NB Liquor to study ‘private-sector involvement’

New Brunswick’s Crown-owned liquor marketing and distribution company plans a structural overhaul from within over the next one to three years and to study ways it can partner with "third parties."

Alcool NB Liquor CEO Daniel Allain emphasized in a release Wednesday that "it is not our focus or our intent to privatize NB Liquor at this time" but agrees "more private-sector involvement in the asset is required."

The planned overhaul stems from a review ordered in October 2010 by Premier David Alward, tasking Allain and NB Liquor’s board with finding ways to strengthen retail strategies, boost revenue and profits and "improve the culture and governance of the corporation."

The corporation’s current mandate includes handling wholesale purchase, importation, distribution and retailing for all beverage alcohol in the province, operating 48 NB Liquor stores and supplying 70 private-agency outlets through its central office and warehouse in Fredericton.

The corporation in 2011 booked sales of $412.4 million, up 1.3 per cent from 2010, remitting $159.6 million back to the province. Sales included $229.6 million in beer, $92.2 million in spirits and $68.3 million in wines.

Allain on Wednesday released the corporation’s report from its review, laying out two batches of recommendations: first, to look at "opportunities identified in current operations" and second, to look at "opportunities to partner with third parties."

The corporation said it plans to pursue the first group of recommendations over the next 18 to 36 months and take on "further study" of third-party partnerships.

Changes to operations from within are expected to include:

  • improvements to the "overall customer experience;"
  • expansion and restructuring of NB Liquor’s retail network;
  • investments in technology to improve "efficiency and security;"
  • exploring "cost reductions, internal opportunities and pricing strategies to increase contributions" to provincial coffers;
  • reviewing NB Liquor’s governance and moving to a "high-performance culture with focus on long-term returns on investment;" and
  • seeking "changes to the legislative environment" while improving NB Liquor’s relationships with other provincial departments.

The second group of recommendations proposed that NB Liquor explore "strategic alliances" with other liquor boards in the region, and also explore "monetization" of the corporation while maintaining its provincial ownership.

"Stop asking"

The Canadian Union of Public Employees (CUPE) Local 963, which represents over 500 NB Liquor staff, said Wednesday that the corporation’s review document makes a "convincing business case" for the Crown-owned model.

"In the past 10 years, NB Liquor remitted $1.4 billion to the provincial government. In addition, it boasts the lowest cost-to-expense ratio in Canada," union local president Martha Thompson said in a separate release.

Each successive New Brunswick government has asked NB Liquor to think about privatization, either through a partial or complete sell-off or by privatizing its retail operations, she said.

"We think it’s time to stop asking NB Liquor to jump through hoops, and let it do what it does best — which is providing us with good customer service, social responsibility and reliable steady growth."

The Canadian Restaurant and Foodservices Association (CRFA), a longtime critic of the public-sector liquor distribution model, reiterated Wednesday that it considers the province’s current liquor system "inefficient" and reliant on a "monopolistic model of price hikes to increase revenue."

"Although we’re disappointed government did not choose to privatize NB Liquor, we are pleased they intend to increase the level of private-sector involvement," Luc Erjavec, CRFA’s vice-president for Atlantic Canada, said in a separate release.

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