Newfoundland and Labrador Liquor Corporation (NLC) Announces Fourth Quarter (Q4) Performance and Fiscal Year End Results

    15 June 2021

NLC today released its financial and operational results for the fourth quarter and fiscal year 2021 ended April 3rd, 2021. All financial information is unaudited, with our 2021 Annual Report containing audited financial information to be released later this year.

NLC reported a 3.0% increase in Net Earnings during the quarter compared with Q4 of fiscal year 2020. Total Net Earnings for the year increased by 8.3% compared with fiscal year 2020, for a total of $200.6 million, with a dividend of $195.0 million delivered to NLC’s sole shareholder, the Government of Newfoundland and Labrador. The dividend is the second largest in NLC history. This fiscal year marks the end of the first year of NLC’s 2020-2023 Business Plan.

“With the challenges presented by the COVID-19 pandemic, this year was unlike any other for most businesses, including NLC,” said Bruce Keating, President and CEO. “The significant changes to our business, beginning late in the previous fiscal year, continued and were further enhanced to enable NLC to continue to provide outstanding service to Newfoundlanders and Labradorians right across the Province. First and foremost, the health and safety of our employees and customers continue to be our number one priority.”

Beverage Alcohol

Beverage Alcohol sales for Q4 were $54.6 million, down 1.1%, mainly due to the increased sales in Q4 of fiscal year 2020 resulting from the uncertainty around the onset of the global pandemic. Sales overall were up 3.8% in fiscal year 2021 over fiscal year 2020, to $279.8 million, with an increase in both spirits and ready-to-drink (RTD) categories. Spirits sales were up 5.5% and RTD increased 46.1% compared with the prior year. Wine and beer sales both declined, with the wine category down 1.9% and beer sold through NLC corporate stores down 14.5%.

NLC’s sales performance reflected the continued impact of special public health measures from the Chief Medical Officer of Health and safety measures introduced by NLC, including restrictions on the access of customers to its corporate stores, increased cleaning and safety protocols and the continuation of online ordering and store pick-up “click-and-collect” process. The pandemic has caused significant changes in the buying patterns of our customers, with an emphasis on familiar brands and large format sizes. Sales through NLC’s corporate stores were down 2.5% compared to the prior year, mainly due to reduced customer traffic caused by the pandemic, while Liquor Express outlets across the Province experienced an increase of 30.1% over the prior year.

In addition to direct sales, NLC earns commissions on the sale of beer through Brewers’ Agents. These commissions for the quarter totaled $16.0 million - up 19.1 % over the fourth quarter of fiscal year 2020, and up 11.3% for the year, for a total of $70.3 million in fiscal year 2021.

Cannabis NL

Commissions earned on the sale of cannabis through licensed cannabis retailers (LCRs) totaled $4.1 million in Q4, for a total of $14.5 million for fiscal year 2021, an increase of 34.1% over the prior year. Net Earnings from the sale of cannabis totaled $11.1 million for the year, an increase of 66.4% over last year.

In Q4 of fiscal year 2021, retail cannabis sales were $14.2 million and for fiscal year 2021 sales grew 35.7% to $52.1 million.

Similar to the beverage alcohol line of business, economy and larger formats are performing well, with high THC flower and CBD ingestible extracts in high demand. Edibles, concentrates and beverages are selling well as incremental purchases.

NLC continued to increase access points of cannabis throughout the Province by opening five new LCRs in St. John’s, Goulds, Burin, Gander and Grand Falls-Windsor in the last fiscal year. The total number of LCRs in the Province now is 30. NLC also issued a Request for Proposals prior to year-end for 16 new LCR locations to further increase customer service and disrupt the illicit market.

NLC currently has 19 licensed producers in the market, including supply agreements with local producers BeeHighVE and Argentia Gold. NLC continues its efforts to bring new and exciting offerings to the market including the introduction of eight new licensed cannabis producers which are due to arrive in market in June of 2021.

Rock Spirits

NLC invested in a canning line for Rock Spirits, to add to the existing bottling and blending lines. In conjunction with the investment, NLC announced its first commercial canning co-packaging agreement, with Corby Distilleries, to can a selection of RTD products, Lamb’s Sociables, destined for the provincial market. Along with this co-packaging agreement, Rock Spirits also launched the popular rum-based RTD, Screech Punch. In total, Rock spirits produced 9,000 cases of RTD in the last fiscal year. The investment will provide Rock Spirits with greater capacity and flexibility to enter into third party co-packaging agreements that help expand manufacturing activity and create jobs here in the Province. Rock Spirits also produced 286,000 cases of spirits that were distributed throughout the Province and exported to other provinces and various international markets.

Regulatory Compliance and Enforcement

NLC’s Regulatory and Compliance department worked closely with the licensee community to help navigate through the pandemic and public health measures. NLC worked especially closely with restaurants and lounges to ensure business continuity as this group transitioned through the various COVID-19 Alert Levels. Regulatory and Compliance conducted 1,095 inspections on licensees in Q4 and 4,584 inspections for fiscal year 2021.

NLC’s Regulatory Compliance and Enforcement department continues its efforts to disrupt the groups controlling the illicit cannabis market by conducting comprehensive investigations and executing warrants resulting in significant seizures of contraband product. In 2021, NLC worked with its partners in local law enforcement and Canada Post to investigate 27 files resulting in seizures of 148 kg of cannabis products with a market value of $1.7 million. Since legalization in October 2018, NLC’s Regulatory Compliance and Enforcement team has seized $4.8 million in illegal cannabis products. NLC is committed to providing systematic and thorough regulatory oversight that helps ensure public safety and provides a safe and secure supply of cannabis to the Province. NLC

Corporate Responsibility

NLC is committed to being a leader in corporate responsibility, promoting a positive impact on consumers and other stakeholders in the Province through our actions in social responsibility, sustainability and corporate governance.

