Officials with the Yukon Liquor Corporation (YLC) say they will not be increasing the retail price of liquor without further community consultation.
The original changes, which were supposed to come into effect July 1, angered local business owners who said they were caught off guard and would lose money.
The corporation is going to release new markup rates by the end of next week, said president Matt King. The changes will be available for review by local manufacturers, licensees and suppliers to give feedback. Officials are hoping to implement a new markup structure by the end of the summer.
“This isn’t about increasing price, it’s about making revisions to the markup structure in a way that prices are calculated,” said King.
On June 15, bar and restaurants owners in the Yukon received a letter from the corporation’s director of operations Steve Cummings stating that effective July 1, YLC would be implementing a new pricing structure. The letter listed an increase of 38 cents for canned and bottled beer, 27 cents per litre for draught and up to $2.40 per bottle for spirits.
“Prices will reflect current supplier pricing, freight, excise, duty, revised mark-up, cost of service differential, liquor tax and other fees and deposits,” wrote Cummings.
King said the corporation heard from small producers that were interested in changing the markup structure, since small producers typically have more premium-priced products. He said the changes would mean a bigger range of products at better price points, like craft beer and wine from small wineries.
In its wholesale and retail pricing document, the corporation also said it’s revising its pricing structure to include a 30-cent-per-litre service charge as part of trade agreements.
King confirmed that this is something the territory needs to abide to, but said it will not be implementing the service charge until the new pricing structure is in place.
“It’s on a per litre basis so one of the challenges or unintended impacts of that is that larger volume containers result in a disproportionate increase in price, so that’s one of the things as we go back we will look to offset,” he said.
In the June letter, businesses were asked to direct their questions and concerns to the corporation.
Prior to the postponement, Christine Kent and Katja Schmidt, owners of the Dirty Northern and The Miner’s Daughter in Whitehorse, responded to the letter and said that the new prices would hurt their business.
“YLC’s desire to ensure compliance with trade agreements just cost our business about $3,000/month on draught beer alone,” they wrote in an email copied to more than 60 other businesses.
James Maltby, co-owner of the Whitehorse cocktail bar Woodcutter’s Blanket, said when he got the letter that he was frustrated with the liquor corporation’s lack of transparency.
“They said things were changing, and that was the warning that we got,” he said. “I don’t think we were really consulted on it in a way that we should have, because I think the voices would have been pretty loud.”
He said he was considering passing down the extra cost to his consumers.
In an interview on June 19, Premier Silver said the increases to draught beer weren’t approved by cabinet.
“We heard the news and we got the letter and we went … ‘let’s take a look at what was passed,’ and the conversation wasn’t there so that increase was not approved,” he said. “So to be perfectly clear we are not increasing the price of draught beer.”
“The government absolutely has the ability to provide direction and directives to the corporation,” said King.
“And these are things that we obviously respect and implement.”
Nail Sultanau, procurement specialist at YLC, said the pricing adjustments in the June letter were suggested changes, and that the purpose of the letter was to improve communications between YLC and licensees and collect opinions from businesses.
King said it’s pretty clear they were planned changes, but the corporation is taking the concerns seriously and they will not be implementing the rates as set out in the letter.
Sultanau said improvements in the supply chain will benefit businesses and consumers.
“In order for it to happen there are many many steps which you cannot skip, and setting up pricing structure in certain way is one of the elements,” he said.
He explained that this includes adjusting the pricing structure to improve things like access to special orders and delivery time.
“Some special orders [which took] four to six weeks are now 10 days,” he said.
“That’s a huge improvement. Huge. It took us a while … but we can say that’s what we achieved… There will be many many positive steps, very beneficial for all Yukoners.”
Contact Kallan Lyons at kallan.lyons@yukon-news.com