PEILCC Annual Report 2020

PEI Liquor Control Commission

72 ND ANNUAL REPORT

For the Year Ended March 31 ST , 2020

Customers Served 2,655,839 Training Per FTE 11.21 Hours

We provided a dividend of $43.7 million to the Province of PEI, a year over year increase of over $1.1 million.

In 2019-2020 PEI Liquor retail store staff checked 266,764 people suspected of being underage, intoxicated, or with no ID.

PEI products are on display & promoted in all PEI Liquor retail stores, on liquorpei.com , and on PEI Liquor social media platforms. Net sales of Island products were $6,062,044 - an increase of 24% .

HOLIDAY2018

FALL2018

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CELEBRATE HOLIDAY2018

Prices subject to change. | Productsnot available in all locations. | While supplies last.

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CELEBRATE FALL2018

Prices subject to change. | Productsnot available in all locations. | While supplies last.

P.E.I. Liquor Control Commission 3 Garfield Street Charlottetown, PE C1A 6A4

Corporate Vision The Prince Edward Island Liquor Control Commission will be recognized as a truly superior retailer in Prince Edward Island. We will achieve this through quality products, modern technology and increased services. We will be the provincial leader in relationships with our partners, customers and suppliers. We will always strive for the best possible value for our customers, staff and other stakeholders. Mission Statement The PEI Liquor Control Commission regulates the sale of beverage alcohol under the authority of the PEI Liquor Control Act. It manages the distribution of alcohol by: • operating in a socially responsible manner; • achieving the revenue goals of the Provincial Government; • providing suppliers with controlled access to the marketplace on a fair basis from modern, attractive venues; • encouraging responsibility and moderation in the consumption of beverage alcohol; and • providing its employees with equality of opportunity and increased training programs that assist in the individual’s personal development and in the commission’s overall customer service strategy.

Corporate Values • Moderation – We promote responsible use as a way of life.

• Quality Service – We take pride in the quality of our work. We strive for excellence in caring for our customers, suppliers and one another.

• Continuous Improvement – As a retailer, we welcome change. We are committed to continuous improvement to all of our services.

• Integrity and Fairness – We take responsibility and are fully accountable for our actions, decisions and behaviour. We meet our commitments and obligations to co-workers, customers and business partners. We are open, honest and fair. • Importance of People – We are committed to fostering a positive workplace that builds teamwork, mutual respect and encourages individual development.

• Focus on Results – We are committed to getting the job done and improving our productivity levels.

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PEILCC 2019-2020 Annual Report

Table of Contents

Message from the Minister

4

Message from the Chairman

4

Message from the CEO

5

Corporate Governance

6

Mandate of Commission Board

7

Accountability to Government and Public

7

Appointment of Members of the Commission

7

Responsibilities of Commission Members

7

Audit Committee

7

Organizational Chart

9

Executive Summary

10

Sommaire

11

Operational Review

12

2019-2020 Year in Review

12

Financial Results

12

Customer Service

15

Corporate Social Responsibility

17

Successful Partnerships

18

People & Culture

22

Challenges and Opportunities Ahead

25

Retail Liquor Outlets

26

Statistics

27

Retail Gross Receipts by Store

27

Summary of Profit and Expense Ratios – Two-Year Comparison

28

Our Spending... All Profits Stay Here

28

Sales Volumes (litres) by Category 29 Total Licenses and Special Permits – March 31, 2019 and March 31, 2020 30

Management’s Report

31

Appendix

Auditor’s Report and Audited Financial Statements

32

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PEILCC 2019-2020 Annual Report

Message from the Minister

The Honourable Antoinette Perry Lieutenant Governor of Prince Edward Island PO Box 2000 Charlottetown, PE C1A 7N8

May It Please Your Honour:

Pursuant to the PEI Liquor Control Act and as Minister designate, it is my privilege to submit the 72 ND Annual Report of the Prince Edward Island Liquor Control Commission.

Respectfully submitted,

Darlene Compton, Minister of Finance Minister Responsible for the PEI Liquor Control Commission

Message from the Chairman

The Honourable Darlene Compton Minister of Finance Minister Responsible for the PEI Liquor Control Commission PO Box 2000 Charlottetown, PE C1A 7N8

Minister:

In compliance with Section 87(3) of the PEI Liquor Control Act, it is my honour to submit this 72 ND Annual Report of the Prince Edward Island Liquor Control Commission covering the fiscal year April 1, 2019 to March 31, 2020.

Respectfully submitted,

Quentin Bevan, Chairman

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PEILCC 2019-2020 Annual Report

Message from the CEO

Mr. Quentin Bevan, Chairman PEI Liquor Control Commission 3 Garfield Street Charlottetown, PE C1A 6A4

Dear Mr. Bevan:

It is my pleasure to report that fiscal 2019-2020 represented the 24 TH consecutive year of record sales and returns by the PEI Liquor Control Commission ( PEILCC) to Government. Sales increased by more than $4.1 million to over $121.2 million. Returns to the Province increased by $1.1 million to $43.7 million which helps fund important public services and programs in health care, education and infrastructure. I wish to thank all staff for their valuable contributions as well as the support of our customers and suppliers which enabled the Commission to have another successful year.

