NB Liquor's cheap beer promotion cut into its profit margin
A summer-long cheap beer promotion in NB Liquor stores cut into the Crown corporation's profit margin to an extent where it could not continue the promotion.
Figures released by NB Liquor on Monday show the promotion, which offered four 15-packs of selected brands for $74.99, or two 15-packs for $49.99, or one 15-pack for $27.99 was profitable, bringing in a profit of $13.2 million on sales of almost two million units for $32.2 million.
"Although profitable, the beer promotion had a negative impact on overall profit margins, extending the summer promotion would continue to reduce ANBL's performance to fiscal budgets," states an analysis of the promotion by NB Liquor.
In the first three months of the fiscal year, beer sales were down by one per cent, but the summer-long promotion reversed the negative trend and beer sales grew by 3.7 per cent in the second quarter.
"However, financial analysis illustrate[s] continuing the beer promotion for the remainder of this calendar year at significantly reduced margins is not sustainable."
NB Liquor said the beer promotion from July 4 until Oct. 9 also had a negative effect on its spirits sales (down 0.6 per cent) and its "ready to drink" category, or coolers, which was down 12 per cent.
Craft beer sales in NB Liquor stores were not affected as those sales increased 16 per cent in volume and 21 per cent in dollar value.
In its breakdown of 15-pack sales through the promotion, NB Liquor states:
- There were 1,626,768 15-packs sold in bundles of four, for sales of $23,930,428 and a profit of $9,220,848.
- There were 31,130 15-packs sold in bundles of two, for sales of $635,986 and profit of $353,853.
- There were 333,085 15-packs sold as single units, for sales of $7,670,948.
The promotion had $19.7 million in production and promotion costs, which were shared with participating brewers.
