British Columbia Quick Facts as of 2015:
Government operated liquor stores: 196
Private operated liquor stores: close to 700
Private wine stores: 12
Duty free stores that sell liquor: 11
Rural Agency Stores: 221 (RAS— general merchandise stores in rural communities authorized to sell all beverage alcohol products);
Restaurants: close to 5600
Pubs and clubs: close to 2500
Manufacturers – wineries, breweries, and distilleries: close to 570
36.2 million retail customer visits in 2013
335,000 wholesale customer transaction for 2013
Gross sales Operational year 2013/2014 – $2.94 billion
Gross sales Operational year 2012/2013 – $2.95 billion
Gross sales Operational year 2011/2012 – $2.9 billion
Gross sales Operational year 2007/2008 – $2.7 billion
Importing liquor in Canada is heavily regulated, controlled, and monitored by the respective Provincial Government represented by a Liquor Board. Every Liquor Board operates in accordance with their own policies and guidelines, which makes them autonomous. The Liquor Board in British Columbia is called “British Columbia Liquor Distribution Branch” (BCLDB). BCLDB is the only organization allowed to purchase, import, and distribute alcoholic beverages in British Columbia. Now I would like to list some of the most important principles, in regards to the BCLDB regulations and guidelines:
- Only BCLDB has the authorization to import liquor into British Columbia. This may sound a bit confusing the way it sounds, so that is why I want to elaborate a little bit on this. The only importer of liquor, in this context means that BCLDB imports on behalf of already approved agent/distributor. To be approved (to be licensed), one of the main requirements is to be a resident of British Columbia. This brings the conclusion that direct relationship between the winery (supplier) from outside Canada, and BCLDB cannot be established without an agent/distributor that resides here in British Columbia.
- All licensees (private liquor stores, restaurants, bars, clubs, hotels and others) must purchase their liquor products from BCLDB (not from the Agent/Distributor). This means that the agents/distributors cannot sell directly to the licensees or the public. They order through the BCLDB warehouse.
- It is very crucial to know the mark-ups that are imposed on the liquor by the BC Government. The old pricing system before April 1st, 2015: the mark-up on wine products was 123%, and on spirits was 170%. Let me give you a quick example to assimilate those numbers: If you want to import a case of wine that has a supplier’s cost of say $47.28 (for 12-bottle case, so a prime cost of $3.94 per bottle), and then we add all expenses including shipping and freight forwarding costs + warehousing + insurance + delivery costs + import duty + agent commission (all those expenses are called domestic charges) of say $19.92 (per case), then when we add those two amounts to get the total of $68,20 (per case). Based on this total, you will get a display price of $15.98 per bottle. This $15.98 will be the price for which you will sell your wine products to all licensees. It includes your supplier’s cost + your domestic charges + 123% provincial mark-up + duty and excise tax + cost of service adjustment + container recycling fee + lastly the 12% HST on the subtotal. For beer products, the mark-up is formed in accordance with the annual production at the brewery measured in hectoliters (1 hectoliter = 100 liters).
NEW WHOLESALE PRICING SYSTEM THAT IS IN EFFECT APRIL 1st, 2015
In April, 2015 the BC Government has implemented major changes in the liquor pricing system in British Columbia. Essentially most shelf prices for lower priced products did not change much. On the contrary for higher priced products, shelf prices increased by a small percentage.
The Government introduced the so called wholesale price for all liquor retailers. The main idea was to create a level playing field for all retailers – both private and Government. As a result all liquor retailers purchase their products at a set wholesale price by BCLDB, where there are no more discounts given to the different private liquor stores (up to 16% for private liquor stores, and 30% for independent wine stores). To compensate the discounts that were taken away, the wholesale price is lower as a result of reduced provincial mark-ups.
To get an idea how the new system works, let’s use the above example again, so you can understand in more details how liquor products are now priced.
If you want to import a case of wine that has a supplier’s cost of say $47.28 (for 12-bottle case, so a prime cost of $3.94 per bottle), and then we add all expenses including shipping and freight forwarding costs + warehousing + insurance + delivery costs + import duty + agent commission (all those expenses are called domestic charges) of say $19.92 (per case), then when we add those two amounts to get the total of $68,20 (per case).
Based on this total, using the wholesale pricing calculator that is given by BCLDB only to importers, the new wholesale price for your wine will be $11.61
Here the provincial Government mark-up is reduced from 123% to 89% and this wholesale price does not include GST and PST. So all liquor stores – both Government, private, and rural agency stores will purchase your wine for $11.61. From here they have to add their personal retail mark-ups. Depending on the different stores this mark-up can typically range from 20-35% per bottle. Or $11.61*35% = $4.06
From here $11.61+$4.06 = $15.67 Now we have to finally add the GST and PST which are 15% for all liquor products or $15.67 * 15% = $2.35
THE VERY FINAL PRICE THAT CONSUMERS WILL PAY FOR YOUR WINE AT THE CASH REGISTER: $15.67 + $2.35 = $18.02
Once you comprehend the above information, and prepare a detail business plan (ofcourse it is up to you whether you want to create it) that will include your target market, SWOT analysis, financial planning (expenses, and expected revenues), you will be ready to move on to the next step – apply for a liquor license. In the next few pages of this article, I will show you the exact steps that you need to follow in order to get a liquor license for distributor.
