EN FR

Customers deserve fairness in liquor competition

Author: Todd MacKay 2015/09/28

Selling liquor in Saskatchewan is a rigged game. The different players have different rules and, even worse, different pricing structures. And it adds up to a raw deal for Saskatchewanians buying a six pack of Pil or bottle of rye.

But what if it wasn’t rigged? What if every off-sale and rural franchise could deliver the same selection, service and pricing that’s available in the new private stores such as Sobey’s and Co-op? Is there any doubt that consumers would be the winners in that kind of competitive market?

The Saskatchewan government will unveil a new liquor policy this fall. The success or failure of the new policy will rest on one simple issue: fairness. If the government continues to enforce an unfair pricing structure, the new policy will be a failure regardless of any other tinkering. If the government delivers fairness in pricing, every liquor retailer will be free to compete and the reform will be a success.

Theoretically, there are lots of competitors in the liquor arena: 450 off-sales, 190 rural franchises, 75 government stores and now four private full-line stores. But it’s not a fair competition.

Here’s how the liquor retailing game is currently rigged.

Liquor franchises, the rural grocery stores that sell booze along with bread and milk, have to sell liquor at the same price as government stores. Then the Saskatchewan Liquor and Gaming Authority provides a 15.3 per cent discount back to franchises. However, most franchises aren’t allowed to sell standard beers such as Pilsner and the government dictates which beers they can sell cold.

Off-sales, such as hotels and brew pubs that sell liquor, face a completely different pricing structure. They have to buy booze from the SLGA at retail prices and there are no discounts, but they can sell it at any price. That’s why a case of beer or a bottle of vodka costs a lot more at the local hotel. Off-sales can buy a limited selection of standard beers (e.g. Pilsner) directly from brewers and get discounts of 10.25 per cent to 13.52 per cent. And off-sales can put all kinds of beer in the fridge.

Then there are the four full-line private stores such as Sobey’s and Co-op. Those stores get a discount of 16 per cent off of the government retail price on everything they buy. Technically, the government lets them set their own prices, carry any products they want and make their own decisions as to what should go in the fridge. Of course, they can’t sell for less than 16 per cent off the government store price or they’d lose money. But at least this little bit of freedom is obvious to consumers who are flocking to the new private stores.

Industry members are clearly tired of being forced to give their customers a raw deal.

In its submission to the Saskatchewan government’s liquor review, the Saskatchewan Liquor Vendors Association calls on the government to “adopt the same discount structure for private franchises as the private full-line liquor stores currently receive.”

The Saskatchewan Hotels and Hospitality Association, which represents most off-sales, makes a similar point and calls for a “single uniform wholesale price for all retailers.”

Restaurants Canada demands to “be granted equal access to discounted pricing.”

The simplest way to achieve fairness would be for the government to leave liquor retailing, allow responsible private stores to take over, and then play its proper role to regulate and tax the industry.

But even if the government wants to hold on to its liquor stores it must ensure fairness by giving every liquor retailer access to the same prices, selection and regulations. That will put every off-sale and rural franchise on the same level playing field with government stores and the new private stores. For consumers, that would be the biggest step forward in liquor retailing since Prohibition.


A Note for our Readers:

Is Canada Off Track?

Canada has problems. You see them at gas station. You see them at the grocery store. You see them on your taxes.

Is anyone listening to you to find out where you think Canada’s off track and what you think we could do to make things better?

You can tell us what you think by filling out the survey

Join now to get the Taxpayer newsletter

Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

Join now to get the Taxpayer newsletter

Hey, it’s Franco.

Did you know that you can get the inside scoop right from my notebook each week? I’ll share hilarious and infuriating stories the media usually misses with you every week so you can hold politicians accountable.

You can sign up for the Taxpayer Update Newsletter now

Looks good!
Please enter a valid email address

We take data security and privacy seriously. Your information will be kept safe.

<