The PEILCC not unlike other retailers across the Province was affected by the COVID-19 pandemic which is sweeping the world and in mid-March our 17 Corporate retail outlets were temporarily closed with three subsequently being opened prior to month’s end. Committed to Public Health directives so as to ensure the well-being of staff and customers, the Oak Tree (Charlottetown), Granville Street (Summerside) and Montague stores reopened with a number of health and safety measures implemented. In addition on the regulatory side of our responsibilities, temporary amendments to the Liquor Control Act Regulations were approved by Government to assist the private sector by permitting the Agency stores as well as Island micro-breweries, wineries and distilleries to do home deliveries of unopened liquor. Clearly the Strategic Plan set out by the Board has served the Commission well as we continue to invest in staff, stores, efficiencies and technologies. Resulting from these important investments, sales and profitability continues to set record levels. Under scoring all of these accomplishments is the Commission’s ongoing commitment to excellence in customer service which remains our primary focus. While the coming year may have new challenges to address in these unprecedented times I am confident in the resolve of the Commission to have another successful year in 2020-21. Lastly, I would like to extend my sincere appreciation to the Board of Commissioners for their ongoing guidance and leadership and as well acknowledge the dedication and professionalism of the Executive Management Team. The Commission will continue to move forward in several areas including: increasing the availability of local and organic products, encouraging the utilization of our user-friendly website, working with suppliers to ensure top quality products are available at the best possible price, and modernization of the Liquor Control Act and Regulations while optimizing profitability.

Yours truly,

James C. MacLeod Acting Chief Executive Officer

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PEILCC 2019-2020 Annual Report

Corporate Governance Corporate governance describes the process and structure for overseeing the direction and management of a crown corporation so that it effectively fulfills its mandate. This involves both its public policy and commercial objectives. It defines who is responsible for what, and how to ensure accomplishment and accountability.

Liquor Control Commission Board Standing: Murray Murphy - Commission Solicitor, Nicole DesRoche - Member, Lisa MacKinnon - Secretary, Perry Gotell - Member Seated: James C. MacLeod - Acting CEO, Quentin Bevan - Chair, Kim Griffin - Member

Executive Management Team Standing: Anita O’Connor - District Manager, David Stewart - Director of Purchasing

Seated: Carl J. Adams - Chief Financial Officer, James C. MacLeod - Acting CEO

Missing from Photo: Shawn Alexander - Human Resource Manager

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PEILCC 2019-2020 Annual Report

Mandate of Commission Board

The mandate of the board is to supervise the business affairs of the commission. Its most important responsibilities are:

• ensuring that the PEILCC provides high-quality service to the public; • developing and approving the strategic plan and monitoring management’s success in meeting the strategic plan; • approving annual financial plans; • assessing and managing business risks and; • ensuring that the PEILCC performs its regulatory role in a fair and impartial manner. Accountability to Government and Public • the Annual Report, tabled in the Provincial Legislature and available for all Islanders to review, either in print or online at www.liquorpei.com; • annual audits of the PEILCC’s financial statements by a qualified auditor; • public access to records under the Freedom of Information and Protection of Privacy Act; • publicly appointed commission members. Appointment of Members of the Commission The Lieutenant Governor in Council, through an order-in-council, appoints the members of the commission, establishes the honourariums and designates the chair and vice-chair. Responsibilities of Commission Members • acting honestly and in good faith in making decisions with a view to the best interests of the PEILCC and all its stakeholders; • overseeing the management of the business affairs of the PEILCC; • avoiding conflicts of interest; • having adequate knowledge of the PEILCC’s business, how it is organized and how it functions; • attending commission meetings and seeking professional advice where necessary; • providing guidance on policy development; • reviewing appeals of listing applications, review, evaluate, and approve strategic plans. Audit Committee The Audit Committee is elected annually and consists of three commission members in addition to the chairman and the CEO as ex-officio. The committee ensures the reliability and accuracy of the PEILCC’s financial statements, helps co-ordinate and improve internal control functions, and ensures the PEILCC adheres to sound corporate governance principles. The PEILCC is held accountable by the Government and people of PEI in a number of ways, including: Each commission member has individual responsibility for corporate governance including:

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PEILCC 2019-2020 Annual Report

Organizational Chart

Hon. Darlene Compton

Minister Responsible

Quentin Bevan

Chair

Perry Gotell

Kim Griffin

Member

Member / Vice Chair

Susan Milligan

Nicole DesRoches

Member

Member

James C. MacLeod

Lisa MacKinnon

Acting Chief Executive Officer

Administrative Assistant

James C. MacLeod

Carl Adams

Director, Corporate Services

Chief Financial Officer

Shawn Alexander

David Stewart

Human Resources Manager

Director, Purchasing and Distribution

Anita O’Connor

District Manager

Photo credit: Mussel Industry Council of PEI / Stephen Harris

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PEILCC 2019-2020 Annual Report

