NB Liquor price cut is a risk, Moosehead says
NB Liquor is dropping the price on 6 popular canned beers as part of promotion that will run until Labour Day
New Brunswick's biggest brewery says it had no choice but to join an NB Liquor promotion that it says creates a "significant amount of risk" for the company.
Moosehead Breweries says if the price cut doesn't lead to an increase in overall sales, it could lose money on each can sold at a discount this summer.
Trevor Grant, the company's vice-president of sales, calls the promotion "a dramatic departure" and says the move is unprecedented.
"We've never seen a promotion like this in New Brunswick."
Grant says Moosehead wasn't in a position to refuse to join the campaign, which also includes canned beer from much larger industry giants Budweiser and Molson Coors.
"That's not really an option for a business like Moosehead, which is a small independent brewer in New Brunswick. We can't not be at the table selling beer in our home province," Grant said.
Alpine, Moose Light reduced
NB Liquor is dropping the price on six popular canned beers as part of a promotion that will run from this week to Labour Day. The brands are Alpine and Moose Light, both made by Moosehead, as well as Budweiser, Bud Light, Canadian, and Coors Light.
Customers will be able to mix and match four 15-can packs of those labels for $74.99, which works out to $1.25 per can. NB Liquor says customers will save $37 in total.
There's a significant amount of risk in this promotion.- Trevor Grant, Moosehead Breweries
That comes as the corporation faces another summer of competition from Quebec, where New Brunswickers have been travelling in larger and larger numbers to buy cheaper beer.
But NB Liquor says the move is not an attempt to match Quebec prices.
"No, this program is really an extension of our focus on creating customer values," said spokesperson Mark Barbour.
"It's the evolution of our beer promotion."
Earlier this year, NB Liquor was offering two 15-can packs of the same brands for $49.99.
Stiff competition from Quebec
In Quebec, breweries sell beer directly to stores, while in New Brunswick, NB Liquor acts as a middleman, imposing a mark-up fee on the product, which raises the price.
The summer price cut will see NB Liquor eat some of the reduction with a lower mark-up and the breweries absorbing some of it by charging lower wholesale prices to the Crown corporation.
"Obviously we're not pleased that there's a significant impact on our profitability but we're trying to do the right thing for consumers in the province and our business," Grant said.
Barbour wouldn't say exactly what the reductions are, and he said the overall impact on NB Liquor's bottom line won't be known until the promotion ends in September.
Grant says if the promotion boosts sales volumes enough, that could make up for Moosehead's losses on price. But "it's early days, obviously … There's a significant amount of risk in this promotion."
New Brunswickers making beer runs to Quebec became a heated issue earlier this year after a Provincial Court judge acquitted a Tracadie man on charges of bringing 14 cases of beer and three bottles of liquor back from Quebec.
The judge ruled the provincial restriction violated free-trade guarantees set out in Canada's 1867 Constitution.
'A troubling situation'
In May, Moosehead CEO Andrew Oland said the solution was not loosening personal exemptions for consumers buying cross-border beer, but lowering New Brunswick taxes on beer to make it more competitive.
"I've sat outside liquor stores [in Quebec] and I've seen people put 40 or 50 flats of beer in a truck and bring them across the border," Oland said at the time.
He estimated Moosehead was losing $10 million a year to Quebec sales, a figure he said he expected would grow without a change to the rules.
Grant said Wednesday he applauds NB Liquor for trying to address "a troubling situation" through the promotion.
Despite Barbour's denial, Grant said "it's pretty obvious" the move is a response to Quebec competition.
"It's a direct result of some of those recent activities," he said.
Grant also said it's "a real possibility" that Nova Scotians living near the New Brunswick border will now cross over to buy cheaper beer during the promotion.