Barley Mowat 

First Tidbit from the Liquor Policy Review

with 11 comments

The first recommendation from the BC Liquor Review is here, and it kinda sucks. Sure, booze in grocery stores will be swell and all, but the nagging bit is that whole “maintain the current cap on the total number of retail outlets”–a cap which has been frozen for some years now. Go read the whole thing here. Retaining the cap is a dreadful mistake.

What this means is that your local grocery store need not apply for a license to sell liquor. No new licenses will be created. Instead, they will be forced to try and buy an existing LRS, close it, and transfer the license. For those not in the know, LRS licenses tend to be obscenely profitable, because you’re selling liquor in a market that restricts possible competition (see above re: license cap).

That, in turn, means only the biggest chains will have the cash piles to undertake this process, and that means the in-store retail experience will be focused on recouping the massive outlay required to set the damn thing up in the first place… which means selling loads of product… which means macro beer. Yaaaaay.


Pictured: “Selection”

Compounding this focus on mass market appeal and high sales volumes will be a disparity between the major stores and smaller food outlets. While the majors will be able to afford to close down a small LRS to pillage the license, the smaller shops won’t. You’ll start seeing situations where a big chain store will have an awesome “Alcoholz of the Werlds!1! W00t!” section on one side of the street while the smaller retail shop on the other side will just have plain old, stupid, boring food with those lousy “nutrients” the hippies won’t shut up about.

So, we just set up an massive system to reward the big, mainstream shops for being so big and mainstream. Yay us. Sure, in the end, I still think this is a small step forward, but I’m not so sure that the heel past the toe here.

Written by chuck

November 28th, 2013 at 11:47 am

Posted in Beer and You

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11 Responses to 'First Tidbit from the Liquor Policy Review'

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  1. Demand drives all Chuck. In the rest of Cascadia craft beer is prominent on the shelves of everything from whole foods to 7-11. The key is to look at the opportunities that are created, not fear what the changes may bring.

    We both know you’re talking about ol Jimmy P, and yes, he will macro up in some spots. That said I doubt his Urban Fare & Nesters Markets chains will go full on macro. For that matter Overwaitea Foods, Save-On-Foods, Coopers Foods, and Bulkleyvalley Foods. Tend to be more upper-midscale and carry local stuff as well. Then we have PriceSmart Foods & Buy-Low Foods, which no doubt will be PBR and Bud as far as the eye can see.

    cbjerrisgaard

    28 Nov 13 at 13:10

  2. That’s what we’ve being saying all along ! I own and operate an LRS and yes while profitable, it hardly is obscenely so. I provide for my family with an income similar to that of most professionals.

    Private liquor stores have had a big part in helping to foster this craft beer revolution and as you point out, once these licenses go to Save-on / Costco good luck finding a brew from Deep Cove or Four Winds… they just couldn’t manage to keep stock of such a small sku. No new breweries will ever be able to break into the market either.

    Small markets where the licensee does sell to a grocery store will never even catch a whiff of a craft beer, The OK Springs craft pack will be the closest they will see.

    You’re right that the little guy always gets fucked, except you seem to think that LRS operators are not little guys. we’re all independent business owners and most of us live and work in the community that we operate our stores.

    Thanks for your support.

    Scott

    Scott

    28 Nov 13 at 13:24

  3. A so called free market Government restricting the free market in alcohol sales, gee, who would’ve guessed? What a joke.

    Sadly, this will hurt the craft beer movement in BC as Scott points out. I won’t be holding my breath for any other meaningful developments from Yap’s review.

    KWL

    28 Nov 13 at 13:38

  4. I think we’ll see something between the south-of-the-border utopian result hinted at by Chris and the craft beer desert Scott describes.

    FWIW, I think we’d be a lot closer to Chris’ POV if the cap was lifted. A new license for just the initial licensing cost (as opposed to the cost of buying a marked-up license and business via LRS) would drive down the revenue needed to justify selling liquor, and allow (nay encourage) the store to focus on the lower volume but higher margin craft products.

    Sadly, by forcing the stores to go second hand with their licenses, the initial focus will be to turn the whole liquor section profitable ASAP (as well as discourage the higher-end, smaller stores from even considering entering the market). Maybe once the investment is paid off we’ll see a craft expansion a la Whole Foods in the US.

    The reality in the short term here will be a select few stores with liquor, likely limited to their “flagship” locations, or maybe struggling locations where the liquor license could be a major differentiator. Niche craft beer will continue to be sold exclusively in our existing LRSs.

    chuck

    28 Nov 13 at 14:08

  5. Chuck, I think you’re bang on here. A few “Special” grocery stores with a liqour store, and thats it. I don’t foresee a dystopian future controlled by Mr Pattison’s grocery chains.

    This may be good for the stores that currently stock craft beer, they won’t be able to compete by selling swill against $grocery_giant, so they will have no choice but to move up market into premium beer, wine, and spirits. — one can dream anyways.

    Chris M

    28 Nov 13 at 14:29

  6. To me the no new licenses is a deal breaker. Limiting the licenses creates an oligopoly and is not good for competition.

    Brian G

    28 Nov 13 at 18:08

  7. Alberta Costco’s are actually one of the largest buyers of Saskatchewan’s Paddock Wood beers. In recent years PW has tripled production to keep up. Don’t count on this trickle effect not slowly becoming a flood of business for microbrewers… I think the new ‘lounge permits’ and ‘grocery permits’ may be the door cracking an opportunity that will swing wide open.

    Toddy

    28 Nov 13 at 19:35

  8. Disappointing for sure. As progressive as BC is about allowing Micro & Nano Breweries you would think that they would see the light and acknowledge the fact that tax dollars and jobs were in their sights and they just just ignored it.

    Alberta may be easier to import beer into and buy any several retailers but it is impossible for micro and nano’s to actually brew beer without a multi-million dollar setup. If we could only get the best of both worlds. Alberta’s newest brewery Toolshed is contract brewing at Dead Frog in BC because they are too small to start up in Alberta. The world of beer in Canada really makes no sense.

    Own governments provincial and federal need to grow some balls and change these prohibition era laws and recognize the amount of revenue they are missing out on. It’s not just in beer tax but jobs and tourism – there is big money at stake here.

    Steve

    29 Nov 13 at 00:56

  9. Fine I say. Let the Buds and the Molsons fill grocery stores and leave LRS’ to carry the good stuff. More space for craft beer!

    Shawna

    29 Nov 13 at 04:07

  10. Couple of thoughts on this…the license cap may actually be throwing a bone to the LRS (I’ll avoid the whole LDB discussion covered on Twitter), basically giving them a chance to be bought out before being run out. I lived in Colorado for years (separate liquor store state), and the big sticking point with allowing full strength booze in grocery stores was always the concern about liquor stores being run out of business. They are still separate and I’d say they have a thriving beverage scene. Which leads to my next thought, What’s the big deal about buying in grocery stores anyway? Yes it would be a “nice to have,” but I’m concerned that it’s being tossed out as red herring to avoid making any real (tax, mark up, distribution)change. Really hope I’m wrong on that one and they do hit the real structural issues.

    Cheers!

    Dave

    29 Nov 13 at 17:16

  11. Put liquor in the grocery stores where there are no liquor stores in the community. That is what the Rural Agency Program is about. They already have this program and yet they ignore it. You have to be a minumum of 10 KM all weather year round driving distance from the the nearest liquor outlet to qualify.

    Bruce Brown

    10 Feb 14 at 16:11

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