Liquor privatization in Alberta has been a clumsy failure that has resulted in higher prices, according to a University of Saskatchewan business prof, who has price data to back up his claim.
"Alberta’s privatization has not been a success," Colin Boyd, a professor of management in the Edwards School of Business at the University of Saskatchewan, recently wrote in the Saskatoon Star Phoenix.
Boyd quotes figures from Integrated Marketing Solutions, which provides quarterly reports on Alberta liquor prices for a variety of clients. Its most recent figures show that the Saskatchewan Liquor and Gaming Authority’s (SLGA) prices are lower on 70 per cent of beer products, 76 per cent of spirits and on 86 per cent of wine relative to average prices across Alberta.
Saskatchewan was lower on 69 out of 99 beer products surveyed, 52 out of 68 spirit products and 24 out of 28 wine products.
"These are counterintuitive and indeed irritating findings for anyone who imagines that free enterprise and free competition must automatically produce better prices for consumers," Boyd wrote.
More private liquor outlets in a community means that consumers lose economies of scale and ultimately pay for increased overhead, including wages that are collectively higher than above-market government salaries because more employees are required, Boyd argues.
"Prices are higher with private, stand-alone liquor stores because higher total overhead costs must be passed on to the consumer," he says.
Alberta in-store prices almost always appear to be lower because, unlike Saskatchewan, our listed prices exclude bottle deposits and the GST, Boyd notes. He says government stores also result in better selection in smaller communities.
This is bound to rile Albertans. Cheaper Saskatchewan booze is more irritating to a Calgarian than a Roughrider fan at a Stampeders tailgate party.
Nobody in this province, though, is clamouring for a return to government- run liquor stores. Most Albertans will argue that private liquor retailing is more than price, it’s also about selection, convenience and choice.
Saskatoon has nine government liquor stores, four of which are closed on Sunday. Regina has seven, one of which closes on Sundays. Government liquor stores in Saskatchewan are closed on Good Friday, Remembrance Day, New Year’s Day, Christmas Day and Easter. Here, retailers have the choice to stay open.
After nearly 20 years of privatization (it was implemented by Ralph Klein in 1993), 78 per cent of Albertans are satisfied with the province’s liquor business, according to the most recent survey by the Alberta Liquor and Gaming Commission.
Since privatization, the number of liquor retailers in Alberta has jumped from 803 to 1,802. The number of liquor products has grown from 2,200 to more than 16,000. Liquor store jobs have increased from 1,300 to 4,000, although wages have dropped with the shift away from union workers.
Saskatchewan has 700 government-run or approved liquor outlets, and less selection. A 2009 study by the Frontier Centre found that Alberta at the time had 14,411 products compared to Saskatchewan’s 2,255. Boyd says this is because of population, not privatization. Alberta has 3.7 million people to Saskatchewan’s one million.
Boyd says he’s not opposed to privatization, if done right. He says Alberta made a mistake not allowing grocery retailers to sell wine, beer and spirits.
"Don’t force them to have separate stand-alone premises to sell booze," he says. "Just let them rearrange the shelf space in their existing stores – essentially copying what many European countries have done for decades." British retailers like Marks & Spencer, says Boyd, are also respected wine merchants.
Grocery-store booze is opposed by the Alberta Liquor Store Association, which represents independent retailers. The organization says it gives an unfair advantage to big retailers like Superstore and Safeway. Boyd says this goes counter to the essence of free enterprise and has only resulted in privatization in Alberta that has been "clumsy" and "muddled."
Boyd is not alone in his criticism. B.C. playwright John MacLachlan Gray, writing recently in Swerve Magazine, says Alberta liquor stores are both pricey and ugly: "Thanks to privatization, (Alberta) retail outlets now resemble slum mini-marts staffed by bikers, and the prices vary from steep to steeper."
He obviously never made it to Willow Park. But as Alberta approaches 20 years of privatization, it’s food for thought. Unlike Saskatoon, at least we can drown our pricey sorrows in a better selection of good scotch.