On Monday night Saskatchewan voters handily re-elected Brad Wall’s Saskatchewan Party with a majority government. Part of Mr. Wall’s platform addressed the issue of liquor retail privatization. Specifically their platform promised this:

“Convert 40 government-owned liquor stores to private stores and add 12 new private liquor
stores in Saskatchewan to provide more choice, more convenience and more competitive pricing to
Saskatchewan consumers.”

If they follow through on this province, that would mean more than half of the current 75 SLGA outlets will be privatized and the number of private stores would quadrupel. It would create an odd hybrid system of public and private retail that I have a hard time believing will be sustainable over the longer term. My suspicion is that this is an initial step and full privatization will follow in a couple of years.

As a resident of the only province that has a wholly privatized system (remember, Quebec still has their government SAQ stores), I would like to say to Saskatchewanians: “be careful what you ask for”.

On the surface, retail privatization seems like a clear winner for both consumers and producers. However, there are many devils in the details and the Wall government has so far offered very few. Even their so-called Green Paper last fall was woefully short on how the system would work. The end result is far more complex.

We will know more in the coming months, but for now here are a few thoughts that Saskatchewan residents should consider before rushing to cheer private retail:

• Privatization in Alberta led to increased beer prices. Alberta now has among the highest prices for beer in the country.
• Be careful about promises of “more choice” and “greater selection”. Yes, Alberta has a proliferation of liquor stores and the highest number of SKUs (product identifiers) in the country. However, scratch a little deeper and you find it is a superficial selection. The bulk of stores are small mom and pop operations that carry the same basic selection as the next guy. There are only a handful of stores that offer a wide selection. Plus, a large portion of those SKUs are multiple packaging formats of the same corporate product.
• 

  Will Saskatchewan private stores look like this?

  One of the biggest questions will be how does privatization affect Saskatchewan’s policy on beer imports? Right now the SLGA decides who gets to sell in the province, and they keep a tight lid on the number of imports. Will there be pressure to create open borders like Alberta has? If so, how will that intensified competition affect local producers? (Ask Alberta breweries how they feel about that.)

• Similarly, will local producers get to self-distribute, or will they be required to go through the SLGA warehouse?
• Will private retailers be required to stock a certain number of local products? That is one of the (potential) strengths of government stores – they can promote local beer.
• There is potential for a huge urban-rural divide. Private retailers (especially those offering decent selection) will want to operate in Regina and Saskatoon, where the profits are. What happens to rural consumers?
• Finally – and I realize it is not strictly beer-related – what of the 400 or so jobs that will be eliminated due to privatization? Sure, new jobs would spring up in the private stores, but no one can seriously compare the two in terms of permitting people to provide for their family.

My biggest worry is the move’s impact on Saskatchewan’s local breweries. The province has seen quite the mini-boom in the last couple years of new, small craft brewery operations. It is a very encouraging trend. However, it is also at a very formative and delicate stage. Most of the new players are not yet fully anchored in the market, and most are still in the “raising awareness” stage. A rapid and uncontrolled influx of imports from around Canada and the world will create a seismic shift in the competitive environment for those new breweries.

Obviously I don’t know what will happen, but neither does the Wall government. Once you unleash market forces, you can never really tell where they are going to push and who is going to get blown over as a result.

The election might be over and everyone wants to go back to normal, but I would advise Saskatchewan beer drinkers to keep paying attention over the next few months. Decisions the government makes in the coming period will have profound impact on the shape of Saskatchewan’s craft beer industry for a long time to come.

I, for one, plan to keep a close eye on developments next door.