Yellowknife booze prices to drop
Territorial government to regulate city liquor stores as of next fall in effort to bring down costs
Cody Punter
Northern News Services
Published Wednesday, December 10, 2014
SOMBA K'E/YELLOWKNIFE
If people are upset about the high cost of living in Yellowknife, they can at least drown their sorrows in cheaper booze next fall.
750 millilitre bottle of Smirnoff (after GST and deposit)
- Liquor Store (downtown Yellowknife) $38.15
- Liquor Shop (uptownYellowknife) $38.00
- Fort Simpson $33.48
- Fort Smith $33.46
- Inuvik $33.58
- Norman Wells $34.09
12 bottles of Budweiser (after GST and deposit)
- Liquor Store $28.80
- Liquor Shop $29.15
- Fort Simpson $30.53
- Fort Smith $30.32
- Inuvik $31.15
- Norman Wells $34.07
GNWT liquor markup per litre
Current
- Spirits - $29.98
- Wine - $8.92
- Beer - $2.22
- Coolers - $3.47
- Ciders - $2.29
March 2001
- Spirits - $23.49
- Wine - $6.99
- Beer - $1.74
- Coolers - $ 2.73
- Ciders - $1.78
Source: NWT Liquor Commission
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Control over liquor prices will return to the NWT Liquor Commission after the territorial government body determined that Yellowknife's two privately-owned stores have some of highest prices for alcohol in the territory.
Beginning Sept. 8, all alcohol sold at Yellowknife liquor stores will be owned by the GNWT and sold through a government regulated consignment model, said Peter Maher, director of liquor operations with the NWT Liquor Commission (NWTLC).
Yellowknife's liquor stores are currently the only two in the territory where private businesses purchase their inventory and then resell it based on what the market is willing to bear. Under the consignment model, the inventory will be owned by the liquor commission, which in turn sets the prices. The stores' owners will be paid a commission as a percentage of every litre of alcohol sold.
"In the consignment model prices are based on actual costs plus GNWT mark-ups and taxes," Maher stated by e-mail Dec. 3.
"The point of sale system is owned by the NWTLC and pricing is set by NWTLC and cannot be changed at the store level."
Maher told Yellowknifer the liquor commission found price was one of the major issues customers had with the current system after conducting a customer survey in 2010. The reason the government is taking over pricing now is because existing contracts with the liquor stores run out on Sept. 7. The new contracts, which were open to a public bidding process, will be for a 10-year period.
"With the termination of the Yellowknife store contracts approaching, the NWTLC conducted an (operational) review and determined that within the current legislative framework, the consignment store model provides the best value to the consumer," wrote Maher.
The price of alcohol in Yellowknife was previously regulated by the GNWT up until 2000 when the government decided to privatize what was at that time the city's only liquor store – downtown. Two years later the territorial government allowed for a second store to open on Old Airport Road after a survey found increased demand. While having another store in the city should have inspired competition and kept prices down, prices apparently continued to creep upwards in recent years.
Ed Eggenberger, owner of the downtown liquor store, told Yellowknifer one of the reasons prices have gone up is because the GNWT has been increasing taxes on alcohol for more than a decade.
The GNWT's markup on alcohol has gone up by 27.6 per cent since 2001, according to statistics collected by the GNWT.
Eggenberger said he has maintained a 15 per cent markup on his inventory since he upped it from 12.5 per cent in 2008, with some of that money going toward maintenance, stocking shelves and paying staff salaries.
Percentage markup
"Part of the problem is because we do a percentage mark-up, the more expensive the item, the more the markup becomes, and because the NWT tax is so high, the price becomes so much more," he said.
"(The GNWT) should share some of the blame for that because it's their system."
Eggenberger said in other jurisdictions, private businesses are given a 15 per cent discount when they purchase alcohol from the government – this is not the case in the NWT however.
Yesterday, Maher conceded provinces such as Alberta, which have government-operated liquor stores, offer discounts on the wholesale cost of alcohol to private businesses to offset their operating costs.
"The justification is that (the government is) not operating that store, so that reduces their cost, so they offer a discount," he said. "We don't operate any stores so our costs are already fixed."
Yellowknifer compared the cost of several items at Yellowknife liquor stores and found that while spirits were generally cheaper elsewhere in the territory, 12 packs of bottled beer were on average a few dollars less here. Eggenberger said customers shouldn't expect prices to drop much after the government takes over.
Longtime Yellowknifer Russel Bird, who was purchasing a case of beer at the downtown liquor store on Friday, said he welcomed the government takeover – providing it leads to lower prices.
"For it to be any more cheaper would be a benefit," he said.
Johnny Mantla, who was shopping at the downtown liquor store on the same day, agreed even a slight decrease would make a difference.
"I would be happy," he said. "It's too expensive."
Yellowknife liquor stores sold a total of $22.54 million worth of alcohol in 2013, up from $21.94 million in 2012.
Eggenberger was the only proponent to put in a bid to run the downtown liquor store and will continue to operate it next fall. He was also only one of two people to put forward a bid to run the uptown liquor store and was successful in getting that contract too.
The owners of The Liquor Shop, located at Stanton Plaza, did not return a request for comment by press time. However, Eggenberger said they did not put their names forward as they plan to retire.
Although having his revenue set through a fixed commission with the GNWT will mean lower profit margins, Eggenberger said being able to run both stores would help alleviate some of his losses.
"Profit margins will be down but the volume is going up," he said.
