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 NDParguesthatrosy financial picture could be at riskif more liquor sales are funnelled towardprivateretailers in the future.

The Crown corporation's president and CEO, Manny Atwal, told a legislative committee hearing on Tuesday Liquor & Lotteriesexpects "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 earnsthrough running the province's liquor and gambling operations and supplyingcannabis to retailers,is then directed into the province's coffers.

The nearly $600 million the corporation allocated to the provincial governmentin 2021-22was 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 contributeto the province for programs like health care, roads, education, infrastructure and that."

New legislation

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

The governing Progressive Conservatives made another attemptrecentlyto introducelegislation that would let private wine stores and beer vendorssell a full range of alcohol products, on par with whatgovernment-runLiquor Marts offer.

Mark Wasyliw, the NDP'sfinance critic, said the proposed legislationgoes 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 suggestsManitobans appreciate the status quo, Wasyliw said.

The liquor stores alsofund social responsibility programs, giveprominence to Manitoba-made products and are safe for customers, thanks tocontrolled entrances installed in late 2019 and 2020that 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," saidWasyliw.

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

Atwaldidn't express his opinion on the potential legislation, butsaid he doesn't expect a major revenue change at all. Liquor vendors, for example,can already sell a wideassortment 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 findLiquor Mart stores provide great service,there's still room for othervenues to sell different types of alcohol.

He theorized Manitobans want more one-stop storesfor 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, Atwaltook umbragewith the suggestion Manitoba's cannabis retail market with more than 170stores and counting is oversaturated.

"The comment that there's anoversaturationor that there are too many andthat 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 iscontinuing to rise, but he said whilehe 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 andfoundmanystores 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, asLiquor & Lotteriesestimates around 40 per cent ofrecreational cannabis sales arehandled by illegal players, said Atwal.

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

Wasyliwtold Atwal at the hearing that he's heard complaints that larger cannabisretailers are pricing goods belowwholesale 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.