1. First you have to register a business in BC.
To do that simply go to http://www.bcbusinessregistry.ca/index.htm, and follow the steps that are shown. First, you have get your business name approved. Click on “Choose your business name and get it approved”. From here it is self explanatory. Click on “Name Requests Online”, and from there after you do name research for your business, click on step 3 “Submit a Name Approval Request”. Then click on “I am ready to start”, and fill in the online form. This will be the place where you will pay the name approval fee of $31.58, and you will get a receipt that you can print out for your records. This whole name approval process should take about 3-4 days, when submitted online. After the name approval it’s time to register the business. Again go tohttp://www.bcbusinessregistry.ca/index.htm and click on step 3 “Ready to register your business for”. After clicking on step 3, then click on “Create OneStop ID”. Here you either tick on the “Registration of a Sole Proprietorship” or “Registration of a General Partnership”. Then tick on the third one “Canada Revenue Agency – GST/HST”. Last but not least, click on “Canada Revenue Agency – Import/Export Accounts. This is required for any import/export business. Then click next and on the next screen just input your first/last name, the user ID is given to you by default, so all you have to do is just type in a password. Click next and fill in the form answering all the questions they need. In a week or so, you will receive the registration documents through mail. Canada Revenue Agency documents will come a bit later.
2. Prepare the British Columbia Liquor Distribution Branch (BCLDB) Document Portfolio
Go to http://www.bcliquorstores.com and from there go to “About Us”. On the left, click on “Information for Liquor Suppliers & Agents”. After reading the page, you will notice an e-mail address - email@example.com Send an – email to this address requesting for the package of information on LDB policy and procedures for listing/registration. I got a reply after two days. In this e-mail you should receive around 10-15 documents which will include the portfolio that has to be filled in and sent. After you fill in the above forms, put them together in an envelope, and mail them to:
2625 Rupert Street
Vancouver, British Columbia
Right After you send the BCLDB document portfolio, I would recommend you to send the Liquor Control and Licensing Branch (LCLB) document portfolio as well. Do this because LCLB will contact the BCLDB to make sure you have registered products for sale and distribution in British Columbia, and after that they will issue the Agent License. So first you have to be approved by the BCLDB, and then by the LCLB. Within 3-4 weeks you should hear from BCLDB about the status of your documents. Make sure you have the initiative, and do follow up calls with the branch, to check on your status. Sometimes this could speed up the process.
3. Prepare the LCLB Document Portfolio
The organization responsible for approving and issuing licenses, regulating and monitoring the liquor industry in British Columbia is called Liquor Control and Licensing Branch (LCLB). The official website is http://www.hsd.gov.bc.ca/lclb/
To apply for agent/distributor license go to “Applying for a Liquor License”, located on the left-hand side of the blue navigation bar. Here you will see the different option you can apply for. Click on the first one “Agent’s License”.
After reading the 9 steps carefully, you are ready to start preparing your document portfolio. To download the necessary documents go to step 4 “Submit Your Application”. There are four main forms: “Application for an Agent’s License”, “Personal History Summary and Consent to Criminal Record Search Form”, “RCMP Consent for Disclosure of Criminal Record Information”, and “Statutory Declaration” – in case you are living outside Canada, or have been living in Canada for less than five years, you have to fill in this form, and get it signed by a Lawyer, Notary Public, or Commissioner for Taking Affidavits – stating either that you have not been charged or convicted of a crime, or providing details of any past charges, discharges, convictions or sentences. As I already noted above, send the LCLB document portfolio at the same time with the BCLDB documents. It takes approximately the same time to be processed (2-4 weeks), and both applications go hand in hand, since LCLB won’t issue a license before your products get approved by the BCLDB. After having an interview with a LCLB inspector, and assuming your application was successful, you should receive your Agent License within 10 days (after the interview). This License will allow you to import, distribute, and sell liquor in the province of British Columbia.
If you want to get a detailed information pertaining to the liquor industry in British Columbia, you can purchase my eBook from the right-hand side panel of this blog.
I personally went through the whole registration and importation process of alcoholic beverages for the two provinces, and now I decided to share some of my invaluable practical experience through the eBook that I have written called “How to Register a Business and Import Liquor In British Columbia”. My eBook is a real blueprint that includes scenario examples, samples/snapshots of important forms, important calculations on how to formulate liquor prices (including an update with the new pricing system as of 2015), snapshots of important sites, guidance on how to fill in important forms and register products for sale and distribution, detailed analysis on the new wholesale pricing system implemented in April, 2015, sharing my personal experience with the BC liquor system including the steps that I do once the container arrives at the bonded warehouse, differentiating the important advantages and disadvantages of Government and private liquor stores, describing which marketing methods have given me the best return on investment, and much more.The only book on the market that covers this specific topic! A priceless blueprint that can save you months of research, and thousands of dollars for professional advice.
At any time you can download free sample pages of the book, to get an idea of the content.