Business -
Steve Winter admits to wondering when the bubble might burst. But the CEO of the Newfoundland and Labrador Liquor Corp. (NLC) is in no hurry to see that happen.
The Crown corporation is reporting another record year for sales and revenues, and is also turning over higher dividends to its shareholder - the provincial government - than ever before.
Winter is also predicting further growth in the 2010-11 fiscal year.
Total sales of alcohol and other NLC products have ballooned by roughly 35 per cent in the past five years.
That far outpaces national trends, and numbers like that would be the envy of just about any business.
The trend is almost difficult to comprehend when you consider the province's population has declined in the past five years, and prices for NLC products have remained relatively unchanged.
So, how is this possible?
Winter points to a variety of factors for the improving fortunes of the liquor corporation, most notably an increased affluence stemming from growth in industries such as the high-paying oil and gas sector.
In simple terms, people generally have more disposable income, he explained.
And that is also translating into more purchases of higher-end varieties of spirits and wine.
But Winter also credits sound business decisions by the corporation for making the most of its opportunities.
"I think overall we've just done a whole lot of small things a whole lot better, and the consumer has responded very well," Winter said.
"And in the end it means a whole lot more money for the province."
He said the corporation has transformed itself into a "legitimate retailer" by investing in its stores and products, improving training for employees and offering greater selection.
It's also gotten much better at marketing its products, and prices are comparable with other provinces.
"You might find one or two that are cheaper, but that's all," Winter says.
"Overall, we've kept our prices down, yet we have been socially responsible from the perspective that we don't drop our prices very much."
The corporation's earnings, as a percentage of sales, have also gone up, Winter explained.
"What that basically means is that we're making better use of our investments. We're investing to drive business, but we're bringing back more than we invest," he said.
Those doing business with the corporation also seem to be pleased.
Paul Benson is an area manager for Circle K stores, which operates some Liquor Express outlets, including the one at Circle K Irving in Paradise.
He said the NLC has become more "aggressive" and praised it for being more "customer driven."
"We have a really good relationship with them," said Benson.
The record profits are also welcomed by Finance Minister Tom Marshall. With the provincial government now spending more money each year than it takes in, an infusion of $124 million from the NLC is like gold.
That's more money than the province received last year in lottery revenues, mining tax royalties, tobacco taxes and payroll taxes. The money goes into the province's general revenue fund.
In fact, profits from the NLC represent more than two per cent of the revenue that goes into the provincial treasury.
"They've been doing very well," Marshall said. "We're pleased with the results and we're delighted because we want that money to provide very important public programs."
Some facts about the Newfoundland and Labrador Liquor Corporation:
- $198.8 million - total sales for the fiscal year ending March 31, 2010 (unaudited); that's $16 million more than the previous year.
- $209 million - projected sales for the 2010-11 fiscal year.
- $260 million - total revenue for fiscal year ending March 31, 2010.
- $59 million - commission collected by the NLC from breweries for beer sold last year.
- $124 million - total dividend for 2009-10 paid to the provincial government.
- $132 million - forecasted dividend for provincial government for the 2010-11 fiscal year.
- 550 - number people employed by the NLC.
- Source: Newfoundland and Labrador Liquor Corporation
troberts@thetelegram.com
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