(UPDATE: I am hearing that the following pricing model may be adjusted ... however, there has been no confirmation of that yet.) Here is a short summary of the proposed changes to wholesale pricing for BC set for April 1, 2015 with some new examples. Some information has been circulating that the price projections presented here earlier (Liquor Law Changes 2015) were "speculative" and that "end consumer prices would not change". I respond to those claims below.

On the first point, the price projections are estimates but they are not speculative in the sense that they are mere guesses. They were based on the pricing formula that has been publicly released and confirmed by the LDB. Any end consumer price projection that is based on wholesale pricing needs to assume a retail profit margin. These estimates were made assuming profit margins equivalent to the current 16% margin for LRS stores and the 30% margin for independent wine stores. The 16% margin is actually a very low assumed profit margin given that the declared operating costs for LDB retail stores are 17-18% and that Costco, probably the lowest margin retailer, works on 14%. As a result, please note that the low end price projections, in my view, are an absolute best case scenario. The price increases will likely be in the higher end of the range because most retailers would use a margin of greater than 16% (e.g. BC LDB stores would lose money at 16% because their operating costs exceed the margin).  

In respect of the latter issue, it is my view that it is not possible for end consumer prices to stay the same for medium to high priced wine using the new pricing formula (nearly all retailers that I have spoken to agreed with this conclusion).  The wholesale markup (liquor taxes) on medium to high priced wines will increase substantially for all wine above a wholesale cost of $8.81 per 750 ml bottle. Indeed, for some higher priced wines such as those listed below, the new BC wholesale price will actually exceed the current pre-tax retail price! It is not possible to increase wholesale prices substantially without having an effect on retail pricing.

The following examples provide cost comparisons for some relatively well-known high end wine products, showing a range of projected prices between the 16% and 30% retail margins:

Wine Current BC Retail Price  Current BC Wholesale Price New BC Wholesale Price  Current Alberta Wholesale Price  New BC Retail Price Range 
Veuve Cliquot Champagne  $69.99
(60.85 pre-tax)
$51.11$63.05 (+23%)$46.28$86.28 to $103.69
Dom Perignon Champagne$221.95
(192.99 pre-tax)
$162.11  $209.19 (+29%)$166.28$286.28 to $344.01
Cakebread Napa Cabernet$99.95
(86.90 pre-tax)
$73.00$91.86 (+26%)$59.50$125.71 to $151.06

And this table provide some cost comparisons for relatively well-known medium priced wines, again showing a range of projected prices between the 16% and 30% retail margins:

Wine Current BC Retail Price Current BC Wholesale Price New BC Wholesale Price Current Alberta Wholesale Price New BC Retail Price Range
Pirramimma Petit Verdot $29.99
($26.08 pre-tax)
$21.91 $24.58 (+12%) $18.15 $33.64 to $40.42
Crognolo (Tuscany Blend) $36.99
($32.17 pre-tax)
$27.02   $31.32 (+16%) $23.17 $42.86 to $51.51
Beringer Knights Valley Cabernet   $44.99
($39.12 pre-tax)
$32.86 $39.02 (+19%) $27.75 $53.40 to $64.17
Tommasi Amarone $59.99
($52.17 pre-tax)
$43.82 $53.45 (+22%) $37.14 $73.15 to $87.90

In the chart above, note the substantial increases in wholesale prices for BC retailers, the fact that those wholesale prices are far higher than Alberta wholesale prices, and the substantial increase in end consumer pricing. As a result, there will likely be price increases at the high end of at least 25-30%, probably much more. I'll add some medium priced wine examples shortly.

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