The two-year moratorium on selling retail liquor permits ended on October 9, following the 2016 decision to close 39 public stores and add 50 more private retailers.
Loblaws announced a Real Canadian Liquor Store location would be opening in the Yorkton Superstore on the same day. It was the first, and so far only permit sale to be approved by the Saskatchewan Liquor and Gaming Authority.
More announcements like this are expected to follow in the near future. The SLGA is currently aware of about 20 deals in the process of being finalized.
Three more of these deals involve Loblaw’s. The company previously said they plan on selling liquor in Regina, Moose Jaw and Saskatoon. Global News has confirmed that both the Moose Jaw and Regina’s east end Superstore’s have received local permits to sell alcohol.
Loblaw’s said they don’t have anything further to announce about those three locations at the present time.
This move is not a surprise to the Saskatchewan Hotel & Hospitality Association (SHHA). Association president and CEO Jim Bence said some of their members have been making adjustments to their business models to compete.
“But it’s really going to be difficult in some centers to compete with these big box stores that can get tier one pricing that our members simply can’t get at,” he said.
“When you’ve got a Superstore moving into Yorkton, you’ve got the Yorkton Hotel who’s done a remarkable job of pouring money into their store. They’re competitive, they’re pricing is there too. Their margins will be smaller but they’re in the game to win it,” Bence added.
With the lifted moratorium this also means permit holders are able to relocate their permits – relocated and sold permits must remain in the same community.
Bonzzini’s in south Regina will be closing their offsale in the near future. The permit holder is going to use that permit to open Urban Cellars in the Golden Mile Shopping Centre. After new permits were introduced in 2016, Sobey’s opened a liquor store a few blocks away from Bonzzini’s.
As bigger competition works its way into the market, Bence hopes customers will remember the local stores that have been around for years.
“There’s a reason why people in Saskatchewan will go to their local hardware store as opposed to some of the bigger spots. I feel that’ll be the same – hopefully that’ll happen here. People have grown up buying their spirits from the local person and hopefully they’ll continue to do that,” Bence said.
The SLGA is not creating more liquor retailing permits at this time, there are currently around 700 liquor retailers in Saskatchewan.
SLGA Retail Competitiveness
All liquor retailers in the province buy their product from the same source, the wholesale branch of the SLGA.
When the government expanded the privatized vendors two years ago, wholesale rules changed to level the pricing between public and private stores.
With new players entering the market Opposition Leader Ryan Meili hopes the government keeps three things in mind: promoting public health first and foremost, responsibly meeting demand and ensuring SLGA’s retail branch remains competitive.
“That’s still coming into public coffers, still employing folks in the public system, but also providing that increased access to service that people want.”
The SLGA retail stores are profitable, but their 2017-18 annual report does not that operating cost reduction goals are not being met due to declining revenue.
Before 2016, operating costs represented 10 per cent of sale revenue. Now, operations are equivalent to 12 per cent of sales revenue.
In a statement, SLGA spokesperson David Morris said the Crown corporation is continually looking at ways to ensure customer service and efficiency goals are met, including monitoring sales trends, adjusting operating hours and evaluating product mix.
“It’s important to note that the majority of SLGA’s profit is generated from the wholesale mark-up applied on all alcohol products sold in the province,” Morris said. “The mark-up is applied at the wholesale level, so essentially SLGA generates the majority of its revenue from the wholesaling of beverage alcohol, regardless of which retailer sells the products.”
Minister responsible for the SLGA Gene Makowsky previously said that the remaining 36 public stores have assurance they will remain open at least until the union contract expires in about three years.