Executive Summary The Prince Edward Island Liquor Control Commission (PEILCC) is a crown corporation responsible for the administration of the Liquor Control Act and Regulations, along with the purchase, control and sale of all beverage alcohol in the province. A five-member Board of Commissioners is responsible for the commission’s activities. The chairperson reports to the minister responsible for the PEI Liquor Control Commission. The mandate under the Liquor Control Act has two primary components: regulatory and commercial. The regulatory function responsibilities include: • licensing and inspecting licensed premises and special permit events; • investigating and reporting on all licensee or special permit complaints and determining whether there were infractions of the Liquor Control Act; and • making recommendations to government on amendments to legislation. On the commercial side, the commission continues to be a major force in the provincial economy with gross receipts in excess of $121.2 million, making it one of the largest retail organizations in Prince Edward Island. In terms of monetary transfers to the Provincial Treasury, this past fiscal year saw $43.7 million returned to the Province, a year over year increase of $1.1 million. The commission currently operates 17 corporate retail outlets, as well as a central warehouse and Licensee Distribution Centre located in Charlottetown. The Commission has contracted with private interests for the operation of a Liquor Agency store in eight locations: Cavendish, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, Wellington, and Wood Islands.

A strategic plan is in place that guides the commission to success in meeting its performance and accountability goals.

The commission focuses on the following four key areas to measure performance:

1. Financial Results; 2. Customer Service; 3. Corporate Social Responsibility; and 4. People and Culture.

These areas serve as a blueprint for incorporating the Mission Statement into day- to-day activities and establishing strategic goals, the details of which are explained in further detail in this report.

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PEILCC 2019-2020 Annual Report

Sommaire La Régie des alcools de l’Île-du-Prince-Édouard (R.A.Î.-P.-É.) est une société de la Couronne responsable de l’administration de la Liquor Control Act (loi sur les alcools) et de ses règlements, ainsi que de l’achat, du contrôle et de la vente de toutes les boissons alcooliques dans la province. Un conseil composé de cinq commissaires est responsable des activités de la Régie. La présidence fait rapport au ministre responsable de la Régie des alcools de l’Île-du-Prince-Édouard. Les responsabilités du volet de réglementation comprennent entre autres : • octroyer des licences et inspecter les débits de boisson et les événements rattachés aux permis spéciaux; • enquêter et faire rapport sur les plaintes concernant l’octroi de permis et les permis spéciaux ainsi que déterminer s’il y a eu infraction à la Liquor Control Act; • faire des recommandations au gouvernement sur la modification des lois. Du côté commercial, la Régie est un levier important de l’économie de la province, ses recettes brutes dépassant les 121,2 millions de dollars, ce qui en fait le plus important organisme de vente au détail de l’Île-du-Prince-Édouard. Sur le plan des transferts monétaires au Trésor provincial au cours de la dernière année financière, un total de 43,7 millions de dollars a été versé à la province, soit une augmentation de 1,1 million de dollars par rapport à la même période l’an dernier. À l’heure actuelle, la Régie exploite dix-sept (17) points de vente au détail ainsi qu’un entrepôt central et un centre de distribution pour les détenteurs de permis situés à Charlottetown. La Régie a passé un contrat avec le secteur privé pour les activités d’un magasin de franchise à huit endroits : Cavendish, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, Wellington et Wood Islands. Le mandat en vertu de la Liquor Control Act compte deux principaux volets – l’un, réglementaire et l’autre, commercial.

La Régie utilise un plan stratégique pour atteindre ses objectifs de performance et d’imputabilité.

Elle concentre ses efforts sur quatre domaines principaux afin de mesurer sa performance :

1. le bilan financier; 2. le service à la clientèle; 3. la responsabilité sociale; 4. les gens et la culture.

Ces domaines servent de plan directeur à l’intégration de notre mission dans nos activités quotidiennes et à l’établissement d’objectifs stratégiques qui seront expliqués plus en détail plus loin dans ce rapport.

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PEILCC 2019-2020 Annual Report

Operational Overview The Prince Edward Island Liquor Control Commission’s Strategic Plan continued to guide activities through fiscal 2019-2020. Progress on strategic objectives is supported by annual business plans that set priorities for actions to meet objectives and timelines for their completion. The following is an overview of the performance in each of the five strategic objectives: Goal 1 Financial Results

Goal To maximize net income within the policy guidelines established by the provincial government.

Objectives

1. Optimize return to government. 2. Grow revenue through effective planning and execution. 3. Continuously improve operational effectiveness and efficiency.

