Andrew Auerbach (00:01.168) Well, hello everybody. Welcome to another edition of Beyond the Bank. My name is Andrew Orbach and I am delighted to be joined by Gene Blacklock, the other co -founder of Delisle Advisory Group. We thought we would give you a bit of an inside look at our monthly column that we write for the Globe and Mail. While it's 700 words, it's quite a bit of work in terms of thinking through

the topic that we want to write about and of course doing the research. The most recent one was quite interesting. It was really trying to put the economic costs of alcohol use in our society and contrast that against other substances such as tobacco. This all started interestingly as we were strolling through the aisles of the grocery store and

you know, at the rows of junk food, I remarked to Jean that, you know, processed foods and the contribution to obesity has such a massive cost that we should probably talk about that, you know, in terms of thinking about what the societal costs are for, you know, all the processed foods we consume in North America. And then things really started heating up on the notion of alcohol availability in Ontario with

Doug Ford's decision to make alcohol more available in many more outlets across the province. And so that's what really brought us to this article. And Gene was the major architect and researcher of this one. So over to you to maybe give a bit of a highlight and a little bit more color on the article.

Jean Blacklock (01:49.632) Okay, thank you. Yes, going back to the processed foods for a moment, just today when I was reading the newsletter that I get from the Times every day out of Britain, there was a note in it that the new Prime Minister, Stammer, is going to do something that Boris Johnson said that he would do, and that is ban junk food ads on social media and television starting next year in Britain. With the note that

Britain's, and I'm reading here, Britain's worsening health would blow 100 million, 100 billion a pound hole in the public finances. So I do think that that is a worthwhile topic for us to look at down the road for sure. But before I launch in the tobacco and alcohol research that I did, I would say that similar to the processed foods,

Writing about these topics is different than the topics that we usually write about, such as the market, the debt, housing, all of that. Because with them, it is about numbers and it is about economics and there's not a lot of personal in it. Whereas when it comes to the consumption of junk food, AKA Doritos and potato chips, when it comes to the use of

alcohol and tobacco, I think you and I are both aligned with, you you do you. If an individual follows the rules, chooses to drink and of course doesn't drive, chooses to smoke and stays in the designated areas and, you know, eats the foods that they want to eat, I think you and I are all over that on an individual level. you know, not a big brother approach when you and I are chatting about it. But...

What is interesting is that if you take it beyond the individual level on those three categories and others that have been looked at such as opioids, cannabis and so on, and look at it from a societal level, it's just fascinating the billions of dollars to society on all sorts of different metrics such as policing, healthcare,

Jean Blacklock (04:09.196) know, rehabilitation, all sorts of costs, and net that against the revenue that's available for those products to government. it's a huge cost to society. So diving in then, as we said in our piece, the Canadian Substance Use Costs and Harms Report in 2020 was a very exhaustive

report and very interesting and the long and the short of it is that in 2020 when this report was written tobacco's net cost so the revenue to the government less the costs of health care and lost productivity and so on was 3 .7 billion dollars and the net cost of alcohol is twice that at 6 .4 billion. Canada takes in

$13 .6 billion in revenue, that is net of the cost of running the liquor stores and all of that. That's their net income on it. And then applied against the social cost of 20 billion, the cost to society overall in Canada is $6 .4 billion. So before I move into each of those different substances, perhaps I'll pause there if you have any questions in what I've said so far.

Andrew Auerbach (05:28.016) Yeah, absolutely. I mean, first, the the number is staggering, you know, $3 .7 billion a year. It does actually kind of I think parallel the number of the other pieces we wrote about, which is just understanding that whether it's government spending, or it's consumer spending, ultimately, it's our spending, it's our spending today, and it's our spending for future generations and

One of the themes that I often try and highlight in the pieces that we research is just understanding that that is not cost less, that in fact, somebody pays for that, whether it's going to be the issuance of debt by governments or whether it's going to be obviously the personal costs that are, you know, very, very significant. And so I think your point's such an important one, Gene, that this was really to me talking about the societal implications from a financial

perspective and the you do you piece is worth highlighting that, you know, we are very much this is not an editorial about, you know, preaching people to reduce their alcohol consumption is simply understanding once again where we spend money as a society.

