Why's beer so expensive in N.L.? It's not all taxes
N.L. beer prices close to others in Atlantic region
Beer prices have increased again in Newfoundland and Labrador, but it could just mean that it's a sign of the times.
The costs of operation for breweries, retailers and the Newfoundland and Labrador Liquor Corporation are going up, and that's factoring into the bump in price, said one beer executive.
Wade Keller, Labatt Brewing's director of corporate affairs in Atlantic Canada, said the price of domestic beer generally reflects the cost of living in the province where it's being sold.
"Bud Light, as an example, went up 1.8 per cent, which is basically a cost of living increase. Our costs are also going up. The price of everything. So, electricity, fuel, wages and so on," Keller said.
"When everything taken into account goes up, we try to maintain profitability by raising prices by the same amount."
Domestic beer prices, such as Labatt and Molson products, are similar throughout the Atlantic provinces, with N.L. still leading the pack with the highest price, according to Keller.
But the reason why N.L. has a slightly higher price on its beer is because of the giveaways under the bottle caps, he said.
In some 12-packs of beer across Canada, customers may find T-shirts or hats as giveaways by the brewery, but N.L. is the only province providing the chance to win real prizes — whether that be a single can of beer, beer for a year, ATVs or other prizes.
"These programs are designed to give back to the consumers. Instead of dollar value you're giving back in some kind of prize," Keller said.
"In Newfoundland and Labrador you can't discount prices [on beer], in Nova Scotia it's very common to discount prices. That's probably the biggest difference."
What about Quebec?
Many who have travelled from N.L. to Quebec are often gobsmacked by the stark differences in the prices — sometimes at half the cost — of domestic beer versus what they have grown accustomed to.
Simply put, Quebec's markup structure and tax situation is different from N.L.'s, which allows that province's beer prices to be lower, according to Keller. Breweries also sell product directly to the retailers, without having to go through a distributor.
"It's a much more private system than the government system in Newfoundland and Labrador," Keller said.
New Brunswick has cut the price on 24-packs of domestic beer to compete with bordering Quebec.
But even if the NLC wanted to do the same in Labrador, the population just isn't there to warrant it, according to Keller.
In an emailed statement in June, the NLC said, "As with all retail models, NLC purchases its products at supplier prices and adds a markup for a final retail price."
"While NLC cannot speak to other provinces' pricing models and markup structures, I can confirm that its markup policy is very much in line with that of other provinces."
Roughly a decade ago domestic beer prices were about seven to eight dollars lower than today for 12-packs, but prices of consumer goods have been keeping pace with the rise of wage increases along the way.
Keller said the additional increase on beer is split three ways, so the 1.8 per cent increase to Labatt products is cut between the brewery, the NLC and the retailer.
But, like anything, prices have increased for consumer products across the board.
"Beer is something that people probably buy more often than sneakers, so you see it more often, and it's something you're hit with more often," Keller said.
Keller said Labatt is wary of price increases. He added that he often hears stories from the struggling bar industry where customers prefer to drink at home first, and go out much later, to help them save money.
And as for a price ceiling, Keller said Labatt Brewing understands that it can't go too far, or risk losing sales.
"You don't want to get yourself into a situation where your pricing is beyond what the average consumer can pay. When do you get to that line," he said.
"Sometimes you see a delay in a price increase because this isn't the right time."