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of Target 2019-2020

Target 2020-2021

Gross Receipts

$116,965,595

$118,700,000

$121,112,506

102.0%

$95,573,000

Gross Profit

$35,231,910

$35,800,000

$35,943,041

100.4%

$28,381,000

Operating Expenses

$16,045,319

$16,993,100

$16,476,245

97.0%

$18,118,300

Net Income

$22,132,575

$21,685,000

$22,468,919

103.6%

$12,328,300

Return To Government*

$42,583,683

$41,685,000

$43,715,692

104.9%

$29,000,300

Revenue Per Litre

9.02

9.07

9.09

100.2%

9.12

Spirits

38.73

38.92

38.82

99.7%

39.20

Beer

5.69

5.72

5.71

99.8%

5.78

Wine

16.93

17.01

17.09

100.5%

17.16

Wine Coolers

7.87

7.91

8.81

111.4%

7.98

Spirit Coolers

7.42

7.46

7.67

102.8%

7.53

Draught

2.24

2.25

2.04

90.7%

2.27

Operating Expenses as a % of Gross Receipts

13.72%

14.32%

13.60%

95.0%

18.96%

Shrinkage as a % of Gross Receipts

0.00%

0.01%

0.01%

100.00%

0.00%

Inventory Turnover**

Warehouse

73.6

73.6

62.0

84.24%

70.0

Stores

31.4

31.4

31.5

100.32%

30.0

* Inclusive of Net Income and health tax transfers to government ** Measured in days

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PEILCC 2019-2020 Annual Report

The PEI Liquor Control Commission delivered both an increased net profit and an increased transfer to the provincial government in fiscal 2019-2020. Gross receipts were $121,112,506 for the fiscal year ended March 31, 2020, an increase of $4,146,911 over the previous year. This increase came as a result of new sales and marketing initiatives. Net transfers for the year totaled $43,715,692. This year’s performance resulted in a $1,132,009 increase in the PEILCC’s contribution to the province over the previous year. The commission set inventory turnover goals at the beginning of the fiscal year as part of its strategic plan. These turnover ratios were based on the year ended March 31, 2019 to measure inventory efficiencies. The commission has been better able to manage the days in inventory and the warehouse level in order to meet the needs of our customers. Store inventory turns are up slightly from last year which can be attributed to the increase in the number of products held in store inventory and necessary to fulfill customer demands. An improved store ordering process continues to keep store inventories in check and ensured better distribution and availability of inventory across the retail network. In addition, the central warehouse has been reconfigured to optimize space and manage warehouse efficiency. Performance Highlights

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PEILCC 2019-2020 Annual Report

Performance Highlights

Figure A Sources of Gross Receipts

6%

0%

3%

Spirits

25%

Wine

Coolers

Merchandising

Other

Fiscal Year 2020

Beer

41%

25%

Figure B Application of Gross Receipts

13%

Payments to Province

Administrative Expenses

Federal Taxes

39%

13%

Suppliers

Fiscal Year 2020

35%

The commission spent approximately $47.53 million on alcohol from both national and international sources. Gross margins increased slightly due to one-time only marketing promotions.

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PEILCC 2019-2020 Annual Report

Goal 2 Customer Service

Goal To understand the needs of our customers so that we can provide quality products and services that are delivered by knowledgeable, courteous employees in attractive and accessible facilities. Objectives 1. Enhance the shopping experience for PEILCC wholesale and retail customers. 2. Provide enhanced customer services. 3. Improve product portfolio.

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of 2019-2020 Target

Target 2020-2021

Customers served Average customer transaction value

2,649,957

2,665,000

2,655,839

99.7%

2,141,200

$44.14

$44.54

$45.60

102.4%

$44.63

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

% of 2019-2020 Target

Target 2020-2021

Litres

Beer

8,616,927

8,744,701

8,635,304

98.7%

6,798,700

Draught

1,125,584

1,142,275

1,091,719

95.6%

877,900

Spirits

789,166

800,868

800,522

100.0%

670,800

Wine (including BYO)

1,748,154

1,774,076

1,799,001

101.4%

1,485,000

Refreshments

694,704

705,005

999,302

141.7%

650,000

Total

12,974,534

13,166,925

13,325,848

101.2% 10,482,400

Performance Highlights

Packaged beer has increased by 18,377 litres over the previous year while draught beer has shown a decrease of 33,865 litres over last year driven primarily by the craft beer segment. This is consistent with both national and international trends. The Refreshment category continues to be popular with volumes increasing by 304,608 litres over last year. The Spirit category had a decrease of 11,356 litres from the previous year. Sales continue to trend toward more premium products which is evidenced by the increase in the value of the average customer transaction.

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PEILCC 2019-2020 Annual Report

The Wine category continued to display strong performance again in 2019-2020 selling a total of 1,799,001 litres, an increase of over 50,847 litres from the previous year. New offerings continued to drive growth in both sales and volume in this category. The availability of one time offerings throughout the year has also been popular with customers. The PEILCC continues to expand the Vines concept to include many PEILCC retail outlets displaying these products as a portion of each location’s shelf set.

