Latest liquor changes good for consumers, small businesses

VICTORIA – The latest changes to B.C.’s liquor policy will offer greater consumer choice and
convenience, support small- and medium-sized breweries to grow and expand, and ensure fair
and equitable wholesale pricing for the retail industry.

For consumers, April 1, 2015, will mark the first day that grocery stores are allowed to sell
liquor through the store-within-a-store model. As well, that same day, restrictions will be lifted
on BC Liquor Stores, allowing them to offer refrigeration and to stay open longer hours,
including on Sundays.

For small- and medium-sized businesses, today’s changes will remove barriers that have
previously hindered and discouraged growth, both with regard to the breweries themselves
and to their volume of beer production. By moving to gradual increases in mark-up rates, there
will be no more financial cliff as soon as breweries grow into a new production category.
Simply, it will mean no more artificial barriers to growth and it will mean more jobs for British
Columbians.

For retail stores, there has long been the perception that BC Liquor Stores had an unfair
advantage in the market. No longer. Starting April 1, 2015, all liquor retailers, including BC
Liquor Stores, will purchase their product from the BC Liquor Distribution Branch (BCLDB) at a
common, wholesale price. This will do away with the existing complex model that offers
retailers various discounts depending on the type of retailer they are.

Simply, all liquor retailers will now be able to make business choices based on a more level
playing field. The expectation is that, by increasing competition, the market can be more
responsive to the needs of consumers. Of note, the shelf price that consumers pay when
purchasing liquor at private stores has never been set by government, and this will continue to
be the case. A minimum purchase price, protecting health and public safety, will also continue
to be in place.

Quotes:
Suzanne Anton, Attorney General and Minister of Justice –
“Underpinning many of our liquor changes – including our models for liquor in grocery stores
and wholesale pricing – is the concept that government needs to get out of the way and leave
more to market forces.

“It is our expectation that, starting April 2015, these changes will create a more competitive
market for retailers. The changes we’re making to the wholesale price today will enable more
competition between retailers to attract British Columbians into their stores and should not
force any change in shelf prices.

“We’ve focused on making changes that benefit consumers, promote local products and
support equal opportunities for business development across the board – this is a promise
made, promise kept.”

John Yap, Parliamentary Secretary for Liquor Policy Reform –
“Liquor in grocery stores and wholesale pricing are a few of many changes to support a level
playing field and a more competitive marketplace, while balancing the priorities of consumers,
industry and health and safety advocates. We heard from many stakeholders during the Liquor
Policy Review that the current, varying mark-up and discount rates were confusing to different
retailers – and government is acting to address the calls for simplicity and a level playing field.”

Michael Tod, partner and director of sales, Parallel 49 Brewing Company –
“The boom of craft breweries opening in B.C. over the last few years has been built on a shared
love of good quality brewing and support from local beer enthusiasts, which has helped bring
success to our industry. It is the strong ties we have to our community and our customers’
loyalty that has helped our industry grow. Now, government is building on that support,
reducing the mark-up for some of our products and eliminating barriers to growth – this will
hopefully lead to further benefits for our loyal customers and B.C. craft breweries.”

Quick Facts:
• As previously announced, the rules around the relocation of liquor licences (the “five
kilometre rule”) will also be lifted on April 1, 2015, to expedite the store-within-a-store
option, but ultimately, it will be up to the market to determine how quickly this model is
adopted.
• The moratorium on the number of private liquor store licences will continue, as
previously committed.
• The new wholesale price is designed to collect approximately the same amount of
revenue from each product category as exists today.
• The change to beer mark-up rates has the potential to positively affect more than 90 B.C.
breweries – that employ over 2,500 people in the province – as they grow.
• An additional 1,000 people work in brewpubs owned by craft brewers.
• The current system allows liquor retailers to purchase products at a discount based on
the shelf price at BC Liquor Stores. For examples, discounts range from 30% for
independent wine stores, to 16% for private liquor stores to 12% for rural agency stores.
• The new system will see any liquor retailer, including BC Liquor Stores, buy product at
the same price from the BCLDB.
• Government is also working to separate BC Liquor Stores’ retail operations from the
Liquor Distribution Branch’s wholesale operations to remove any perception of an unfair
advantage that government liquor stores have in the marketplace.
• B.C.’s craft breweries have invested over $100 million in equipment and expansion in the
past two years.
• B.C.’s small- and mid-sized breweries make up approximately 95% of the total number of
breweries in B.C.
• Currently, there are 196 BC Liquor Stores in B.C., 670 private liquor stores, 221 rural
agency stores and 12 independent wine stores.
• Government’s updates on the grocery model and wholesale pricing are centred on
addressing the calls of consumers, enabling a competitive marketplace and providing
industry with certainty and time to prepare for the changes. As the Province works to
implement these changes, and the remaining recommendations from the Liquor Policy
Review, consultations with industry will continue.

Learn More:
There were more than 50 meetings and written submissions to the Liquor Policy Review that
called for elements to level the playing field, including wholesale pricing. View a list of
submissions here: www.engage.gov.bc.ca/liquorpolicyreview/stakeholder-positions

Government announced it would move to a new wholesale pricing model in March 2014:
www.newsroom.gov.bc.ca/2014/03/bc-outlines-balanced-plan-for-grocery-store-liquor-sales.html

Media Contact:

Government Communications and Public
Engagement
Ministry of Justice
250 213-3602