Jean Blacklock (06:42.068) That's right, and I think similarity in the other pieces that we write is when we talk about reducing debt overall, you and I often chat about the fact that we're not suggesting that any particular government program should go. Every, most, not every, but most government programs, most things government can do have some important measure.

whether it's keeping the parks clean or whether it's our highways or, you know, there's a million good things that society can do with taxpayers' money. The point is that if the taxpayer's revenue is X and you want to spend X plus 10, even the best program is worth taking a look at. So I'll move into tobacco then. As I said, as we said in our column,

We've been hammering away at tobacco for 60 years now. And I think everyone that's our age can remember basically growing up in a house full of cigarette smoke and working, you know, the early parts of our career in an office with cigarette smoke. And that is definitely no longer the case. And that can be seen very clearly in the graph done in the 2018 report, Seizing the Opportunity.

the future of tobacco control in Canada, which showed that in 1965, a full 60, 60, 60 % of us were smokers. And in 2020, it's 10%. So that is a massive reduction. And that has not come without a lot of concerted effort on the part of all of us in government. we've lived it. You don't need to hear my research on it. We see what the...

cigarette packages look like right now. They're not very appealing. We know the taxes that are on them. We know how difficult it is to buy cigarettes. You have to ask. As you well know, I'm not a smoker, so I'm not exactly sure how you go about getting cigarettes. I think they're locked up. You ask for them and then pay a lot of money for them. So, you know, we've made it difficult in, at least in North America, to enjoy tobacco.

Jean Blacklock (09:07.402) without a lot of rules. That said, it still remains really costly. But I would say before I move on to alcohol, that the usage of it and the revenue obtained in Canada has dropped since 2020 when that report was done. The revenue then was 7 .5 billion. In the next year, it dropped to 7 .1.

And in 2022, 2023, it dropped to 6 .3 billion. So people in Canada are continuing to quit smoking or smoke less. And that 2018 report that I mentioned issued a call to action of reducing Canadian smokers to less than 5 % by 2035, which based on those graphs certainly seemed like a feasible goal.

It just is no longer something that is really socially accepted. Would you agree with that?

Andrew Auerbach (10:12.196) Well, I think the contrast is is such a good one because you know, we find ourselves now in a situation where people don't remember, as you just reminded us that as today, we think about social drinking, we think about the way we consume alcohol, as just normative. That's what it is. I mean, that's the way it is. And yet, when you contrast that with tobacco, you know, you're absolutely right, just how shocking it would be today.

if somebody lit up a cigarette in a restaurant or on an airplane or in your office, would be shocking, be the word. And yet that was the reality. You and I earlier in our careers, you know, often joke about this, that, you know, you would go to the smoke -filled room or the, what I used to find jarring is when I would travel, when we implemented these no smoking measures in Canada.

and the U S if I would go to other countries, say in Asia and they, you know, I would go into a conference room filled with cigarette smoke, how shocking it was. and I think it's a good reminder that at the end of the day, there were significant health costs and societal costs. And so by taking some approaches, it doesn't mean you're banning smoking. You're simply addressing this significant cost to society.

And I think that is a really good illustration of how you were guiding us with alcohol as we think about what might we do about all this.

Jean Blacklock (11:46.065) Yeah, that's right. You know, none of us, like I think in that as adults anyway, badger our friends that choose to smoke. You know, they make their decisions, but yes, it is absolutely at a societal level, something that's very costly and, you know, continues to really add up even though people are

smoking less. Now over to alcohol, as I said, it's twice the cost to Canada as tobacco. And the tricky piece with it, and you know, we, I have personal knowledge of this, is that we are nowhere in 2024, where Canadians were guided to go in 1965, in terms of the use of tobacco. In 1965,

I don't remember it myself, I was basically a baby, but in 1965, with the causal links to smoking and the new science at the time about smoking, mean, it just immediately, the government started hammering away at how we all needed to stop. Whereas in previous decades, smoking even was advertised as having some health benefits. Fast forward to now, with double the cost of alcohol,

We are just not seeing that in society because having a glass of wine at the end of every day is considered very normal drinking or light drinking even. And it isn't something that's set up as something that an issue that anybody really needs to look at unless they're in the situation of really apparent problems with alcohol in their life.

In other words, an alcoholic, someone that isn't going to work or someone that is, life is really negatively affected by alcohol. But by and large, social drinking is not being criticized in a way that, quote, social smoking was being criticized back in the 60s, 70s and 80s. Would you say that's a fair statement?

Andrew Auerbach (14:01.028) Yeah, absolutely. And I think it's a fair contrast. you know, to your point about the processed foods piece you talked about earlier, there are costs to these things. And I think that that contrast is a fair one between alcohol and tobacco.

Jean Blacklock (14:17.959) Right. Well, and so then what I want to move to is the Canada's Guidance on Alcohol and Health, the final report of 2023. we mentioned it in the column and it's 80 pages long when it came out because of my personal interest in this as I have been over the last several years, moving from being someone who would have a glass of wine a day to not drinking. I'm interested in the topic and I read it from, you

front to back and it's a very, very well written report. And what made the news about it and created a real pushback was the fact that contrary to the previous guidelines around drinking, which were one to two a day for women, I think it was two to three a day for men, it went down to really zero is best.

and one or two drinks is low risk, one or two drinks a week is low risk. And so there was, when this was announced back in 2023, like a lot of pushback about that. But it's interesting that if you read the report, the reasons that they give for it is, and the sharing of the science is, it's pretty interesting.