A number of vendor supported themed campaigns ran throughout the course of the year including themes such as Island Style which helped to promote local food and drink pairings with recipes. Merchandising across the corporate retail network permitted products to be featured in a like fashion and provides consistency across all locations. Local producers continue to benefit from exposure of having their products featured on ‘Buy PEI’ displays as well as on the shelves with products of their respective category. The Eastlink Centre served as the venue for the 25 th Prince Edward Island Liquor Control Commission’s Festival of Wines. The private firm that was the successful bidder two years ago to manage the planning and execution of the festival has turned the Festival into one of the must attend events of the year. The PEILCC continues to operate the pop-up retail boutique featuring the wines of the festival. general listings. The 2019 festival included Germany as its feature region. Wines from this country were promoted throughout the PEILCC retail network leading up to the festival as well as on site during the event. The feature region concept continues to provide profile not only to the region but also to the Festival of Wines as a whole. The Commission also participated in other events during the year including the PEI Spirit Festival and the PEI Beer Festival. Both of which helped generate interest across each of the spirits and beer categories. This event featured more than 250 wines, many of which are now included among the PEILCC’s A number of PEILCC retail employees have taken advanced training in the WSET program, providing them with an additional level of expertise which is beneficial when helping customers with product options. This training combined with other initiatives led by the Commission’s Category Managers, have contributed to the development of all categories and the growth of overall sales.

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PEILCC 2019-2020 Annual Report

Goal 3 Corporate Social Responsibility

Goal In partnership with community groups and suppliers, the PEILCC will strive to raise public and staff awareness of the responsible use of beverage alcohol. Objectives 1. Enhance our reputation as a socially responsible corporate citizen. 2. Build corporate social responsibility into all areas of our business. 3. Regulate the consumption of beverage alcohol throughout the province in a fair and responsible fashion.

Actual 2018-2019

Actual 2019-2020

Target 2019-2020

% of Target

Target 2020-2021

Number of ID Checks as a % of transactions

10.5% 10.04% 10% 100.4% 10%

Funds raised for charities and foundations

$105,797 $137,132

$90,000

152.4% $95,000

Licensee Compliance Rate

97.9% 97.9%

95% 104.4% 95%

Number of Inspections Conducted

3521

3152

3500

90.1%

3300

% of Sanctions without Adjudication

100%

100%

90%

100%

100%

Performance Highlights

support for MADD Canada’s campaign 911, and expanded the in-store retail ice program in a number of corporate retail outlets which also benefits the work of MADD Canada. The commission continued to participate on a number of committees promoting responsible use including the Ad Hoc Working Group on Impaired Driving Prevention, and the Canadian Liquor Jurisdictions Social Responsibility Committee. The seventh year of an at-cash campaign benefiting the PEI Region of the Canadian Red Cross, was successful in generating over $27,000 to continue the support of community programs and relief to Islanders in the time of need. The PEILCC also completed the 4 TH year of a five-year agreement with the Island Nature Trust (INT) with $20,000 collected through this supplier supported campaign. A portion of sales from a variety of products, were donated to the INT.

The PEI Liquor Control Commission continues to promote the responsible use of alcohol. The commission strives to provide products that are socially responsible and incorporates responsible messaging into product promotions. Ongoing responsible use initiatives include: Challenge and Refusal, and ID Training for PEILCC retail and liquor agency staff, Check 30 ID Program, HOST booklet and various responsible use messages during graduation, long weekends, Christmas and New Year’s celebrations. Responsible Use messages were promoted throughout the year using local media as well as Social Media. The Prince Edward Island Liquor Control Commission continued its support of MADD Canada’s Multi-media School Assembly Program during the 2019-20 school year, with seventeen presentations of the English language version Over The Edge and two of the French language version ( Précipice ), which took place in high schools across the Island. The commission provided ongoing

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PEILCC 2019-2020 Annual Report

Keeping it socia since 2013. Keep It Social is a student-led partnership promoting responsible consumption, personal choice and a culture of moderation. For six years, Keep It Social ambassadors have been empowering their fellow students to reduce their risks and respect their limits.

UNIVERSITIES 11

PARTICIPATING COLLEGES &

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4 EVENTS AUS

ATLANTIC PROVINC ES

1

“IF YOU CHOOSE TO CONSUME, KEEP IT SOCIAL.” CONSISTENT MESSAGE

To learn more, visit

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PEILCC 2019-2020 Annual Report

ial

The PEI Liquor Control Commission has a partnership with UPEI as well as with Holland College for each institution’s Keep It Social (KIS) programing. KIS is helping students make responsible decisions when it comes to alcohol. Led by students and guided by the PEILCC, Keep It Social is a long-term initiative designed to address and reduce high-risk consumption. Now in its fourth year, KIS is tackling the false perceptions that many students have about how much alcohol their peers consume.

As well as getting the message out on campuses, keepitsocial.ca offers students tips and advice on how to make the right decisions when they’re planning a night out.

UPEI and Holland College appointed several student athletes as KEEP IT SOCIAL Ambassadors who lead spreading of the message about high-risk alcohol consumption among students. The KIS message is promoted through social media and KIS videos that are shown and promoted throughout the academic year at various athletic and social events.

Also in partnership with UPEI, Coach Atlantic and KKP, a PEILCC funded bus wrap puts a focus on the campaign when student athletes travel throughout the Maritime Provinces to their “away” games.

