| You would think in this hot Alberta economy that booze would be flowing as freely as bubbling crude, but that isn’t the case. Most of this past spring and summer there have been rolling shortages and it is affecting everybody from the Alberta government’s warehousing system – Connect Logistics Services – to trucking companies that ship the booze, the Ma and Pa liquor stores, liquor sales agents and Alberta’s burgeoning microbrewery business.
The Alberta Gaming and Liquor Commission (AGLC) oversees the operations of Connect Logistics, a privately contracted distribution warehouse. It has a catalogue of 13,000 types of liquor from more than 70 countries, and ships it to more than 320 Alberta communities.
Connect Logistics ran with the precision of a finely tuned Mercedes, but it got hit hard by Alberta’s blazing hot economy and this Mercedes now has some engine problems. With revved-up incomes, Albertans are spending more on booze and Connect has had a 13 per cent increase is sales over last year (roughly 25 million more bottles of beer and 11 million more bottles of wine than last year).
Then, in April, Connect Logistics contracted a case of Oiler’s fever. Its 12-plus employees kept getting mysterious flu-like symptoms every time the Oilers had a game during their long playoff run. Connect Logistics was powerless to reprimand any of its staff for these sick days in the current economic climate. "They’ve got tons of disposable income and if I fire them, they go across the street and get a job," says Rob Madore, Senior Director of Connect Logistics.
The problems of Connect Logistics are magnified once the booze leaves the warehouse. Due to upstream booze-flow problems Marshall trucking is not getting deliveries and is having to send drivers home without work. Staff retention troubles are further interrupting the flow of spirits.
Stores wind up short on the niche products Fast Forward booze column readers appreciate. The constant complaint is that it is like ordering in the dark, store owners never know what is coming. The ironic thing is licenced liquor vendors and retail stores have strict rules and must pay for their order before it is picked and delivered. Stores weren’t getting orders for up to nine days. The store has its money tied up, and winds up refrigerating empty shelves. Owners do get a credit note when product is short shipped, but what do they sell their customers? Dave Nutall of Royal Liquor Merchant’s complaint is, "We have 30 on staff during the day, but lately there is no scheduled arrival and consistency. Connect deliveries arrive at night when we have five on staff." One owner of Stampede Liquor has launched a well publicized $250,000 lawsuit against Connect Logistics’ for lost revenue.
For the liquor agents this has been particularly hard. Some agents represent products in our neighbouring provinces and use Connect as the shipping point. When Connect first had its labour problems in April the first thing it did was end all shipments out of province. Theoretically, an agent could now have several times as much product as needed for Alberta sitting at the warehouse. This problem could be compounded with beers that have relatively short shelf lives and thus risk spoilage. Connect charges warehousing charges weekly. This means the agent has a ton of beer he didn’t count on for the Alberta market. Also, he is charged to warehouse this product.
Liquor sales agents who import alcohol are also facing extra cargo charges. Railway companies charge a $150-per-day, per-container, fee for additional storage days. While awaiting AGLC release approval paperwork, one wine agent had to wait two months for his container to be released. (This was not the fault of Connect Logistics.) Fortunately these were refrigerated and his product didn’t spoil. However, this is not the case with every product that comes to Alberta. These additional charges will eventually come out of the consumer’s wallet.
Vern Raincock of DeLancey Direct Inc. estimates that Connect’s problems have cost him 30 per cent of his income this year. Other agents have endured similar financial loss.
One feels for the craft breweries of Alberta. They cater to the adventurous, educated consumer, who will give a new product a try but will not buy it again if the product is off. Craft brews that are unpasteurized must be refrigerated, and with staff changes at Connect this is not happening. Once again, add in extra charges for warehousing, and Connect is shipping sour beer the brewery will have to buy back. As well, breweries are loosing customers they will never regain.
Numerous agents, brewery owners and retail staffers say the system stops short of favouring larger operations. However, it is a classic case of the big getting bigger as the large breweries like Molson, Labatt’s, Sleeman’s and Big Rock have their own distribution systems that allow them to warehouse and deliver their products. They’ve suffered less damage for this. The largest retailers, who sell a lot of the big company product, appear to be less impacted as well. Western Canada’s two largest liquor retailers – Liquor Stores Income Fund and Liquor Barn Income Fund, both headquartered in Edmonton – are soaking up huge profits for unit holders.
With the economy going strong and the many for-hire signs that are in evidence everywhere, it is unlikely that this situation will be solved or even improved upon in the near term. Expect to see increased prices and limited supplies. Never mind stockpiling water or food, it may be time to stockpile liquor. |
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