BC Liquor Updates: Wholesale Pricing & Premium Wine & Spirits
November 27, 2014 § 3 Comments
In a previous post I wrote about the change to wholesale pricing in BC as of April 1, 2015. At the time of writing that piece I was aware that the BCLDB were soon to release more details including the graduated mark-ups that will be applied to premium spirits and wine. Today they released those formulas and it seems that wines over $20 and spirits over $30 are set to jump significantly in price, whereas wines under $20 will stay roughly the same as what they are today.
To be clear I can only speculate on what the result of this pricing model will be, however my 20+ years in the business leads me to believe that this will have the effect of penalizing mid-range and premium wines and spirits and favouring lower end items.
The fact is that consumers are value driven and understand that a tax increase does not equate an increase in value… no matter how good the retail store they are purchasing from is. I fear that the real effect will be to chase premium consumers out of premium price points, exchanging them for good values at lower prices. Note that the consumer is not likely to increase the quantity they purchase, they will simply spend less. On the supply side, small artisan producers can expect slower sales for their products making it harder to justify selling them in B.C. and will be forced to either seek other markets (Alberta, Asia, US, other Canadian Jurisdictions), business channels (divert volume from retail to restaurants or ‘cellar door’ sales), or simply close their doors.
There are those, however, that are very pleased with the new calculations. Retailers in Alberta and Washington State will be eagerly expecting windfall gains as more BC residents load up or make special trips to save hundreds of dollars on their purchases. I can tell you that this happens right now within the specialty spirits category. The most ardent Scotch collectors have long been making most of their purchase outside of BC.
Admittedly I am not privy to the discussions and calculations that saw the powers that be opt for this model vs a flat tax or less oppressive percentages. I can only speculate what their short and long term motivations are and what the results will actually be. However, although I remain hopeful that they will take another look at the numbers, I believe the smart move would be to find a model that reduces the potential of sending more money to Alberta and pushing artisan producers out of business.
Attached is the pdf as issued by the BCLDB regarding the new formulas.
As always let me know your thoughts and feedback.
May Quality Be Ever In Your Glass
The Dork Uncorked
Tagged: Ad Volerum, BC Liquor Distribution, BC Liquor Industry, BC Liquor Stores, BC Spirits, BC Wine, Cheap Liquor, Craft Spirits, Flat Tax, Liquor Pricing, Liquor Retailing, Liquor Stores, Wholesale Pricing