NLC wants to ensure it has leading practice corporate governance controls and Board protocols in place to ensure it is effective, open and transparent. NLC’s Board of Directors has undertaken a review of all corporate governance policies and procedures and is making changes to ensure it is a leader in Board oversight to further build public trust.

In the areas of social responsibility and community, NLC has developed many partnerships with various community groups and charities throughout the year. NLC provided financial support to groups such as Mothers Against Drunk Driving, Fetal Alcohol Spectrum Disorder of Newfoundland and Labrador, The Gathering Place, Community Food Sharing Association, The Wiseman Centre, Transition House Association of Newfoundland and Labrador, Hospitality Newfoundland and Labrador, Citizens Crime Association, Crime Stoppers, The Association of New Canadians and Law Enforcement Torch Run.

NLC partnered with the Royal Newfoundland Constabulary (RNC) and the Royal Canadian Mounted Police (RCMP) on initiatives focused on responsible consumption of alcohol and cannabis. NLC along with RCMP launched social responsibility marketing campaigns that focused on drinking and driving, with “Don’t Drink and Drive and Never Drive High. It’s that simple!” and around responsible ATV and recreational vehicle usage with, “Don’t Drink and Ride and Never Ride High.”

NLC has made it a priority to create an environment where diversity and inclusion is fostered and employees are valued, respected, safe and provided the opportunity to succeed. To this end, NLC has undertaken a number of steps to integrate diversity, inclusion and belonging awareness into the daily workplace. Further, NLC is looking to increase diversity in the workplace through its training, promotion and hiring practices. NLC’s Diversity, Inclusion and Belonging Committee continues to help drive NLC’s diversity agenda and has coordinated several initiatives to increase staff understanding and awareness, such as Pride Month activities, Bell “Let’s Talk” Day, Anti-bullying Day and International Women’s Day to name a few.

COVID-19 Pandemic Special Response

With the onset of the pandemic near the beginning of the fiscal year, NLC’s Rock Spirits (blending and bottling operations) team took the unprecedented step of repurposing its manufacturing assets to produce hand sanitizer for the various health, long-term care, government departments and other public agencies to support the Province’s broader response to the COVID-19 crisis. Rock Spirits produced 15,000 cases of hand sanitizer in fiscal 2021.

As additional steps, NLC announced a series of measures to assist businesses that deal with NLC which have been hit hard by the pandemic:

  • Discount on certain purchases from NLC for restaurants, lounges and other licensees.

  • Increase in the commission discount on beer from craft breweries.

  • Waiving liquor license fees for fiscal year 2020-21 for lounges, bars and restaurants and other licensees, excluding Brewers’ Agents.

  • Temporary waiving of warehousing service fees for smaller craft breweries with annual production of 1,000 hectoliters or less that use NLC’s distribution network.

  • Support for Government’s decision to bring forward legislation allowing temporary direct sale of alcohol to customers of restaurants and other licensed establishments that sell prepared meals for takeout, curbside pick-up and delivery.

  • Expanded market access for local craft breweries, by collaborating with them through our distribution and marketing efforts.

  • Assisted licensees on how to successfully navigate through COVID-19 restrictions, wherever possible.

“As the new President and CEO, I’m tremendously proud of the efforts of the entire team”, said Bruce Keating. “The business has been turned on its head as a result of the pandemic, and our employees rose to the occasion in every part of the organization and maintained their focus on our customers and partners.”

About NLC

NLC is a Crown Corporation of the Government of Newfoundland and Labrador with responsibility through the Liquor Corporation Act and the Liquor Control Act for importation, sale, distribution and regulation of beverage alcohol, and for the delivery of programs that promote safe, responsible consumption of alcohol.

On October 17th, 2018, the Cannabis Act came into effect federally, regulating recreational cannabis markets in Canada and providing the Government of Newfoundland and Labrador with the authority to prescribe regulations regarding the distribution and sale of non-medical cannabis. Under Newfoundland and Labrador’s regulatory model, NLC, through the Cannabis Control Act, has been given responsibility for regulating the sale and distribution of non-medical cannabis, and for social responsibility initiatives that promote safe and responsible use of non-medical cannabis. NLC is committed to providing a safe and secure supply of legal cannabis for residents of the Province, while disrupting the illicit market. In doing so, it recognizes the importance of province-wide accessibility both online and through retail locations.

NLC is one of the largest retailers in the Province. Through 29 corporate retail locations, eCommerce, catalogues, private order services, more than 140 agency stores, almost 700 Brewers’ Agents outlets, and more than 1,500 restaurants, lounges and other licensees, NLC offers 4,000 to 5,000 products per year to consumers and its retail partners from more than 20 countries, and handles six to seven million transactions annually in corporate stores and agency locations. It also regulates 30 licensed cannabis retailers across the Province; and operates a 77,000 square foot Distribution Centre, employing 600 people in all parts of the business.

NLC operates with the expectation that it will generate revenue for the Government of Newfoundland and Labrador that will be reinvested for the benefit of people of the Province, and returns 100% of its profits to Government to help fund key public services. NLC aspires to earn trust in everything it does – with customers, employees, retailers, commercial partners and communities in which it operates and with Government as it works together to build a stronger Newfoundland and Labrador.

Media Contact:
Darrell Smith
Manager, Marketing & Communications
Newfoundland and Labrador Liquor Corporation
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