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Booze prices hit by wholesale changes

nnsl photo

More convenience and selection are two of the benefits privatization of liquor sales has brought. The benefits have come at the cost of higher prices to consumers. - Richard Gleeson/NNSL photo

Richard Gleeson
Northern News Services

Yellowknife (Feb 15/02) - Who benefits most from the new system of liquor sales in Yellowknife remains unclear, but if price is the main issue, it is certainly not consumers.

nnsl photo

Weekend fun pack, then and now

2001 Down
Crown Royal 28.80 30.90 32.30
Glenlivet 34.85 37.45 41.97
Absolut 27.90 29.90 33.49
Smirnoff 350 ml 14.00 15.00 15.28
Private Stock 8.55 9.50 9.25
Wolf Blass cab sauv. 21.15 24.20 25.36
Black Opal 14.40 16.35 16.41
Long Flat shiraz 12.60 14.25 14.89
Vodka Stinger 9.85 10.55 10.82
Canadian/cans 11.00 11.50 10.82
Big Rock trad./btls 10.45 11.00 10.67
Corona, btls 13.15 14.15 13.77

Despite the move to a more competitive system at the beginning of the year, people are paying more for alcoholic beverages. Despite the introduction of wholesale prices, the cost of a beer in a bar remains unchanged.

Though the addition of a second liquor store is the most obvious change, the move toward privatization is the biggest. Perry Smith, the owner of the new Frame Lake South liquor store, called deregulation "the most profound change to liquor sales here since time began."

Ed Eggenberger, co-owner of the downtown liquor store, said he has increased prices seven per cent overall to cope with the additional costs of deregulation. It's too early to tell what effect on profitability the changes will have.

Under the rules in effect until a month ago, the government set retail prices and paid liquor store operators a commission on liquor sales. From that commission, the Eggenberger family, operator of the downtown liquor store, paid their costs and made their profit.

Neither the government nor the Eggenbergers will reveal the percentage of the commission, but it is not difficult to estimate. The latest NWT Liquor Commission report shows the government paid $933,000 in retail operating expenses on $11.2 million in sales at the Yellowknife store for the year ended March 31, 2000.

Those expenses include the relatively small cost to apply labels warning of the dangers of drinking while pregnant and bags with symbols advising against drinking and driving. The commission was approximately eight per cent.

With the elimination of that expense, the government introduced a wholesale pricing structure. Prices dropped by slightly more than eight per cent on most domestic beer, but on most spirits and wine the reduction was in the range of one to three per cent.

Kegs of imported beer stayed the same or went up. A keg of Guinness that used to cost $250.20 now costs $270, not including handling charges.

That's bad news for The Black Knight. Manager James Hodgson said draft beer accounts for 70 per cent of the bar's sales. Hodgson said the bar has not benefited from deregulation.

The same goes for Pierre LePage, owner-operator of Le Frolic. LePage also said the minimal decrease on domestic beer prices was offset by increases on the price of kegs.

Liquor store operators are coping with higher costs associated with lower volumes. They now also purchase inventory from the liquor warehouse and have to absorb the carrying costs of maintaining hundreds of thousands of dollars in inventory. Up to this year, the government owned the product until consumers bought it.

While lower prices is not one of them, deregulation and competition has brought some benefits.

For the first time Interac is available at liquor store checkouts. There is more selection. The downtown store will soon be selling all of its beer cold without an additional surcharge.

And consumers in Frame Lake no longer have to travel downtown to buy a six- pack.