New year brings new liquor pricing model

Posted : 01/15/2019


Whitehorse Daily Star
By Palak Mangat
January 7, 2019

The Yukon Liquor Corp. (YLC) is changing its pricing structure to shift from a retail pricing model to a wholesale one.

The announcement for the January changes came in December – several months after concerns were shared by local bars and restaurants about price hikes some said they were not consulted on.

Among the notable differences is that draft beer will on average not be seeing a change in prices.

Wine prices are also expected to drop, but will be offset by an increase in spirits.

It’s in efforts to keep the pricing model as revenue-neutral as possible, YLC president Matt King told the Star.

“One of the things we heard was that there’s certain categories that are quite sensitive,” he said. “The main one being the beer category.

“So we made sure that the markups on draft beer will effectively remain the same.”

Beer was the choice of drink for Yukoners, at least for the year between March 2016 and March 2017, federal statistics show.

As reported in May 2018, Statistics Canada shows that Yukon liquor stores, agencies and retailers sold a total of $37.9 million in alcoholic beverages – with beer leading the way, making up nearly half (44 per cent) of the sales.

Meanwhile, packaged beers and ciders will see a retail increase of about seven cents, and the wholesale price is to drop by 33 cents, a YLC spokesperson confirmed.

Retail prices for wine are to drop by 19 cents per unit and 57 cents for those looking at the wholesale price. Spirits are to see a more significant bump by $1.02 per unit for retail and a 17-cent increase for wholesale costs.

“This is the continuation of the pricing review,” King said in reference to events that occurred last summer.

That saw the corporation send a notice to wholesale licensees detailing planned hikes ahead of the Canada Day long weekend – only to reverse the decision shortly afterward, after some local bars and restaurants told the media they had not been consulted.

One even told the Star then that it had not heard anything of the hikes (which would have seen draft beer and ciders bumped up by about 27 cents, among other things) until media reports surfaced.

King spoke to the matter then, acknowledging that a longer notice than the 15 days given would have been a better call.

(For background, the notice was dated June 15, with the date by which prices were to take effect being listed as July 1, before plans for the hike were axed.)

The criticism also led Premier Sandy Silver to weigh in, clarifying that his government had not approved any increase to draft beer.

King reiterated that the corporation had been looking into small producer pricing since at least August 2017, so the recent announcement was about a year in the making.

He also explained there was more of a concerted effort to hold advance consultations this time around, specifically in areas like Whitehorse, Dawson City and Watson Lake during August and September 2018.

“We sought their feedback on what it was about the previous proposal that we had on the table that wasn’t working,” he said.

“We took that feedback and tried to incorporate it – so now we’re preparing to implement the pricing changes.”

Documents posted on the YLC’s webpage offer a detailed breakdown of this month’s expected new prices, the presentation given to licensees, among many others.

Meanwhile, King explained that at the same time, the corporation wanted to ensure that the change would have a “relatively low impact on consumers and licensees.”

A testament to that is reflected in the price to draft beer not seeing any changes, he added.

“We know that higher prices is a challenge for small businesses,” particularly for those in the hospitality sector as “they do operate with rather small profit margins.”

That sector in particular sees an increase during the summer months thanks to, among other factors, tourism, peaking in a big way between May and September, the Yukon Bureau of Statistics noted in 2018.

Last July’s proposed timeline for the hikes fell within that period (the plan for which, as mentioned, was abandoned shortly after).

For its part, the corporation is also looking at shifting how often it issues changes in prices, King said.

“Right now, we update our price list monthly based on changes in supplier cost and various factors like that,” he said – something in line with the note sent out last June that cited freight, liquor tax, other fees and deposits and freight reasons for a hike.

“What would be really beneficial,” he said, recalling the consultations, “is to hold suppliers to changes that only happen twice a year – in advance of the summer and winter season.”

That would mean prices on menus, for example, may fluctuate on a more predictable schedule, leading to more overall consistency even if there are minor changes on a monthly basis.

“That’s one of the things we’re looking to implement with these changes,” King said.

There still may be monthly price lists, he explained, but the corporation will try to limit them to things like limited time offers or whenever new products are added.

Consultation also brought out the confusion some licensees had about invoicing.

“(We heard) some of the pricing processes that we have are unclear and can be difficult to decipher,” King acknowledged.

“Essentially, the big change is rather than calculating the retail price with the discount, we’re doing the wholesale price,” which is expected to make it more transparent for licensees.

“This is the implementation side of it.”

According to the release, the changes are expected to save bars, restaurants and offsales about $250,000.


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