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PEILCC 2019-2020 Annual Report

The Heart and Stroke Foundation’s Paper Hearts campaign took place for the seventh year in 2020 and was successful in raising over $35,266. The Foundation uses these funds to continue the advancement of research, promotion of healthy living and advocacy. The Canadian Cancer Society and the PEILCC partnered again in 2019 for a very successful fundraiser. Pin sales from local liquor stores showed an increase over last year collecting $17,946 with the support of generous Islanders. The PEILCC actively assists various groups and causes through coin box collections in all corporate retail outlets. Groups receiving financial assistance from this activity during this fiscal year included Cerebral Palsy Association of PEI, Crohn’s and Colitis Foundation of Canada, MADD Canada, ALS Society, Maritime Greyhound, Crime Stoppers, Autism Society PEI, Keeping Cats Homed Inc., and the Canadian Diabetes Association.

$35,266

$17,946

$23,370

$13,789

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PEILCC 2019-2020 Annual Report

During the fiscal year, the commission continued its commitment to social responsibility in the areas of alcohol service and community support. The PEILCC partnered with a number of outside agencies in shared activities including:

• Participation as an active member of the Canadian Association of Liquor Jurisdictions (CALJ) Social Responsibility Committee.

• Affiliation with the Culinary Institute of Canada, to provide the mandatory server program, It’s Our Business, an awareness program for staff of licensed premises.

• Raising monies for ALS Society of PEI, Canadian Diabetes Association, Easter Seals Society of PEI, IWK Health Centre Foundation, Parkinson Society of Canada, Prince County Hospital Foundation and the QEH Foundation through staff dress-down days and other staff events raising over $6,000.

• Generating approximately $1,800 in support of the Hospice Palliative Care Association of PEI through proceeds from the silent auction, held during the 25th annual Festival of Wines.

Optimal compliance to the Liquor Control Act and Regulations as well as PEILCC Policies is a primary objective of the commission. Retail staff are required to check and verify the age of customers and refuse minors or intoxicated persons. In 2019-2020, commission store staff checked 266,764 people suspected of being underage, intoxicated or with no ID and refused service to 2,625. Liquor inspectors performed 3,152 compliance inspections and 3,009 ID checks in licensed premises.

After evaluating all stores in relation to established criteria, the staff of the O’Leary store was awarded the Annual CEO’s Award of Merit for Loss Prevention for fiscal 2019-2020.

Initially introduced in January 2016, Check 30 replaced Check 25 which had been launched in August 2006. The Commission remains committed to the ongoing enforcement in all Corporate and Agency stores.

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PEILCC 2019-2020 Annual Report

Goal 4 People & Culture

Goal Build a customer-focused, high-performance work environment that results in greater employee involvement, development, innovation and creativity. Objectives 1. Always recruit, retain, and develop the best people. 2. Foster a culture of performance, communication, and engagement. 3. Rigorously establish and promote a healthy, safe, and respectful workplace.

Actual 2018-2019

Target 2019-2020

Actual 2019-2020

Target % 2019-2020

Target 2020-2021

Training Hours per Employee - FTE

12.80

13

11.21

86.2%

10

EMPLOYEE EXCELLENCE Plan

69.2%

95%

97.3%

102.4%

80%

Employee Wellness Rate

98.51%

98%

98.72%

100.7%

98%

Lost-Time Frequency

2.97%

8.00

5.16

64.5%

8.00

Performance Highlights

The PEILCC continued to re-invest in its employees training and development by providing them with a range of developmental opportunities over fiscal 2020. The PEILCC training hours per employee was down slightly over last year from 12.8 hours to 11.21 hours for fiscal 2020. We have adjusted our training hours target as a result of COVID-19 and refocused training efforts. We continue to offer Wine and Spirit Education Trust (WSET) training and PEILCC Development Training Fund continues to be utilized by staff. These funds are allocated to developmental opportunities that assist employees in achieving their personal career objectives, while simultaneously bridging individual performance gaps that collectively lead to increased levels of organizational success. From an employee engagement perspective, the PEILCC hit over 98% of the target goal in its overall employee wellness rate score. Success in this regard continues to be attributed to the diligence of PEILCC leadership in the administration of the EMPLOYEE EXCELLENCE program which was piloted in fiscal 2017, and rolled out across the entire organization in

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PEILCC 2019-2020 Annual Report

fiscal 2018. Employee engagement will continue to be a top priority for the PEILCC, as the benefits of engaged employees have tremendous impacts on business outcomes, not least of which is a workforce that is satisfied and excited to be part of the PEILCC family. The PEILCC had continued success in fostering high levels of workplace wellness and safety over fiscal 2020. In addition to efforts in employee engagement and the provision of OH&S training, new disability management initiatives and decreases in workplace accidents leading to lost time. A healthy workforce is extremely important to the PEILCC, particularly given the physically demanding work involved in many operational processes. Continued effort in this regard will be an ongoing priority moving forward.

Opportunities and Challenges Ahead:

The PEILCC HR and Payroll division continued to implement the Strategic People & Culture Plan. The objective of this plan is to foster an engaged workforce that is aligned with the strategic objectives of the organization. Through effective implementation the PEILCC has the opportunity to enhance its ability to accomplish these goals.

