Late last month, the Liquor Control Board of Ontario began offering its products to federal departments and agencies at a 49 per cent discount from the retail price that everyone else pays.
The cut rate on alcoholic beverages is also available to foreign embassies, high commissions, consulates and trade missions, most of whom are located in the Ottawa area, within the LCBO's jurisdiction.
And the favoured buyers will be exempt from an LCBO policy dating from 2001 that sets minimum prices for products, under its "social responsibility" mandate.
The new pricing, approved by the board of directors on April 25 this year, replaces an older, more complex discount formula that was based on the individual cost of products.
The now-uniform 49 per cent discount is applied to the basic retail price, but before HST.
A case of imported wine, which currently costs consumers $203.18, is now priced at $104.80 for this special group, including HST and bottle deposit. Under the old discount, embassies and others had paid $131.27 — for an extra savings of $26.47.
Imported non-U.S. beer is similarly cheaper, at $28.68 a case versus $42.56 under the old discount. Ontarians currently pay full price at $53.93.
Ontario wine has also become cheaper, though imported booze will go up in price, to $175.63 a case from $143.91, compared with the $342.07 everyone else pays.
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LCBO spokeswoman Heather MacGregor said the discount policy was changed as the agency moved to an automated sales system from a manual version previously used for private orders.
"This was an internal recommendation to improve systems controls, sales reporting and monitoring of embassy sales," she said in an email.
"A new, more simplified pricing formula, based on a discount from the retail price, had to be developed because the old pricing formula could not be accommodated with the LCBO's existing POS (point-of-sale) system."
The agency sells about 20,000 cases a year under these deep-discount rules, she added, or less than $1 million in sales annually.
"More than 90 per cent of the products ordered are imports," MacGregor added.
The agency was not able to cite the historic value of sales to the federal government, but said there were none in 2012-2013, the year before the new discount pricing began.
The Canadian Press obtained details of the discount policy change under Ontario's freedom-of-information law.
The LCBO also allows deep discounts on sacramental wine purchased by bona fide religious groups.
Federal policy imposes limits on the purchase of alcoholic beverages with taxpayer dollars, forbidding such hospitality at events attended only by public servants, for example.
And hospitality events at which alcoholic beverages will be served, such as for visiting diplomats, must be pre-approved by ministers or senior officials.
The Bank of Canada in May this year spent $30,000 on several farewell bashes for outgoing governor Mark Carney, which included fine wines.
Last month, an economist at the University of Waterloo released a study suggesting LCBO retail prices would be reduced if the province allowed more competition from private operators.
And in a 2011, Ontario's auditor said the price of alcohol is too high in the province, and that LCBO revenues were not being maximized.
The agency said last month it generated record sales in 2011-12, the last year for which figures are available, providing $1.7 billion for the Ontario treasury.