NLC today released its financial and operational results for the third quarter of fiscal year 2023, ended December 31, 2022. All information is unaudited.
NLC reported net earnings for the quarter of $55.6 million, a decrease of $2.0 million, or 3.4%, compared with Q3 of fiscal year 2022. The dividend paid by NLC to the Government of Newfoundland and Labrador totaled $54.5 million for the quarter, $0.5 million lower than Q3 of the prior year.
“The third quarter has been a strong quarter with beverage sales and cannabis sales both exceeding results for the same quarter a year ago,” said Bruce Keating, NLC President and CEO. “Earnings are down slightly and this reflects the impact of the new collective agreement and commission changes to support cannabis retailers. Given the uncertainty as we emerged from the pandemic and challenging economic conditions, we’re pleased with the results and cautiously optimistic as we look ahead.”
Beverage Alcohol sales for Q3 were $89.0 million, up 3.1% vs prior year, with increases in all product categories. Compared with Q3 of 2022, RTD (ready to drink) sold through NLC corporate stores increased 11%, beer sales increased 5.8%, spirits increased 1.8%, and wine increased 0.8%.
Sales through NLC’s corporate stores were up 2.6% compared to Q3 of the prior year, while Liquor Express outlets across the Province were consistent with Q3 of the prior year. Sales through licensees such as bars and restaurants rebounded strongly as pandemic restrictions eased, increasing to $4.2 million for the quarter, an increase of 23.6% compared to Q3 of 2022.
In addition to direct sales, NLC earns commissions on the sale of beer through Brewers’ Agents. These commissions for the quarter totaled $15.5 million, lower than the third quarter of fiscal year 2022 by 9.3%.
During the quarter, NLC continued with its program to improve the customer experience, completing the renovation of three Liquor Store locations, including Merrymeeting Road (St. John’s), Duckworth Street (St. John’s) and Gander. Upgrades included new flooring, lighting and enhanced store layout and design.
Cannabis sales through licensed cannabis retailers (LCRs) totaled $18.6 million in Q3, an increase of 31.9% over Q3 of the prior year. Total retail cannabis sales in Q3, including online sales, were $18.7 million.
Following a three-year review of the cannabis industry in the Province, recently completed by the Government of Newfoundland and Labrador, in consultation with NLC, the decision was made in September to approve cannabis vapourizers (commonly referred to as “vapes”) and associated products. The first cannabis vapour products hit shelves in October, and cannabis vape products sold $1.6 million in the third quarter, amounting to 9.0% of total cannabis sales. Given the significant portion of the illicit market that vape represents this is a positive step in continuing to capture market share from illegal cannabis operators.
Cannabis NL was also pleased to welcome two new LCRS in the third quarter – Atlantic Cannabis in Torbay and Oceanic Cannabis on O’Leary Ave. There are currently 41 licensed cannabis retailers in Newfoundland and Labrador.
Cannabis NL is seeking to expand the retail store network to provide a safe, secure and convenient access to legal cannabis throughout the province. Cannabis NL sought out expressions of interest for the following communities in the fourth quarter; Baie Verte, Glovertown, Harbour Breton, Labrador (L’Anse aux Clair to L’Anse aux Loup) and Labrador (West Saint Modeste to Cartwright).
Rock Spirits produced 96,000 cases of spirits and 9,600 cases of beer and RTD during Q3, an increase of 13% in spirits and an increase of 405% in beer and RTD over the same period the previous year. The increase in spirits was driven by the timing of production while the increase in RTD was due to continued growth in canning initiatives. NLC also reached an agreement with Newfoundland Cider Company and canned the first cider at its Rock Spirits production facility.
Rock Spirits will be launching a new recipe for Screech Rum this summer. NLC’s previous supplier of bulk rum advised that they are no longer able to supply the rum, based on demand and global supply chain issues.
“NLC is delighted to share that not only did we secure a new Jamaican rum supplier, but also one that we feel will take Screech to a new level,” said Bruce Keating, NLC President and CEO.
“This has provided a great opportunity to write an exciting new chapter in the storied history of Screech Rum in Newfoundland and Labrador. NLC is confident that the taste profile of the new recipe will meet the high expectations of current loyal customers, but will be augmented with a smoother finish to appeal to new Screech customers as well. It is the beginning of a new era for Newfoundland and Labrador’s legendary, number-one selling dark rum. The naming of Screech Rum will always remain a part of NLC’s history but we also look forward to beginning a new chapter.”
NLC conducted 1,084 inspections on liquor establishments and cannabis retailers in Q3, as it continues to work closely with the licensee community. NLC’s Regulatory Enforcement team also seized over 10 kilograms of illicit cannabis product during this period. NLC is committed to providing systematic and thorough regulatory oversight for beverage alcohol and cannabis that helps ensure public safety and provides a safe and secure supply of cannabis to the Province.
NLC is continuing to build on its Corporate Responsibility strategy, encompassing social responsibility, community, sustainability, a compelling workplace, and corporate governance.
To move towards a more diverse and inclusive workplace, where everyone feels a sense of belonging, NLC provided additional education and training to its employees. NLC’s Executive and Board received Diversity, Equity and Inclusion training delivered by the Canadian Centre for Diversity and Inclusion (CCDI), and Liquor Store and Head Office Managers attended a presentation on “2SLGBTQIA+ Equity and Belonging at the annual Managers Seminar.
NLC was pleased to provide a $5,000 sponsorship to the Association for New Canadians for the IDEA’s (Inclusion, Diversity Equity, and Anti-racism) Conference 2022. This employer-focused event aims to make Newfoundland and Labrador’s workplaces more welcoming for immigrants, racialized people and others from underrepresented groups.
As President and CEO Bruce Keating said, “The NLC team, across the Province, continues to focus on delivering on our financial objectives. As importantly, we have continued to make important strides with respect to our regulatory mandate; corporate governance; corporate responsibility; diversity, inclusion and belonging; and as an employer to more than 600 NLC team members. We will continue to work to earn trust in everything we do and strive to make NLC the kind of organization we believe it can be.”
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 management of beverage alcohol and cannabis, and for the delivery of programs that promote safe, responsible consumption of alcohol and cannabis.
NLC is one of the largest retailers in the Province. Through 29 corporate retail locations, catalogues, private order services, more than 140 agency stores, over 600 Brewers’ Agents outlets, and more than 1,400 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. It also regulates and distributes to 41 licensed cannabis retailers across the Province, and offers customers a secure, legal online environment for cannabis purchases via ShopCannabisNL.com. NLC operates a 77,000 square foot Distribution Centre, employing over 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.