OFF-SALE SYSTEM UNDER REVIEW
SLGA looking into restructuring pricing practises for outlets
A comprehensive review could change the way off sale vendors buy and sell booze, according to the Saskatchewan Liquor and Gaming Authority.
“Everything’s on the table,” SLGA spokeswoman Stephanie Choma said. “That’s the purpose of doing such a broad review.”
Under the current system, the approximately 450 off sale outlets in Saskatchewan — bars and restaurants licensed to sell beer and liquor — must purchase their stocks at retail prices. They receive a discount of between 10.25 per cent and 13.52 per cent on beer, but they need a markup to turn a profit.
The review began last year. Choma said it’s expected to conclude when the government unveils a plan sometime this fall, which could change the government’s sales structure.
The current system is “pretty unfair” because it forces customers to pay a premium, a Canadian Taxpayers Federation spokesman says.
“They key thing with off sales is that they pay retail price from an SLGA supplier,” said Todd MacKay, the advocacy organization’s prairie director. “So they really can’t compete based on price. They have to charge more in order to get their margin.”
For example, 12 bottles of Budweiser cost $25.99 in SLGA’s stores and $27.50 at the Sobey’s liquor store. A Saskatoon off sale reported selling the same product for almost $35, a markup of 35 per cent.
MacKay said while he doesn’t blame off sale owners for “doing what they gotta do to make a dollar,” he “absolutely” blames the government for making competition impossible.
“Off sales are competing with public stores but they’re not given access to the same pricing,” he said. “It’s a very unfair structure.”
Rick Rumberger manages the Candle Lake Golf Resort, which includes an off sale. He said he sets prices based on customer feedback, and that the store averages about $1 per dozen more than SLGA’s prices.
Rumberger said he believes it would “absolutely” be easier to compete if the resort could buy booze at wholesale prices, but he doesn’t expect the review to introduce wholesale pricing for off sale vendors.
“I just don’t see it happening, to be honest,” he said. “I think (the government) is moving that way, but I don’t think they want to upset the apple cart really quickly.”
Industry players recently created an informal group to lobby the government. Jim Bence, a member of the group and CEO of the Hotel and Hospitality Association, which represents hoteliers across the province, said one of the things the group wants is a single wholesale price for every vendor.
According to Choma, wholesale pricing “will be looked at in the context of what works well for government as well as (its) impact on revenues.”
In 2013-14, the government collected $632.3 million in gross revenue from liquor sales, of which $282.8 million, or 45 per cent, came from sales to commercial retailers.
“Can you make changes that make sense and are good for customers and stakeholders and government as well?” she said. “That’s what they’re looking at.”