Base prices for cider and spirits going up this month
Toronto – The C. D. Howe Institute, an independent not-for-profit research institute, today reported that while the baseline/floor pricing for beer is being reduced to $1.00 through buck-a-beer, it is being raised for spirits and cider.
The price floor for Class A spirits, including whisky and vodka, will go up 16% from $30.25/litre to $35.10/litre while cider will raise more than 15%, according to C. D. Howe data outlined below:
Table Source: C.D. Howe Institute
This means, for instance, that an Ontario distillery won’t be able to charge less than $35.10 for a 1 litre bottle of vodka. This is similar to how a brewery could previously not charge less than $1.25 for a bottle/can, prior to buck-a-beer.
“If the government was serious about getting its hand out of people’s pocket, it wouldn’t have changed a meaningless baseline rate, it would have reduced the LCBO mark-up or the excise tax, which ultimately determines what you pay as a customer. And most certainly wouldn’t have increased baseline rates on all other alcohol by as much as 16 percent while very modestly lowering the minimum beer price,” says the intelligence memo.
They add, “All in all, the “Buck-a-beer” challenge will likely be ineffective, since the price of beer is determined by much more than for the minimum price floor, including many hidden levies and taxes. If the government really wanted to make beer cheaper, it could increase competition in the alcohol market or lower its share of revenues rather than inefficiently distorting markets.”
These changes go into effect on August 27, 2018 – the same day buck-a-beer pricing goes live.
View the intelligence memo here.
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