As the National Post has reported, in October 2012, Gérard Comeau, a New Brunswick man, was arrested for returning from Quebec with cheaper beer. Unbeknownst to Comeau, a provincial law implemented during Prohibition forbade importing more than one bottle of wine or 12 pints of beer (approximately 19 bottles of 355ml) into New Brunswick from any other province.
Naturally, Comeau plans to challenge the arrest and seek justice for what he, along with the Canadian Constitution Foundation (CCF), regard as a violation of the Constitution — section 121 of which guarantees the free trade of “manufactured” goods across provincial borders.
But while Comeau is right to challenge his arrest, missing from the conversation entirely is the reason Comeau opted to travel to Quebec to buy beer in the first place.
Liquor retailing in Canada remains, to a greater or lesser extent, under firm government control. In fact, with the exception of Alberta, every province continues to operate a government-run liquor retailer.
In various degrees, these provincial governments contort themselves into several forms of problematic conflicts and economic inefficiencies when they import, transport, warehouse, distribute and sell alcohol while they simultaneously regulate the same and many other related activities, such as labour issues and taxation.
In Ontario, the incarnation of these conflicts and inefficiencies is called the Liquor Control Board of Ontario (LCBO); in Saskatchewan, the Saskatchewan Liquor and Gaming Authority (SLGA); in Nova Scotia, the Nova Scotia Liquor Corporation (NSLC); and in New Brunswick, the New Brunswick Liquor Corporation (NBLC).
Founded in 1976, the NBLC became responsible for the purchase, importation, distribution and retail activity for all alcoholic beverages in the province. Prior to the NBLC, this was handled by the Liquor Control Board (LCB), created in 1927. Taken together, the NBLC and LCB represent nearly 90 years of government-controlled liquor retailing in the province.
According to the NBLC website, the purpose of its control is to “responsibly manage a profitable liquor business for New Brunswick.” That profit, from liquor retailing or anything else, must be “responsibly managed” by a state monopoly in the 21st century is a remnant of an era long gone.
It is a basic fact of economics that less competition in the marketplace means higher prices for consumers. Accordingly, without more than one retailer, liquor prices in New Brunswick remain comparatively high — so high that many New Brunswickers gladly travel to neighbouring Quebec where, in addition to the provincially run Société des alcools du Québec (SAQ), grocery stores, convenience stores, and several private retailers are allowed to sell beer and wine.
Interestingly, recognizing the problem, the NBLC put in place an even more self-centred and restrictive attempt at a solution. In 2009, then president and chief executive officer of the NBLC, Dana Clendenning, estimated that New Brunswick was losing about $12 million in annual sales because of enterprising individuals like Comeau. But rather than liberate the market and bring down prices, the NBLC decided to extend its activity into a part of the alcohol business it had not yet ventured into; the brewing business.
In what can only be described as a destined to fail attempt at trying to curb the flow of New Brunswickers travelling to Quebec to buy cheaper beer, the NBLC brewed and sold its own discount brand, NB Select.
The NB Select “solution” suffered from two problems until it was discontinued in 2011 due to low sales. Monopolies being monopolies, the NBLC assumed that New Brunswickers’ tastes were monotone and that the introduction of one “discount” beer would sufficiently prevent consumers from seeking a wide selection of premium brands at relatively low prices elsewhere. Second, despite marketing illusions, NB Select was hardly discounted. In 2009, a 12-pack of NB Select cost $18.67 — the lowest possible price for a 12-pack given New Brunswick’s pricing policy at the time. By comparison, a 12-pack of Molson Canadian in Quebec currently retails for around $16.99. Clearly, it is cheaper to buy established beer brands in Quebec today, than it was to buy NBLC’s solution in New Brunswick six years ago.
John Adams, cousin of the famous brewer Sam Adams, once said that “facts are stubborn things.” The economic fact that more competition means lower prices for consumers is case in point. Unless the government of New Brunswick opens up the alcohol retailing market, prices will remain high and individuals like Gérard Comeau will continue to travel out of province to buy their beer.
The simpler solution, more in keeping with the times, is not out of reach. At a time when New Brunswick is in a tight fiscal corner, why not liberalize the market and turn the province into a place where Quebeckers travel to buy beer, instead?