Price of wine set to go up in Alberta with new 'value added' fee

The price of a bottle of wine in Alberta is set to go up after April 1.

The Alberta government announced changes to its liquor markups in the recent budget, with respect to wine only, saying it will  "address industry concerns, improve equity within the system, and support the growth of Alberta's liquor manufacturing industry."

The province says the flat rate for wine is going up another 15 cents per 750 ml bottle.

And it's creating a new ad valorem, or "value added" fee, that will go up as the price of wine goes up, on top of the flat fee.

For example, according to the province, a $25 750 ml bottle of wine will cost another 20 to 40 cents, but a $50 750 ml bottle of wine will cost anywhere from $2.80 to $3.25 more.

These changes came as a surprise to some Calgary wine merchants who say they worry about customer backlash.

"If the price goes up a buck or two a bottle on somebody's favourite wine ... we just like it to be very clear that this is taxation by another name and is something we're just having to pass on," said Richard Harvey, co-owner and founder at Metro Vino.

As part of the province's private liquor retail model, Alberta Gaming Liquor and Cannabis (AGLC) charges a markup to liquor products sold in the province. The money goes into provincial general revenue.

In the case of wine, the importer pays the markup, and then typically passes it on to the retailers, who then pass it on to the consumer.

"Basically it [wine] is going to go up in price, is what it comes down to, and it's going to be reflected on what customers pay when they come in through the door," said Ivonne Martinez, president of the Alberta Liquor Store Association. 

Since privitatization in the early 1990s, the markup has been a flat rate based on the percentage of alcohol per volume. 

This is the first time a markup has been created that is based on the price of liquor.

Here's a quick breakdown of the new markup:

• 5 per cent on wines priced greater than $15 but under $20 per litre.
• 10 per cent rate on wines priced greater than $20 but less than $24.99 per litre.
• 15 per cent rate on wines priced greater than $25 per litre.

Martinez says she doesn't understand why they are targeting wine and why the Alberta government complicated the system.

"We were quite shocked by it," said  Martinez. "Now this is going to add extra red tape and it's going to be difficult for liquor stores to figure out exactly how much they are going to need to charge," said Martinez.

In an email to CBC News a spokesperson for the province said these changes followed input from representatives of a wide range of Alberta liquor manufacturers, including distillers, large and small brewers, and makers of refreshment beverages who were critical of the current markup system, saying it led to market distortions between product categories and inequalities between small and large manufacturers.

"Changes to the liquor markup system were undertaken with the objective of minimizing the impact to Alberta consumers and support social responsibility as they ensure products with a higher content of alcohol are subject to higher markup rates," said Brandon Aboultaif, press secretary to the Service Albert and Red Tape Reduction Minister, Dale Nally.

The province also says its approach ensures that higher-value products contribute proportionally, and expects it will only impact 16 per cent of wines sold in Alberta.

But industry representatives believe most wines will be impacted.

Harvey suggests the province should have started the ad valorem markup at a higher price point.

"We just don't think it had been done in the right way, without consultation, without perhaps stakeholders being able to talk about where to peg any ad valorem price increase, and just the rationale behind it in the first place. Why is this necessary? What was the logic behind this?," said Harvey.

But he says people still have time to stock up on their favourite bottle of wine because those on the shelf now won't increase in price. He says the price increase will kick in on new supply ordered on or after April 1.

The  province says the changes are projected to result in a revenue increase of between $22 million to $23 million each year.