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Les Leyne: Liquor pricing reaches peak confusion

With craft breweries now approaching coffee shops when it comes to market saturation, my son warned me somberly we are now approaching “peak beer.
Craft beer
With the proliferation of craft breweries, there's a suggestion that we're near the peak of the market. It’s either a period of impending doom, or a wonderful time to be alive.

VKA-Leyne02832.jpgWith craft breweries now approaching coffee shops when it comes to market saturation, my son warned me somberly we are now approaching “peak beer.”

In the global oil racket, that’s code for some kind of supply-demand pinnacle after which no one knows what will happen.

It’s the same in the beer business. It’s either a period of impending doom, or a wonderful time to be alive.

Adding to the uncertainty is the provincial government’s move to a new wholesale pricing system on April 1.

The shift seized the attention of the Opposition on Tuesday, and by the end of question period, B.C. had arrived at peak confusion.

It’s either going to mean marginal price adjustments on a new level playing field that most consumers won’t notice, or a big “conspiracy” that will drive the craft brewers “to the wall” and jack up the price of beer and wine all over B.C.

(The Opposition will never be accused of underplaying liquor-price changes when it comes to fomenting unrest.)

Attorney General Suzanne Anton is the one reassuring drinkers that the new pricing system won’t change much of anything. But she did buy into one part of the NDP’s conspiracy theory. Anton accused a few suppliers of using the upcoming pricing system change to sneak in a price hike in the hopes people will blame the government for it.

Some of the price hikes are too high, she said. “It looks as though some suppliers are hiding behind the government changes on April 1 to raise their own prices. That’s not good enough.”

She said her suspicious nature led her to that conclusion. “We don’t like to see government changes being used to hike supplier hikes.”

The Liquor Distribution Branch is talking to the alleged offenders, she said. But according to LDB numbers, they are a minority.

The NDP dwelled Tuesday on the fact 5,300 products will increase in price on April 1. But the LDB said that’s only about 17 per cent of the 33,000 products it carries. The vast majority of suppliers have said they’ll keep prices the same or decrease them.

And of the 17 per cent that are going up, most of the hikes are relatively small and can be blamed on the Canadian dollar, inflation or confusion on the new calculations.

Suppliers aren’t the only ones confused. The government has appeared a bit confused itself over liquor pricing over the last few years.

Before the big liquor-reform push started, there was some talk of changing the confusing pricing system to one set wholesale price for both government and private stores.

The NDP cited quotes from a previous minister advocating the need for such a change.

But when Anton was asked in the legislature about that in July 2013, she said it wasn’t on the table.

“The question of one wholesale price did get assessed at the time, and the assessment concluded that there would be significant impacts. There would be winners and losers. It would have been extremely disruptive to the industry and very complicated, so the decision was made not to go there. The question of ‘should we try again at this point?’ is not under consideration at this point.”

It was deemed outside the scope of the big consultation effort on liquor changes. But eventually everything was put on the table. Disruption be damned. They decided to go there after all.

The single wholesale price was announced last November as a move to simplify the complicated tiers of different discounts to different retailers. It would put government and private stores on equal footing and enable more competition. It looked good in theory, although prices will always be far higher than strictly necessary, because the government builds social costs and a nice profit into the pricing.

April will determine whether it works in practice. The NDP is quick to predict a “fiasco.” People will likely be too busy seeing if their grocery stores are selling booze to notice.

But be price-conscious for the next few weeks. If you see a dramatic price hike next month, the best response is to leave the product on the shelf and find something else.

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