Twenty years ago, the Alberta government swiftly and boldly threw open Alberta鈥檚 markets in beer, wine and spirits. The result has been a success story of intense competition, added convenience and thousands of new jobs.
Alberta announced in September 1993 that it would privatize its government liquor stores. It did so with remarkable speed. When privatization was announced, the province owned 202 government liquor stores. Two days later, the first store was shut. By Christmas, two-thirds of the government shops were closed or sold. The last Alberta government liquor store was out of business six months after the initial announcement.
The results speak for themselves. Pre-privatization, in addition to the 200-plus government liquor stores, the private sector operated 65 full-product outlets while 530 hotels offered a limited product selection. In the 20 years since the Alberta government left the retail business, private-sector retail outlets have grown to 1,982. Product selection has expanded, from 2,200 in 1993 to more than 19,000 varieties of beer, wine and spirits now. Employment in retail liquor stores (including the government numbers at the time of privatization) jumped from 1,300 employees to 4,000.
Alberta鈥檚 privatization model has its critics. For example, the Consumers Association once claimed Alberta鈥檚 prices were mostly higher than those in B.C. And one university think tank claimed the Alberta government has lost $1.5 billion in revenue since privatization.
Both claims are incorrect. The Consumers Association study used median prices (not the lowest prices available in Alberta) and surveyed just 53 products. Also, the group ignored one of the cheapest sources of beer wine and spirits in Alberta: the Real 91原创 Liquorstore chain (a division of the Superstore/Loblaws group).
Eleven years ago, I conducted a more comprehensive review of prices between B.C. and Alberta using pre-tax and pre-markup prices. I made both 鈥渄eep鈥� and 鈥渨ide鈥� comparisons and looked for the lowest available price, not some 鈥渕edian鈥� measurement.
On the deep comparison, I contrasted 1,845 products available at B.C. government stores with two chain stores in Alberta; 83 per cent of beer, wine and spirits were cheaper in Alberta, even including much of the wine produced in B.C.
On the 鈥渨ide鈥� comparison, I compared 166 products available at both B.C. government stores and 100 Alberta stores; 90 per cent were cheaper in Alberta. On a pre-and post-privatization contrast, a 2003 study by economist Douglas West based on 100 Alberta stores found retail prices rose by four per cent in the immediate years after privatization but dropped in the last half of the 1990s, in part due to increased competition.
And what about the claim of lost revenue? The data show Alberta hasn鈥檛 exactly starved itself of booze revenues. Including the first fully privatized budget year (1993/94), and to the end of the last year, the Alberta government reaped $11 billion in mark-ups (read 鈥渢ax鈥�) from beer, wine and spirits. That includes $729 million in the past year alone.
In fact, it is those markups, rather than privatization, that have the most effect on revenues.
Twenty years after Alberta began to dismantle and sell off government liquor stores, no other provincial government has exited the retail side of the liquor business, not for economic or social reasons, but for merely political ones 鈥� too many unionized government employees have a vested interest in the status quo.
The reality is that private retailing of beer, wine and spirits is unremarkable wherever it occurs 鈥� whether in Alberta in standalone private liquor stores, or Europe, where grabbing beer or wine off the grocery-store shelf is considered a normal part of shopping.
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Mark Milke is a senior fellow with the Fraser Institute.
