Privatized booze sounds good but don’t drink the Kool-Aid yet

by Jason Foster


pintsIf you’re an average (and non-political) Saskatchewan beer drinker, you’re likely either unaware or don’t care that the Saskatchewan government is engaged in public consultations around the future of the Saskatchewan Liquor and Gaming Association (SLGA). And fair enough, because they’ve been a bit under the radar about the whole thing.

Not to say that Brad Wall’s government hasn’t been pretty open about their intentions: they’ve made it very clear that they plan to privatize the liquor retail system, in one manner or another, after the next election — so to me, the “public consultation” is a bit of a façade.

But it’s also important, because there are very serious issues at stake that need to be debated — even for a person like me (and perhaps you), who generally prefers to focus on pints rather than politics.

I imagine most craft beer fans are open to the idea of privatization, because they envision cheaper prices, greater selection and more stores offering good beer, rather than the run-of-the-mill crud that dominates shelves today. And fair enough; lord knows government-run liquor stores can be quite frustrating when it comes to everything from selection to service (especially when you’re trying to order something) to price, so the image of buying an excellent beer in grocery stores or local mom-and-pop liquor stores is damn appealing.

And that’s the vision (a future of more and better beers at lower prices) that the privatizers want you to accept. And why not, right?

Except for one thing: They want you to forget that nothing comes for free, and you can’t have your cake and eat it too.

Saskatchewan isn’t the first province to consider privatization. Twenty years ago, Alberta adopted full-scale retail privatization, and in recent years B.C. has toyed with elements of private retail (They currently have a mix of private and public stores). Both offer up solid case studies to consider the effect on beer consumers.

Let’s take a look, one at a time, at the big three consumer issues — price, selection and convenience. When it comes to price, the case is closed — because privatized liquor retail increases prices. What the hell, you say? That’s not what every right-winger tells me! Well, read on.

A series of studies has shown that Alberta has the highest beer prices in the country; a recent one by the Parkland Institute, a research organization based at the University of Alberta,  showed that prices in Alberta and B.C.’s privatized stores are higher than in Saskatchewan and Manitoba, two provinces that maintain a public system.

The reason is simple. First, under a private system, wholesale prices remain the same (the government still wants its cut, after all), yet a private store needs to capture its profit. And so prices go up. Add in the various middlemen that emerge in a private system (including agents, wholesalers and salespeople) and there are more layers taking a cut, all increasing the price. Second, government liquor agencies like the SLGA can negotiate cheaper prices through bulk buying. The Ontario liquor commission, for example, is the single biggest liquor-purchaser in the world, meaning they can leverage some serious negotiating power. A privatized system atomizes the purchases, eliminating the power of bulk buying.

What about selection? The Alberta government, the vanguard of private liquor retail, brags that it has the most SKUs (stock keeping units, a standardized system for tracking products) in the country. This is technically true — but if you’re a fan of good beer, good luck finding something decent in the store near you.

The bulk of stores in Alberta are small and only carry a limited selection of beers, usually meaning the standard products from corporate brewers. If you want a locally produced craft beer in good old AB, you have to search long and hard. By eliminating centralized ordering, small craft brewers are at the whim of hundreds of store owners, all of whom just want what will move the fastest. So private liquor retail makes selling craft beer harder, not easier. Bummer.

When it comes to convenience, privatization wins: the system creates an incentive for stores every few blocks, as each tries to get a piece of the action. But the reality is most of those stores aren’t going to offer anything you want to purchase. Take Edmonton, a city of almost a million people, with hundreds of liquor stores; if you ask a beer aficionado where to buy good craft beer, there are only two or three places worth mentioning. Despite the sea of convenient liquor stores, finding good beer still requires driving across town to find it. Is that what convenience means?

There are other legitimate objections to privatization, including the fact that it turns decent careers that pay enough to raise a family into dead-end, minimum-wage jobs, but that kind of article isn’t my thing. What is my thing is looking at the world from the perspective of a consumer who loves quality beer. And from what I’ve seen, privatization leads to higher prices and, ironically, less accessible selection. It might seem attractive on the surface, but be very wary of what lurks below.

Damn straight, there are serious issues with the status quo, which works against local producers and limits access to good beers. But privatization won’t solve those issues; it will only make them worse. The privatizers want to sell you a fantasy of cheap, good beer available around the corner. But that’s not how it’s gonna work.

So if you love beer (or any style of alcohol, really) be informed, and act accordingly in the next election.