Sky Captain and the World of Tomorrow

Gary Collins has joined a company that could be profitting from decisions made by the Campbell administration when he was finance minister. Last month, the Liquor Stores Income Fund announced it had made Mr. Collins a trustee and a director of Liquor Stores GP Inc. The fund makes its money in the retail booze business via its 72.3 percent interest in Liquor Stores LP - the largest liquour store owner in Wild Rose Country. But it may soon be looking westward for more moneymaking prospects. According to a circular released back in April, the fund management "believes that British Columbia offers significant opportunities for expansion and intends to build on its market position" - which includes three outlets in the Lower Mainland and two elsewhere in the province - "by adding new stores through acquisitions and new store developments."

And why does British Columbia offer "significant opportunities" for expansion? In an interview with Business Edge's Gyle Konotopetz, the fund's president and chief executive officer Irving Kipnes explained "it's tough to get into (the province). Yet, once you get in, the business is very good because there is only about one store for 4,000 to 5,000 people in B.C., whereas in Alberta it's one store for about every 3,000 people or less."

It should aso be noted the Liberals announced regulatory changes in November 2003 allowing private liquour stores to better compete with their government-owned counterparts. And, although the administration has backed away from plans to privatize those public liquour stores, the effort did result in a brief lifting of the moratorium on private store applications in 2002.

That increased the number of those stores from 295 when the Liberals first formed government to 604 today - which has presumably created the kind of investment opportunities the income fund is now looking for. And, at the same time, the government has closed and consolidated its own operations - going from 222 stores to 206.

Fund trustees and Liquor Stores GP directors receive $20,000 per year and $1,250 for each meeting they attend. Fund management didn't respond to an interview request placed this morning. Mr. Collins, who is president and chief executive officer of Harmony Airways, has also not yet returned a call from Public Eye. The income fund amassed $6.1 million in net earnings between January and December 2005, according to its most recent annual report.

2 Comments

Ah yes LIQ.UN, my favorite income trust. There's nothing like selling booze up in Fort McMurray to boost the bottom line.

In BC, their primary strategy has been to acquire existing licensces, rather than opening new stores.

BTW, what's happening to the "Signature Store" on Cambie and 49th? They spent hundreds of thousands to redesign the store, only to have it blocked off by RAV line construction? Oops, poor sales, time to close!

We were shopping for liquor last summer in Grande Prairie at the Great Canadian Superstores liquor branch, a separate, much smaller and rather dreary looking building about 100 feet further down the parking lot from the main supermarket.

Most products were priced similar to BC, within 5%, perhaps 10% on beer and domestic spirits. What stood out was Scotch and American whiskey. Whether blended or single malt, the scotch was much lower priced than in BC. A bottle of an entry level single malt that sells for $40 in BC was on for $27 in Grande Prairie, a more than 30% savings. Apparently this has to do with an Alberta philosophy of "flat taxation" on imported liquor. Alberta charges something like $13 per litre of whiskey, whatever it's price, while all other provinces charge on some kind of percentage of price schedule.

And you know, it's kind of annoying to be travelling in Washington State and see a case of Corona beer for $12, instead of $21 here. Even after the exchange rate, that's a bit of a difference.

The other thing I cannot understand about the marketing aspects is why we cannot have beer and wine in supermarkets as in Washington State. Selling beer and wine in food outlets helps to reposition the product in the public's mind, away from booze and towards a beverage consumed with food in civilized company. And why can't gas stations cannot sell the product as they can in Washington, and as they can in BC if they are in rural areas and have one of the "agency" licences. And why can't even the Signature stores have refrigerators for beer and white wine?

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