BC Liquor Store Sunday Openings: A Big Glass of Kool- Aid

July 31, 2012 § 2 Comments

On the heels of a ton of expensive advertising the BCGEU released the results of a poll done by Angus Reid that concluded that 75% of British Columbians support the opening on all BC Liquor Stores on Sunday’s. I have to say their timing was excellent as it gives a veil of legitimacy when a credible company like Angus Reid does the poll. I doubt the conclusions were ever in question.

It seems that the BCGEU, and by abstention the BCLDB, want you to believe that BC Liquor Stores are profitable, that the revenues that they are looking to generate are incremental and are not already being collected by the Government, and lastly the only way to collect these revenues is through public stores.

I guess the saddest part about all this is that there is no effective group that is prepared to take on the Goliath that is the BCGEU, and that large news companies such as the Times-Colonist, The Province and the Vancouver Sun didn’t ask a question as to the real legitimacy of the poll before publishing it.

First, BC Liquor Stores are not profitable. They don’t generate revenue. The vast majority of them are the most inefficient tax collection operations on the globe. The minority, conceivably would be profitable under traditional measures but BC Liquor Stores are not measured traditionally or individually. BC Liquor Stores don’t pay for the product they sell. There is no public reporting for each individual store’s overhead costs including labour. If you can’t include these costs you can’t determine profitability.

It has been proven on numerous occasions that the government retains more revenue by selling product through private stores and not public ones. The best guess is that 30% of the shelf price is eaten up by operational costs of BC Liquor Stores, whereas the cost of selling to private stores is 14% less than selling through public stores.

Secondly, the revenues generated are already being generated by the private sector. Opening BC Liquor Stores on Sundays is a shell game and simply moves the revenue from one store to another.

Lastly, the fact is that neither government stores nor government distribution is needed to collect tax revenues. Every market in Europe, Asia, Australia, South America, Africa, Alberta and most of the US proves this (Pennsylvania and Utah have similar markets to BC and the rest of Canada, minus Alberta). Any cost that is not pure tax collection takes money out of health care, education and the like.

Are you ready for a twist? If BC Liquor Stores had to compete like any other retail industry, then I don’t care when they are open because I know they must be a real profit centre and that means that they deliver real dollars to government. It would mean BCGEU members in the BC Liquor system create real economic value like other retail organizations and the foundations of a real and truly awesome liquor industry will exist.

The opinions expressed above are exclusively my own and should not be attributed otherwise.

Privatizing Liquor Distribution in BC A Fallacy

July 28, 2012 § Leave a comment

Last week the minister responsible for the BCLDB, Rich Coleman, announced that a short list of 4 competitors for rights to Liquor Distribution in BC. Shortly thereafter the political rhetoric reached new levels from both the left and the right. All of it, in my opinion, was crap and did not see what makes the whole issue a fallacy.

The fact is that most beer, wine, spirit and cider products in the province are privately distributed. Labatt’s, Molson’s, Sleeman, Okanagan Spring and Pacific Western Brewing account for about 80% of all the beer sold in BC yet they are all distributed by privately held companies. The only thing they are responsible to the government for is submitting the correct paperwork that accompanies their submission of tax (mark-up) dollars collected through sale of the products they distribute.

Wines such as Mission Hill, Naked Grape, Copper Moon, Peller Estate, Joie, Burrowing Owl, Sandhill, Hillside Estate, Tinhorn Creek, Road 13 and Quail’s Gate just to name a few, are all privately distributed. Again the only thing the distributors must do is submitt the paperwork and tax revenues collected.

Ciders such as Growers, Okanagan, Extra, Strongbow, Merridale, Sea Coder, etc. are privately distributed.

Every domestic brewery, winery and cidery have the choice of distributing privately or through the BC LDB.

I know what you are asking “So what does the BCLDB distribute”?

The only items that at present must be distributed by the BCLDB are spirits, spirit based beverages, import wines, and import beers (not including Heineken, Stella Artois, Miller Genuine Draft just to name a few).

Most of the revenues generated by the sales of liquor in BC are from privately distributed products. Nothing more needs to be said.

The opinions expressed here are my own and must not be attributed otherwise.

Private Liquor Retailing vs Public Liquor Retailing: Operational Differences Part II

July 27, 2012 § Leave a comment

In Part I I focussed on a number of the largest differences between public and private liquor retailing in BC. Part II showcases four behind the scenes differences that are a big deal.

The first of which is the ability to transfer product between stores owned by the same people or group. At present BC Liquor Stores can and commonly do transfer between their own stores. That means if a product is moving in one store but not another, BC Liquor Stores can legally move product from one store to another no matter where the two stores are located. It is illegal for private retailers to transfer product between private stores even if those stores are owned by the same person, or group.

Second, on average 30% of revenues generated by BC Liquor Stores are through the back door. In other words by sales to licensees such as restaurants and private liquor stores. It is illegal for private retailers to sell to licensees or other private liquor stores.

Third, any new product or a product that has arrived back into inventory gets uploaded into the computer systems at the BC LDB before anyone, including BC Liquor Stores, can order it. However BC Liquor Stores have access to order these products 2 days before private liquor stores.

Private liquor stores pay business taxes to the province that are calculated per store, thus the operations of each individual store are subject to traditional accounting practices. BC Liquor Stores are not subject to business taxes.

Part III will wrap this all up and make some conclusions as to the best plan of attack moving forward.

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