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PEILCC 2019-2020 Annual Report

Distillery

FEATURED PRODUCER

Even though the apple trees at Deep Roots Distillery are bare, that doesn’t mean early spring is a time to sit back and watch the flower buds come out. Mike and Carol Beamish are hard at work this season getting ready for the busiest time of year at their farm and distillery. What started as a 200-tree apple orchard in 1990 has been growing strong ever since; they now tend over 2 acres of trees and they’re also certified organic. Mike was inspired to start his new business in 2012 and after attending a distilling workshop at BioFoodTech, the idea of opening his own distillery started to “ferment”. In July 2014, their signature “Island Tide” spirit was released and was soon followed by their Maple, Blueberry, Haskaap and Spiced Apple liqueurs, Apple Brandy, Apple Ice Wine and an award-winning Absinthe. Deep Roots uses locally-grown produce from all over PEI and even a little from Nova Scotia to keep up with demand. Most of their products are made by distilling pure cane sugar into a neutral white spirit, and are then blended with local blueberries, haskaap (camerise) berries, apples and spices, and even local maple syrup from their sons’ small- batch Maple operation. They also use some of the “seconds” from their orchard and from other local apple growers to ferment various kinds of apples into their apple brandy, or into apple ice wine. This means that many of the clean, non- bruised apples that are too small or misshapen to be sold as eating apples won’t go to waste. Instead, they’re given a new life as delicious spirits. Their apple brandy is aged in oak barrels for two years for a well-balanced, aromatic, smooth and rich spirit. As a bonus, the empty brandy barrels are then passed on to Hazel Grove Sugar Shack, the same operation that supplies the maple syrup for their Maple Liqueur, who in turn use them to create their Brandy Barrel Aged Maple Syrup. Mike has some great ideas for pairing their products with some Island ingredients. Many of their liqueurs are on the sweeter side, so they make a great ice cream topper! They are also delicious swirled into coffee or tea, added as a “dosage” to champagne, or incorporated into dessert sauces. Their apple ice wine is a lovely pair for smoked and blue cheeses. Mike especially recommends their Island Tide as the base for a classic Caesar, as it’s neutral-tasting with enough of an edge to add a really unique character. As the seasons change this spring, Mike and Carol will be busy with the yearly task of pruning the trees in their orchard. They are also busy distilling their spirits before the weather turns warm, so the cooler temperatures can help with the passive cooling system required in the distilling process. The summer is their busiest time of year, with an orchard to maintain and plenty of visitors stopping by their beautiful property and distillery to take a tour and pick up a couple of bottles from their shop. The farm and shop is open to the public from June to October, where they offer tours, tastings and exclusive products. Mike and Carol also have a stall at the Charlottetown farmers market for most of the year. Visit them online or stop in for a visit to experience some true Island flavours and hospitality!

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PEILCC 2019-2020 Annual Report

CHALLENGES AND OPPORTUNITIES AHEAD

The Prince Edward Island Liquor Control Commission continues to identify opportunities and challenges, as well as to meet the expectations of an increasingly diverse and discerning customer base. Store renovations and a new merchandising strategy have improved the way in which products are displayed as well as the customer experience. On-going investment and planning is required to meet customers’ needs and keep standards moving forward. In addition, continued investment in human resources as well as technical resources are also necessary to fulfill its strategic plan. Capital planning is required to provide for future needs. The commission has set its monetary transfer goal to $29.0 million for the 2020-2021 fiscal year to help continue investments in our province. A disciplined category management approach, working in co-ordination with the supply chain, has provided a more efficient system to get products from the commission’s international supply chain onto its store shelves. The PEILCC continues to investigate new opportunities for products and their distribution to meet the ever-evolving customer demands. The commission’s commitment to social responsibility presents ongoing opportunities to communicate and reinforce the message of responsible use and public safety to a wide range of audiences. Underlying all of these challenges and opportunities is the vision of excellence in management. Being prepared to capitalize on new opportunities in the marketplace and continuing to integrate and streamline operations is key. The PEILCC is confident that it is building an organization which is internally more efficient and will continue to be publicly accountable.

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PEILCC 2019-2020 Annual Report

Prince Edward Island Liquor Control Commission

Retail Liquor Outlets

Corporate Retail Outlets

Liquor Agency Stores

Alberton

Cavendish

Borden-Carleton

East Royalty

Cardigan

Eldon

Charlottetown - Minna Jane Drive

Kinkora

Charlottetown - Queen Street

Morell

Charlottetown - University Avenue

Murray Harbour

Cornwall

Wood Islands

Kensington

Wellington

Montague North Rustico O’Leary Souris Stratford

Summerside - Granville Street Summerside - Waterfront Mall Tignish Tyne Valley

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PEILCC 2019-2020 Annual Report

