Starting April 1, consumers in Alberta will face higher prices for wine as the provincial government introduces changes to its liquor markups. The adjustments, announced in the recent budget, are intended to address industry concerns, improve fairness within the system, and support the growth of Alberta’s liquor manufacturing sector.
Under the new system, the province will increase the flat markup rate for wine by 15 cents per 750 ml bottle. Additionally, a new ad valorem fee, also known as a “value-added” fee, will be applied based on the price of the wine. This fee will rise as the price of the wine increases, adding to the flat rate markup.
For instance, a 750 ml bottle of wine priced at $25 will see an additional charge of 20 to 40 cents, while a $50 bottle could experience an increase ranging from $2.80 to $3.25.
The announcement caught some Calgary wine merchants off guard, raising concerns about customer reactions. Richard Harvey, co-owner of Metro Vino, expressed worry over potential backlash, emphasizing that the price hike will be passed on to consumers. “If the price goes up a buck or two on somebody’s favourite wine… this is taxation by another name,” Harvey explained.
In Alberta’s privatized liquor retail model, the Alberta Gaming Liquor and Cannabis (AGLC) applies a markup to all liquor sold within the province, which contributes to the provincial general revenue. In the case of wine, importers bear the markup cost and pass it along to retailers, who in turn pass it on to consumers.
“This is going to lead to higher prices for customers,” said Ivonne Martinez, president of the Alberta Liquor Store Association. Since privatization in the 1990s, the liquor markup for wine has been a flat rate based on alcohol content. However, the new markup structure introduces a price-based system for the first time.
The new markup rates are as follows:
- 5% for wines priced between $15 and $20 per litre
- 10% for wines priced between $20 and $24.99 per litre
- 15% for wines priced over $25 per litre
Martinez expressed confusion over the decision to target wine specifically, calling the new system unnecessarily complex and burdensome for liquor stores. “This is going to add extra red tape, and it’s going to be difficult for liquor stores to figure out how much to charge,” she said.
The provincial government, however, argues that the changes reflect input from a variety of Alberta liquor manufacturers, including distillers and brewers, who criticized the existing markup system for creating market distortions and inequalities between small and large producers. Brandon Aboultaif, press secretary to Service Alberta and Red Tape Reduction Minister Dale Nally, stated that the changes aim to minimize impacts on consumers while ensuring higher alcohol-content products are subject to higher markups.
The government also claims that these adjustments will affect only 16% of wine sales in the province. However, industry representatives believe the majority of wines will be impacted.
Harvey suggested that the province should have initiated the ad valorem markup at a higher price threshold, adding that the decision lacked sufficient consultation with stakeholders. “We don’t think it was done the right way,” he said, questioning the rationale behind the changes.
For those looking to stock up, Harvey reassured customers that existing inventory would not see an immediate price increase. The new prices will only apply to wine supplies ordered after April 1.
The province expects the new changes to generate between $22 million and $23 million in additional revenue annually.
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