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Vancouver’s pain, Alberta’s gain?
In Canada’s heavily regulated market, new pricing rules could seriously damage business in British Columbia as fine wine sales flood east.
Vancouver’s Broadway Wine Shop faces an uncertain future
Fine wine shops in Alberta may soon be licking their lips as trade flows in from neighbouring British Columbia. Next April a change in the rules on wholesale pricing in BC will pump up the statutory mark-up on wines sold above $11.75 from 51% to 67%. As the drinks business reported in October, Alberta’s fine wine business is already booming thanks to being Canada’s most deregulated market, and having a strong, energy-based economy.
“We are trying to see if we can influence how this impacts us because as it stands, the private wine shops are in trouble,” Chris Reid of Vancouver’s Broadway Wine Shop told db. “Sales will definitely go to Alberta with high-end wines. A little road trip will save the connoisseur a lot of money with the now even higher prices! Prices will go up significantly higher once you get above the $30 mark.”
Last week, local wine industry lawyer, Mark Hickin, told the Vancouver Sun that people who enjoy a fine bottle of $100 Bordeaux will have to pay between $126 and $151 under the new system. Robert Simpson, general manager of Liberty Wine Merchants which has six stores in Vancouver, told db that: “the retail wine store model will suffer significant losses,” though he added: “There may be enough industry / public pressure to force an appeal.”
Hon. Suzanne Anton, Minister of Justice, British Columbia
Defending the decision, attorney general and Minister of Justice, Suzanne Anton, claimed: “The new wholesale pricing model is about enabling more competition in the marketplace – it’s not about changing prices for consumers.
“Trying to guess what each individual retailer will charge per product at this point is complete speculation.”
Yet not everyone’s convinced. “We are a family shop with a single location and these changes may force us out of business,” said Reid. “It’s not looking good for the small shop, but it looks like big business with a high-volume focus will be just fine.”
Increasing the mark-up on wines retailing above $11.75 is clearly a luxury tax.
With most Canadian provinces operating with budget deficits, making wine drinkers pay more for so-called premium and super-premium wines is a policy that will go over well with average consumers. I do not foresee it raising all that much additional revenue.
Some BC residents may shop in Alberta …..but it will not be a stampede …. pardon the pun.