Statistics Retail Gross Receipts by Store

Year Ended March 31, 2020

Year Ended March 31, 2019

Year Ended March 31, 2018

Retail Store

Gross Sales

Alberton

$2,095,105

$2,010,170

$1,986,853

Gateway

$2,405,124

$2,319,723

$2,249,928

O'Leary

$2,309,963

$2,193,053

$2,079,069

Summerside - Granville

$9,639,001

$8,179,486

$8,872,691

Summerside - Waterfront

$4,673,517

$5,521,993

$4,690,551

Tignish

$3,106,881

$3,097,433

$3,033,307

Kensington

$4,005,786

$3,932,996

$3,702,602

Wellington

$0

$0

$ 786,233

Tyne Valley

$1,374,931

$1,343,989

$1,298,988

Charlottetown - Queen Street

$4,414,008

$4,176,445

$4,119,492

Charlottetown - University Avenue

$16,772,822

$16,177,238

$16,022,712

N. Rustico

$3,841,645

$3,793,707

$3,552,099

Charlottetown - Minna Jane Drive

$14,471,703

$13,603,873

$13,459,098

Licensee

$21,136,454

$20,382,722

$19,434,309

Cornwall

$6,466,947

$6,181,129

$5,932,856

Stratford

$9,929,804

$9,568,277

$9,342,808

Cardigan

$1,871,143

$1,804,085

$1,851,096

Souris

$3,411,600

$3,325,721

$3,324,804

Montague

$7,513,424

$7,137,448

$6,540,273

Other

$1,672,648

$2,216,107

$1,750,261

Total

$114,030,030

$121,112,506

$116,695,595

PEI product is on display and promoted in all LCC retail stores, on the new LCC website and through our social media channels, net sales of Island products was $6,062,044, an increase of 24.0%.

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PEILCC 2019-2020 Annual Report

Statistics Summary of Profit and Expense Ratios Two-year Comparison

(in 000s)

2020

2019

Gross Receipts

$121,113

$116,966

Gross Profit

$35,943

$35,232

Net Income

$22,469

$22,133

General and Administrative Expenses

$16,476

$16,045

Gross Profit as a Percentage of Gross Receipts

29.68%

30.12%

Net Profit as a Percentage of Gross Receipts

18.55%

18.92%

General and Administrative Expenses as a Percentage of Gross Receipts

13.60%

13.72

Our Spending... All Profits Stay Here

5%

9%

Operating Costs:

Salaries and Benefits:

5,990

10,486

124,114

Total Sales:

43,716

47,531

35%

38%

Returned to PEI:

Cost of Product:

16,392

13%

HST & Other:

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PEILCC 2019-2020 Annual Report

Sales Volumes... (litres) by Category

,

3

3

2

1

Beer 9,727,023

:

5

L

,

8

A

T

4

O

8

Spirits 800,522

Fiscal Year 2020

T

Wine 1,799,001

Coolers 999,302

FEATURED PRODUCT ADVISOR Jean-Sébastian Morin is a category manager with PEI Liquor currently on a one-year assignment as 2008. Before the wine bug overtook him entirely, Jean-Sébastien was a senior analyst with the federal Public Service for 15 years.

product advisor at the Montague corporate store. He is an accredited sommelier, wine writer, judge and educator. His love of wine was born in the late 1980s, while studying and working in Europe. He has worked for the Liquor Control Board of Ontario and has taught the nationally recognized Sommelier Certificate offered by La Cité collégiale in Ottawa. He has also enjoyed providing wine consulting services to restaurants including securing PEI’s first Wine Spectator Award in

Jean-Sébastien aims to transmit his passion for wine while never forgetting that the pleasure of a glass of wine often resides in the moment and the company in which it is shared. Read more in PEI Liquor’s Celebrate E-Flyer . Subscribe to receive our E-Flyer via email and stay up to date with our latest products, recipes, food pairings and promotions.

Morin

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PEILCC 2019-2020 Annual Report

Total Licenses and Special Permits

Year Ended March 31, 2020

Year Ended March 31, 2019

License Type

Dining Room

196

197

Lounge

100

102

Club

45

45

Military Canteen

20

19

Special Premise

141

119

Caterer

22

22

Agency Store

1

1

Liquor Agency

8

8

Winery

7

6

Micro-Brewery

11

8

Tourist Home

6

5

Distillery

8

7

Brew Pub

0

0

Ferment on Premises

6

5

Package Sales

13

13

Total Licenses in Effect

584

557

Special Permits Issued

Year Ended March 31, 2020

Year Ended March 31, 2019

Class I

148

141

Class II

119

156

Total

267

297

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PEILCC 2019-2020 Annual Report

Management’s Report Mr. Quentin Bevan, Chairman PEI Liquor Control Commission 3 Garfield Street Charlottetown, PE C1A 6A4

Dear Mr. Bevan:

The preparation of financial information is an integral part of management’s responsibilities and the accompanying financial statements are the responsibility of the management of the commission. This responsibility includes the selection of appropriate accounting policies and making judgments and estimates consistent with International Financial Reporting Standards.

The commission maintains an accounting system and related controls providing:

• reasonable assurance that transactions are executed and recorded as authorized; • that assets are properly safeguarded and accounted for; and • that financial records are reliable for the preparation of financial statements in accordance with International Financial Reporting Standards.

Financial information presented elsewhere in this annual report is consistent with that in the financial statements.

James C. MacLeod

Carl J. Adams, CPA, CA Chief Financial Officer

Acting Chief Executive Officer

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PEILCC 2019-2020 Annual Report