‘Level playing field’ for liquor not so level: report REGINA
Lobby group says rule changes are creating problems for industry
When it comes to liquor legislation, Saskatchewan’s grades are improving. But it’s still no teacher’s pet, according to the latest Raise the Bar report card.
In part, that’s because bars and restaurants that offer an off-sale service can now purchase their liquor at wholesale prices. Similar businesses without off-sale outlets cannot. That has left some business owners feeling disadvantaged, the report states.
Saskatchewan was given a C minus in the report, which grades each province on its liquor legislation. It was published this month by food service industry lobby group Restaurants Canada.
“The Saskatchewan government has taken steps to modernize their whole liquor distribution system,” said Mark von Schellwitz, the group’s vice-president for Western Canada.
Action toward privatizing liquor sales and distribution has led to the province eking out an improved grade — up from D plus two years ago.
“However, in doing so they created as many problems as they solved,” von Schellwitz went on.
In October 2016, the Saskatchewan Liquor and Gaming Association (SLGA) implemented what spokesman David Morris referred to as the biggest change to provincial liquor sales regulations “since Prohibition.”
All liquor retailers now operate under one permit, he said, allowing them to sell the same products and operate during the same hours, creating a “level playing field.”
All of these retail permit holders are eligible to purchase liquor at wholesale pricing directly from SLGA warehouses, Morris said. This includes businesses such as bars, restaurants and hotels previously holding off-sale endorsements, which were effectively grandfathered to become retail permit holders.
Also, businesses without a permit are now free to purchase liquor from any of the roughly 700 permit-holding retail outlets in the province at negotiated prices, he said. Previously, they had to purchase from SLGA at retail prices.
No more retail permits are being granted at this time, Morris noted, but SLGA plans to examine the possibility of granting additional permits in the future.
Darren Carter is one of the owners of Regina’s Beer Brothers Gastropub, which doesn’t hold a retail permit. Despite being able to negotiate for lower prices, he sees the structure as unfair.
“It’s forcing me to buy my product from my competitor, who is currently getting a better price,” he said.
When the changes first came into place, Carter said those with retail permits started by reselling their products to other licensees at roughly a six per cent markup from the wholesale price. As time has progressed, the average markup has now increased to roughly 10 per cent, he said.
“When does it stop?” he asked, noting that if markups continued to rise, eventually they could approach SLGA retail prices.
Carter doesn’t blame business owners for marking up their product and admits he’d do the same were his business a retail outlet.
Still, he said, given tax changes at both the federal and provincial levels, coupled with the liquor markup his business is forced to pay, his profits are “disappearing.”
Regina’s Four Seasons sports bar holds a retail permit, but owner George Yannitsos says he doesn’t see it as an unfair advantage. Even though he can purchase at wholesale prices, he said, operating as a retailer isn’t without its challenges.
“I have a lot more capital tied into my inventory. I have a lot more administrative costs,” he said.
Furthermore, other businesses looking to purchase liquor can now shop around in a competitive environment, he said, noting that if buyers don’t like the price, they can quickly find another seller.
“Believe me, a lot of them shop around and negotiate” he said.
The bottom line, Yannitsos said, is that the changes have made for a “tremendously competitive” environment.