B.C. to cut retail liquor markup to help hospitality sector's COVID-19 recovery

The Ministry of the Attorney General says a temporary wholesale pricing program will mean liquor licence holders can purchase beer, wine and spirits at reduced cost.

The program is set to begin at the end of July and will be in place until March 31, 2021, when it will be reviewed.

Restaurants, bars and pubs currently pay for liquor purchases at full retail price, which is the wholesale price, plus a retail markup set by the ministry's liquor distribution branch.

The new system will eliminate the retail markup.

It comes as welcome news to an industry reeling from the economic impact of the COVID-19 pandemic.

Ian Tostenson, president of the B.C. Restaurant and Foodservices Association, said Tuesday's announcement is among the most significant changes to the province's liquor policy in a generation.

"It's going to add some much needed margin into the operations of an industry that continues to be on its knees," said Tostenson.

He said most restaurants rely on liquor for at least 30 per cent of sales, so reducing the cost by roughly 20 per cent will make a huge difference.

'It was absolutely desperate'

Tostenson said he doesn't expect the savings to be passed on to customers, as restaurants and bars are now just struggling to stay afloat.

Kelly Gordon, co-owner of Romers restaurants in Metro Vancouver, agreed that it's unlikely liquor prices on the menu will see any change after the costs go down for businesses.

He said until the last few weeks, his restaurants were operating at about 20 per cent in sales, compared to the same time last year. He estimates that has now increased to 65-70 per cent.

"It was absolutely desperate," said Gordon. "It was tough, it was really tough."

He heaped praise on Attorney General David Eby and Tostenson for the changes.

"I've got to be honest, we've been pushing this for years and to actually see it come into reality is almost unbelievable," said Gordon.

He said some quick math done on a coaster showed the reduced liquor cost would mean roughly $200,000 in added profitability across the four restaurants he co-owns.

The ministry said in a statement that it is also working on several proposals from a separate report, including creating a new rural liquor licence regulated by its liquor and cannabis regulation branch later this year.

Attorney General David Eby said changing the pricing system for liquor sales will help the hospitality industry, which has been one of B.C.'s hardest hit sectors, affecting as many as 190,000 jobs.

"Offering a wholesale discount for licensees was something we were exploring before COVID-19, but after the onset of the pandemic we accelerated efforts in order to support these community businesses as they try to find their feet," Eby said in the statement.

The province didn't say in its statement how much the change is expected to affect tax and liquor distribution branch revenue.