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Is private liquor bad for Alberta?

So, I made a quirky discovery this morning.

After seeing on Twitter that Winnipeg Free Press wine writer (and books editor — and good guy!) Ben MacPhee-Sigurdson had found a neat document showing before-and-after stats for liquor privatization in Alberta, I was intrigued.

Alberta privatized liquor retailing in September 1993, and it's been perennially mooted here in Manitoba as well.

But is it a good deal?

The Alberta document sure makes it look that way.

The number of products available has exploded in the past 20 years in that province, from just 2,200 then to 19,176 now. And the province is bringing in $729 million annually now, compared to $404.8 million before they privatized it.

Sounds great, right? Manitoba should go for it, right?

Well, I decided to dig a little deeper.

First, I wondered what effect a growing population might have had. Alberta has boomed in the past 20 years. According to this provincial government document, the population of Alberta in 1993 was just under 2.5 million. These days, according to this Global News report on a Statistics Canada estimate, it's over 4 million.

So a quick calculation shows that Alberta was bringing in $157.21 from every person in liquor revenue in 1993. In 2013, some two decades later, they managed to increase that to $181.11 per person.

That adds up to hundreds of millions, of course, but it doesn't seem like they've managed to leverage much out of privatization — only $24 extra dollars over 20 years? The increased revenue is almost exclusively from the increase in population.

It gets even worse when you look at inflation. According to the Bank of Canada, inflation over the past 20 years has been 42.5 per cent — so the $404.8 million that the Alberta government brought in in 1993 is equivalent to $576.9 million in today's dollars.

On a per capita basis, that means that pre-privatization Albertan liquor marts were able to bring in the equivalent of $224 per person, if we talk in constant 2013 dollars.

So their per-person revenue has actually declined! By nearly 20 per cent!

That was the quirky discovery that I wasn't expecting. After 20 years of privatization, Alberta now makes nearly one-fifth less in alcohol-retailing revenue per Albertan. The spike in revenues that they've gotten looks impressive in isolation, but hasn't kept up with the pace of their population growth or inflation.

Weird. That definitely would put the brakes on, for me, any discussion of Manitoba-privatization-as-cash-cow.

Aside:

On Twitter, Policy Frog's Colin Fast suggests that the same might be true in Manitoba. The MLCC (now MLLC) annual reports online only go back to 2005. In that time, annual revenue returned to the province has increased from $185.3 million (worth $211.3 million in 2013 dollars) to $260.6 million in 2013. Population is in dispute (oh, Manitoba) but it doesn't appear to have grown enough to offset that increase in total revenue. Still, it's impossible to really compare without going back to ’93 anyway.

Interestingly, in 2005 there were "over 3,000" different products available at Manitoba Liquor Marts. In the 2012–13 report, they tally up 4,243 active product listings.

Aside No. 2:

This report from the Canadian Centre for Policy Alternatives has charts on Pages 12–13 of government revenues per litre of alcohol and revenues per capita, in constant 2002 dollars. They appear to make the same point that I found — that revenues to the Alberta government have declined. Meanwhile, revenues in Saskatchewan and B.C. have increased or stayed steady. They use data from 1993–2011.

Source: This tweet

It's not like liquor retailers in Alberta haven't been trying to increase sales. In 1993, there were 803 places in Alberta where you could buy beer, wine or spirits. Now there are 1,995. Accounting for population growth, the average retailer serviced 3,200 Albertans in 1993, now the average store services 2,020 Albertans. That's a stunning growth, especially given the surge in population.

A few other things I took away from the numbers:

  • Albertans drink more than they used to — an average of 8.25 L a year more
  • Most of that increase is wine — Albertans drink 60 per cent more wine per person than they did 20 years ago. The average Albertan now consumes nearly 13 bottles of wine a year, up from just eight in 1993.
  • Albertans drink slightly less beer per person and slightly more spirits per person than they did in 1993, but the levels are pretty comparable (between 68–69 L of beer per person every year, and around 6.5 L of spirits per person per year).
  • Coolers and ciders have exploded — the average Albertans now drinks nearly 5 L of year in that category. It was just 1.36 L in 1993. That's about a 260 per cent increase.

All in all, it isn't the rousing validation of privatization that I was expecting, quite frankly.

Now, of course, raising money for the government is only one of the rationales of getting the government out of the liquor business. The increased number of products and the increased availability from sheer number of stores is another. As is the one-time juice a government would get from selling off all the existing liquor stores — as well as licenses for new ones.

But I, personally, find that privatized liquor stores in Alberta tend to be retailers first, and specialists second — it's not the pleasant shopping experience there that it is here. And I don't even think the prices are all that much better. Not compared to American prices, for example.

Of course, I'm not immune to the lure of being able to pick up aa bottle of wine or a six-pack in a grocery store. It seems silly to me that beer vendors can be attached to a hotel, but not a grocery store.

The coming changes to the province's Liquor Control Act will make it somewhat better from a bars-and-restaurants perspective. But it doesn't really go very far in that direction, and I'd love to see them tackle it from a bottle-buying perspective as well.

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