagsOnTheRun.com,a premier Reusable Bag community in USA.
Seeing your blog I found that you are also engaged in a noble cause of making the earth more “Green”.And thought perhaps I could convince you to give the website www.BagsOnTheRun.com a look and link to it from your great blog.I am sure your visitors will find the website very interesting.

Regards
SamJones

[Duane Cook]

Bruce, you've hit a sore spot with me!

No matter how you make the switch from plastic bags the current cost structure will change. When I lived in Germany 10 years ago, we had to pay for bags. Funny thing was, we were almost the only ones doing so as everyone else seemed to have folding crates that hold a lot of food. I think that is where this policy will take us eventually. Banning them outright, as China did, would be faster and more effective but we have to move very slowly pandering to all the whiners and business interests.

There are even sustainable solutions for your dog poo problems that are reasonable convenient if you take the time to look into it.

By the way, who do you think paid for that "truth about plastic bags" site? Perhaps the companies making billions selling plastic bags? Why don't you take a walk down a country road and see where a good number of these easily recycled bags end up? (in the ditch) Better yet, visit China where there are trillions of them trampled into mounds along the side of the roads.

[Bruce Galway]

Duane; Thanks for your comments.

I found your comments on your experience in Germany interesting. Our experience in visiting China was there was very little litter of any kind in the areas we travelled through. In fact that was true for all the countries we visited in Asia.

Because we all have different filters, there is my truth, your truth and the truth. Of course I understand who pays for the "truth about plastic bags" web site. What they publish is their truth ...

Thanks again.