Manitoba Liquor & Lotteries expecting 2nd year of record-setting profits for 2022-23

Manitoba Liquor & Lotteries is on the verge of reporting record profits once again, but the NDP argues that rosy financial picture could be at risk if more liquor sales are funnelled toward private retailers in the future.

The Crown corporation's president and CEO, Manny Atwal, told a legislative committee hearing on Tuesday Liquor & Lotteries expects "to make more history" by reporting a higher net income in the 2022-23 fiscal year than the record-breaking $597.8 million reported in 2021-22.

That profit, which the corporation earns through running the province's liquor and gambling operations and supplying cannabis to retailers, is then directed into the province's coffers.

The nearly $600 million the corporation allocated to the provincial government in 2021-22 was a 40 per cent increase from the previous year.

Part of the reason is that Liquor & Lotteries is learning to operate more efficiently, Atwal said in an interview.

"The profit that we're generating from that same amount of revenue is significantly higher, which we can now contribute to the province for programs like health care, roads, education, infrastructure and that."

New legislation

The NDP, however, questioned whether the days of high profits are numbered.

The governing Progressive Conservatives made another attempt recently to introduce legislation that would let private wine stores and beer vendors sell a full range of alcohol products, on par with what government-run Liquor Marts offer.

Mark Wasyliw, the NDP's finance critic, said the proposed legislation goes against the public's wishes.

In response to Wasyliw's questioning at the committee hearing, Atwal said 89 to 93 per cent of respondents to a public satisfaction survey said they were pleased with the government-run liquor stores and their customer service.

The survey suggests Manitobans appreciate the status quo, Wasyliw said.

The liquor stores also fund social responsibility programs, give prominence to Manitoba-made products and are safe for customers, thanks to controlled entrances installed in late 2019 and 2020 that have reduced the number of robberies by virtually 100 per cent, Atwal reported.

"The system is working great, people are happy with it, and the government wants to break it," said Wasyliw.

"And they want to break it so that they can reward special interests that fund their political campaign."

Atwal didn't express his opinion on the potential legislation, but said he doesn't expect a major revenue change at all. Liquor vendors, for example, can already sell a wide assortment of products (except for restrictions on beer sales at rural Liquor Marts). The bill also does not expand the type of stores that can sell alcohol — allowing sales at grocery stores, for example.

Andrew Smith, the government minister responsible for Liquor & Lotteries, told the committee that while many people find Liquor Mart stores provide great service, there's still room for other venues to sell different types of alcohol.

He theorized Manitobans want more one-stop stores for the alcoholic beverages they want, not fewer.

"Other jurisdictions around the world have more choice in alcohol purchases, and I think that's a thing where Manitoba lags behind," Smith said.

"It's time to get with the 21st century. We're already 20-some years into it."

Meanwhile, Atwal took umbrage with the suggestion Manitoba's cannabis retail market — with more than 170 stores and counting — is oversaturated.

"The comment that there's an oversaturation or that there are too many and that many will shut down, that is pretty anecdotal. I don't think it's based on any science or data at this point," he told the committee hearing.

The number of retailers is continuing to rise, but he said while he does anticipate some stores will eventually close, he doesn't expect a significant reduction.

Four stores have closed in the past 18 months, said Atwal.

He said he personally has met with 40 different retailers — including three stores within 400 metres of each other — and found many stores have carved a niche for themselves, catering to different customer bases or offering different products.

There's room for the legal cannabis market to grow, as Liquor & Lotteries estimates around 40 per cent of recreational cannabis sales are handled by illegal players, said Atwal.

Even if the legal retailers got 10 per cent more of the cannabis market, "there's still going to be growth for the overall marketplace," he said.

Wasyliw told Atwal at the hearing that he's heard complaints that larger cannabis retailers are pricing goods below wholesale costs in order to force smaller companies to leave the market.

Atwal said in an interview afterwards he's been hearing about that issue lately and is in discussions with staff about what could be done, but he said the corporation does not have the authority to set prices.