Friday, June 19, 2015

Recent Craft Beer Price Hikes Nothing More Than BC Liberal Asshattery

"Let's put things in perspective: every month, some prices go up and some prices go down -- just as any other retail cost of good -- but we're talking about cents here." - Suzanne Anton as quote by Bill Tieleman in The Tyee June 9, 2015 concerning BC beer prices.
The Reality Since April 1, 2015:
  • 55 beer products deceased in price;
  • 19 beer products showed no change in price;
  • 94 beer products increased by less than 1%;
  • 219 beer products increased between 1% and 5%;
  • 123 beer products increased between 5.01% and 10%; and,
  • 74 beer products increased by more than 10%. ****

I know just a short month ago I stated I was packing it in as a blogger, but this latest BC Liberal move, which saw them randomly hike the prices of beers, mostly craft beers, without telling the breweries ahead of time or giving them a cut of the increase, has me foaming at the mouth and I feel compelled to vent here before I explode.

Damn you BC Liberals and your BC liquor policy reforms.

This latest price hike on June 2nd was a blatant kick in the crotch to BC craft beer consumers who have been the driving force behind the growth of the flourishing BC craft beer industry.

What an asshat move!

As a side note,  I am submitting to the Urban Slang Dictionary the following :
Asshat- (noun), definition, "BC Liberal politician".
Asshattery - (verb), definition, "actions taken by BC Liberal Party related to BC liquor reforms").

Okay, back on track now with  my rant...
Approximately 40 new breweries have opened in BC the past few years and many more are in the planning stages. Yes, BC breweries are producing world-class brews, but without consumers to purchase them these beers would most likely never be brewed commercially. As well, businesses and jobs associated directly and indirectly with the craft beer industry would not be supported or created, and local economies not spurred on in communities across the province.

I can just imagine the conversation in the BC Liberal Caucus meeting.

Question: "We need to increase government revenues folks, where can we screw the general public next?"
Response: "Well this craft beer seems to be selling well and has increased sales by about 40% over the past few years, why don't we just raise prices there? We don't need to tell anyone. Breweries are too busy making beer and consumers are too apathetic to do anything about it, not to mention, they are beer drinkers. We can just keep the difference. No one will notice..."

I wish the BC Liberals would at least buy me dinner and give me a little kiss before bending me over the table and, well, you know where I am going with that one. I'm going to let you fill in the blanks and keep this PG rated.

This price hike could finally be the move that kills the goose laying the golden eggs.

We already pay outrageous prices for craft beer in BC and this is not because of the craft breweries who produce it. There is a tipping point for prices where consumers get turned off (and pissed off) with the cost of the goods in question and begin to think long and hard about making purchases and look for other options.

In communities like mine, Powell River, craft beer is just becoming accepted in the mainstream thanks to our local brewery, Townsite, who have blazed the trail. There are many beer drinkers here just discovering craft beer and who are converting over from the mainstream lager swill that was the only choice in town for decades.

Restaurants, pubs and private liquor stores are just starting to support the industry and offer craft beer products regularly. Many businesses were previously hesitant to sell craft beer due to the fact that it was a new in this market and, more often than not, more expensive than the national brand lagers. Pricing is far more important in communities where jobs, especially higher paying jobs, are hard to come by.

Higher-priced products, due to the harsh reality of economics and family budgets, are a hard sell when there are cheaper, although inferior, options . Pricing craft beer beyond those consumer thresholds could stall out this industry in markets outside the major urban areas and tourist resorts.

This scenario is playing itself out in many communities around BC. Not every market is like Vancouver and the Lower Mainland where the consumers are used to paying ridiculously high prices. This move to increase prices yet again, just for the sake of increasing government revenue, will slow down sales in these smaller markets and could possibly confine the craft beer revolution's spread across the province.

Most of the smaller breweries operate with a slim profit margin and are trying to find the balance between making a reasonable profit and not alienating consumers due to price. Our liquor prices are artificially high in BC, boosted by our government who rake in hundreds of millions of dollars a year on booze. We are paying high prices because the government controls the final prices of booze in this province, not the manufacturers.

A prime example was just prior to the April 1st change over to the government's new alcohol pricing system. The Liquor Distribution Branch (LDB) contacted craft breweries (and I am sure all booze manufacturers in the province) and gave them a chance to adjust their wholesale prices; the price manufacturers set to sell their products to the LDB. The catch was that the government was not telling the breweries how much the government was going to mark up these prices, so the breweries had no idea what the final price on their products would be on the shelves.

The brewery folks in BC literally had to guess as to how much consumers would be paying for their beer and were hoping they guessed right on their wholesale pricing. Setting the price too high (underestimating the mark-up) meant potentially alienating customers because of price increases and setting the price too low meant a decrease in revenue for the brewery for no reason whatsover.

But at least both the industry and consumers were aware that prices were about to shift April 1st and were, although in most cases unhappy, prepared.

The June 2nd, prices went up again for some craft beers without warning or consulting the craft beer breweries or explanation to consumers that this was government driven and not a decision from the breweries themselves. I know of one brewery partner who found out about the price hike when they saw the increased price of their products on the BC Liquor Store shelves!

And not a penny of the latest increase is going to the breweries.

Suzanne Anton and her crew in charge of all things boozy in BC keep up the mantra, of "don't worry, some prices will go up by a little, some will go down. This is the reality of the consumer market. It is only a few cents here and there..."

Yes Minister Anton, let's put things in perspective.

The reality is that since April 1st (stats from CAMRA Vancouver update):
  • 10% of Beer products have dropped in price.
  • 3% of Beer products have shown no change
  • 87% of Beer products have increased in price

If you look at which products have been increased, the majority are craft beer products made here in BC. How the Hell is that a sign that the government is supporting the BC craft beer industry and small businesses, under which category most craft beer breweries fall under?

These price hikes are stacked on top of the price hikes many BC communities endured last year when the BC Liberals reintroduced "happy hour" which they paired up with new minimum drink price scheme (click here to read) which impacted those going out to a licensed establishment for a drink.

Now we are getting nailed on our take home purchases.

I am sick and tired of the cynical and entitled nature of this government. Their liquor policy reform consultations were supposed to be held to help find out the wants and needs of British Columbians and alochol industry stakeholders. I am quite certain not one craft beer consumer put forward they wanted multiple price increases applied to their favourite beers. I am also certain not one craft brewery representative put forward the desire to have craft beer prices go up while brewery profit margins stayed the same or decreased slightly.

Wake up consumers. Start writing letters, e-mails to those in charge. Start letting your local MLA, no matter what party they are from, know this is unacceptable. If not, we are going to continue to see the BC Liberals choke off the industry until it stalls out due to decreased sales secondary to ever-increasing prices.

(****statistics from the Campaign for Real Ale of BC - Vancouver Branch)