The Nova Scotia Liquor Corporation plays a significant role in the province’s economy, but doesn’t have an adequate plan in place to support the local alcohol industry, according to the auditor general.
In a report released Tuesday morning, Nova Scotia’s auditor general Michael Pickup noted the NSLC attempts to support the local industry through various methods, but there were several issues with its approaches.
Pickup reported the NSLC’s markup structures for locally manufactured alcohol are not sufficiently planned, evaluated or documented, its processes, such as how to have a product listed as “Proudly Nova Scotian” is not defined and the implementation and the outcome of an agreement on beer trade with Alcool New Brunswick Liquor is unclear.
“With the rapidly growing number of local alcohol manufacturers in Nova Scotia and sales of these products through the Nova Scotia Liquor Corporation increasing, it is important that the corporation has a well-planned strategy for promoting the local industry that aligns with their mandate,” Pickup said.
“Although the local industry was a key part of the Nova Scotia Liquor Corporation’s 2015-20 strategic plan, goals and objectives to support the local beverage alcohol industry are not specific or measurable, and measures like reduced markup rates were not adequately planned.”
The NSLC recently reported its total sales were up 9.7 per cent to $726 million — $655.1 million from alcohol and $71 million from cannabis — compared to its previous fiscal year.
Locally produced products also saw a large spike in sales at the NSLC. Ready-to-drink sales were up 101.4 per cent to $16 million, craft beer up 21.5 per cent to $20.1 million, spirits up 22.2 per cent to $9.4 million and wine sales up eight per cent to $12.5 million.
The number of local alcohol manufacturers has more than doubled since 2015, going from a total of 64 breweries, wineries and distilleries to 141 in 2020.
“Management and the board failed to adequately plan for NSLC’s role in the local industry,” Pickup said in his report.
“An appropriate strategic plan would align with NSLC’s mandate and include clear goals and objectives for the local industry, including action plans with measurable targets to determine success.”
Also during the first audit of the NSLC, Pickup found the NSLC doesn’t adequately monitor or report against established performance measures for programs that promote responsible drinking.
Training for retail practices, such as age verification, was not completed by those tested during the audit within the 30-day required timeframe.
“In fact, new hires of the Nova Scotia Liquor Corporation took an average of 119 days to complete the training,” Pickup said.
While anyone under 30 years old is to be asked for valid identification under the NSLC’s program, it was found that corporate stores failed 12 per cent, agency stores failed 19 per cent and private wine and beer stores failed 37 per cent of their visits.
“Also, the Nova Scotia Liquor Corporation does not monitor training for new hires at agency stores, and we saw little evidence of training occurring at these stores,” Pickup said.
During the audit, Pickup did find the NSLC did well in capital procurement and had completed a full review of the condition of its corporate retail stores.
Pickup made 11 recommendations, focusing on the corporation supporting the local industry and promoting responsible drinking, which were all accepted and agreed to be implemented by the NSLC.
A second phase of the audit of the NSLC is to be released at a later date.