For example, they stated full out that alcohol is a carcinogen that can cause at least seven types of cancer. It's connected to heart disease. The belief of, you know, decade ago that a glass of wine a day was good for your heart has been definitely disproven. Liver disease and violence and driving. you know, on the one hand, it's not that different from the science that came out around tobacco.

in the 60s, but it has been received by society and the government in a much different way. Although there were a number of letters written by various organizations, as we mentioned in the column to Doug Ford, that is not really the, I would say, the general sentiment right now. And I hasten to say that just because I have decided for

Jean Blacklock (16:37.606) health benefits, sleeping better and all of those things to not drink. Once again, I don't have a personal view that people should cut back or quit or anything like that. I just find two things interesting. One, the sheer economic cost to Canada of it. And second, that in the face of such clear science and 80 page report by, I don't know, three dozen research, more than that.

so many researchers and the report itself has basically been shelved. I find that pretty interesting.

Andrew Auerbach (17:15.268) Why do you make of that?

Jean Blacklock (17:18.211) What I make of it is that that glass of wine at the end of the day, each day for people, is important. That there isn't the feeling or if the education hasn't been done to really make people think about whether they want to cut back, although there are many excellent suggestions in the report itself about ways to look at it and statements such as

any reduction is good. The report is not written in a negative hammer over your head way at all. I just think it hasn't broken through to have two people who drink say, you know, nine to 15 drinks a week as the previous guidelines suggested to really make them think about that.

Andrew Auerbach (18:12.398) Yeah, that is interesting. And I, I, I think that the interesting piece about it as well is back to your point of the contrast that there probably was a time with tobacco that the critics, would have probably had similar silent treatment as I'm sure there were articles in the early days written about the costs of tobacco. yet

You know, to your point of that earlier contrast, when I started at Canada Trust, Canada Trust was owned by Amasco, a big tobacco company. And, you know, at the big meetings, they would have not just glasses of wine being passed around, but cigarettes, you know, we're being, we're being passed, we're being passed around on trays to, to help yourself to a cigarette. And, you know, again, that just wouldn't happen now. And I think just not being resistant.

Jean Blacklock (18:56.26) D

Andrew Auerbach (19:08.004) to information. mean, one of the things we're always talking about in our business is, you know, this notion of being informed and educated and, know, just ignoring something doesn't make it not so and then form an opinion on it. It doesn't mean to your point that you have to cut back or change or do anything, but to be informed, I think probably is a reasonable expectation for everybody and then assess risks personally, make decisions, but be aware that

I think to your point, because it didn't get the airplay, a lot of people would not be aware of how pronounced that guidance has been.

Jean Blacklock (19:46.104) Yeah, it is very interesting. I could go on quite a bit about it because I have read a lot of literature and just as an example, women in the 30s and 40s that are raising children are often exhorted to do all sorts of things for wellness. Well, frankly, I think women of every generation

right now on social media and so on are told to do yoga, do this, do that, like all in the name of wellness. And yet memes and so on are often about, it's wine o 'clock somewhere, this is mommy's juice in a mug that's clearly for wine. It is something that in the face of a real interest in wellness overall, it's kind of remained a sacred cow.

One last thing before I stop my review of research. I mentioned earlier that tobacco is going down, tobacco revenue is going down, know, 7 .5 in 2020 down to 6 .3 only two years later. The opposite is true of alcohol. I think the pandemic was hard on people and

drinking, people drank more frankly, because the revenue in Canada for alcohol in 2020 was 13 .4. It then moved the next year, which we're right in the middle of the pandemic, to 13 .5. This is billion, so we're talking $100 billion difference, and then moved another 10 million the next year.

It isn't as tobacco usage is going down, alcohol use is going up. So just an interesting point there.

Andrew Auerbach (21:48.304) Well, a very interesting overview of this article. Anything else to throw into the mix, Gene?

Jean Blacklock (21:53.366) No, I don't think so. It's been fun looking at it. I guess I just would emphasize again, isn't Andrew and I making any particular suggestion as to what a person should do with their drinking or tobacco habits or cannabis. None of it. It's just interesting to look at the economics. As you said a moment ago, Andrew, be aware of them.

Andrew Auerbach (22:17.294) Absolutely, and I think that's probably a great place to close. This article did get a lot of reaction, I'm sure both positive and negative. as I'm always reminding people, it is an opinion piece and this is our opinion, not our fact. So everybody is welcome to have an opinion on the topic, but it was certainly an interesting one to cover. Well, let me go ahead, Gene, sorry.

Jean Blacklock (22:40.835) Yeah.

No, I was just going to say everyone can disagree and as we've said before, I'm sure in the comments under our article lots of people do.

Andrew Auerbach (22:51.428) Yes. Well, let's, let's close here. If anybody has any thoughts for either topics you'd like us to cover in our monthly column with the globe or guests you'd like to see us invite to the Beyond the Bank podcast, please send us a note to pod at delialadvisory .com. Thanks very much, everybody.