PEILCC - 2019 Annual Report

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PEI Liquor Control Commission

71 ST ANNUAL REPORT

For the Year Ended March 31 ST , 2019

Customers Served 2,649,957 Training Per FTE 12.8 Hours WSET Trained Employees 53

We provided a dividend of $42.6 million to the Province of PEI, a year over year increase of over $1.2 million.

In 2018-2019 PEI Liquor retail store staff checked 276,915 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 $4,894,750 - an increase of 23.73% .

FALL 2017

LATE FALL 2017

SPRING2018

LATESUMMER2018

FALL2018

CELEBRATE FALL2018

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

HOLIDAY2018

CELEBRATE HOLIDAY2018

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

P.E.I. Liquor Control Commission 3 Garfield Street, P.O. Box 967 Charlottetown, PE C1A 7M4

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.

PEILCC 2018-2019 Annual Report

Table of Contents

Message from the Minister

Message from the Chairman

Message from the CEO

Corporate Governance

Mandate of Commission Board

Accountability to Government and Public

Appointment of Members of the Commission

Responsibilities of Commission Members

Audit Committee

Organizational Chart

Executive Summary

Sommaire

Operational Review

2018-2019 Year in Review

Financial Performance

Customer Service

Financial Results

Corporate Social Responsibility

Successful Partnerships

People & Culture

Challenges and Opportunities Ahead

Retail Liquor Outlets

Statistics

Retail Gross Receipts by Store

Summary of Profit and Expense Ratios – Two-Year Comparison

Our Spending... All Profits Stay Here

Sales Volumes (litres) by Category 29 Total Licenses and Special Permits – March 31, 2018 and March 31, 2019 30

Management’s Report

Appendix

Auditor’s Report and Audited Financial Statements

PEILCC 2018-2019 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 71 ST Annual Report of the Prince Edward Island Liquor Control Commission.

Respectfully submitted,

Darlene Compton, Minister Department 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 71 ST Annual Report of the Prince Edward Island Liquor Control Commission covering the fiscal year April 1, 2018 to March 31, 2019.

Respectfully submitted,

Quentin Bevan, Chairman

PEILCC 2018-2019 Annual Report

Message from the CEO

Mr. Quentin Bevan, Chairman PEI Liquor Control Commission PO Box 967 Charlottetown, PE C1A 7M4

Dear Mr. Bevan:

It is my pleasure to report that fiscal 2018-2019 represented the 23 RD consecutive year of record sales and returns to Government and the people of Prince Edward Island. Sales increased by more than $2.9 million to over $116.9 million. Payments to the Province were $42.6 million and we are pleased to state that the PEI Liquor Control Commission continues to be a socially responsible retailer as well as major revenue generator for the Province. 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. Our strategic plan has served us well as we continue to invest in people, stores, efficiencies and technologies. As a result of these investments, sales and profitability continue to set record levels. I would like to extend my appreciation to our Board of Commissioners for their ongoing support and guidance and as well acknowledge the commitment and leadership of the Executive Management Team. The Commission will continue to move forward in several areas including: improved customer service, enhanced product selection, staff development and training, improved technology, and modernization of The Liquor Control Act and Regulations while optimizing profitability.

Yours truly,

James C. MacLeod Acting Chief Executive Officer

PEILCC 2018-2019 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 - Area 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 (Acting)

PEILCC 2018-2019 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 the Auditor General; • 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:

PEILCC 2018-2019 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

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 (Acting)

Director, Purchasing and Distribution

Anita O’Connor

Area Manager

PEILCC 2018-2019 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 $116.9 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 $42.6 million returned to the Province, a year over year increase of $1.2 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 five key areas to measure performance:

1. Financial Performance; 2. Customer Service; 3. Financial Results; 4. Corporate Social Responsibility; and 5. 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.

PEILCC 2018-2019 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 116,9 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 42,6 millions de dollars a été versé à la province, soit une augmentation de 1,2 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 cinq domaines principaux afin de mesurer sa performance :

1. la performance financière; 2. le service à la clientèle; 3. le bilan financier; 4. la responsabilité sociale; 5. 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.

PEILCC 2018-2019 Annual Report

Operational Overview The Prince Edward Island Liquor Control Commission’s Strategic Plan continued to guide activities through fiscal 2018-2019. 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 Performance

Goal To maximize net income within the policy guidelines established by the provincial government. Objectives 1. Achieve or exceed planned monetary transfer to the Provincial Government.

2. Achieve or exceed net income targets. 3. Increase traffic through liquor stores.

Actual 2017-2018

Target 2018-2019

Actual 2018-2019

% of Target 2018-2019

Target 2019-2020

Gross Receipts $114,030,030 $115,000,000 $116,965,595

101.71% $118,700,000

Gross Profit

$34,583,582 $34,800,000 $35,231,910

101.24% $35,800,000

Operating Expenses

$16,001,267

$16,165,400

$16,045,318

99.26% $16,993,100

Net Income

$21,377,733

$21,189,600

$22,132,576

104.45% $21,685,000

Monetary Transfers*

$41,385,656

$41,189,600 $42,583,684

103.38% $42,385,000

* Inclusive of Net Income and health tax transfers to government

The PEI Liquor Control Commission delivered both an increased net profit and an increased transfer to the provincial government in fiscal 2018-2019.

Gross receipts were $116,965,595 for the fiscal year ended March 31, 2019, an increase of $2,935,565 over the previous year. This increase came as a result of new sales and marketing initiatives. Net transfers for the year totaled $42,583,684. This year’s performance resulted in a $1,198,028 increase in the PEILCC’s contribution to the province over the previous year.

PEILCC 2018-2019 Annual Report

Performance Highlights

Figure A Sources of Gross Receipts

3% 4%

25%

Spirits

Wine

Coolers

Merchandising

Fiscal Year 2019

Other

25%

Beer

43%

Figure B Application of Gross Receipts

13%

Payments to Province

13%

Administrative Expenses

Federal Taxes

Suppliers

Fiscal Year 2019

36%

38%

The commission spent approximately $45.14 million on alcohol from both national and international sources. Gross margins increased slightly due to one-time only marketing promotions.

PEILCC 2018-2019 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 2017-2018

Target 2018-2019

Actual 2018-2019

% of 2018-2019 Target

Target 2019-2020

Customers served Average customer transaction value

2,659,841

2,660,000

2,649,957

99.62%

2,665,000

$42.87

$43.23

$44.13

102.08%

$44.54

Actual 2017-2018

Target 2018-2019

Actual 2018-2019

% of 2018-2019 Target

Target 2019-2020

Litres

Beer

8,645,712

8,400,000

8,616,927

102.58% 8,744,701

Draught

1,095,320

1,015,000

1,125,585

110.90% 1,142,275

Spirits

786,427

789,500

789,166

99.96%

800,868

Wine (including BYO)

1,711,026

1,670,000

1,748,153

104.68% 1,774,076

Refreshments

562,304

536,000

694,704

129.61%

705,005

Total

12,800,789

12,410,500

12,974,535

104.63% 13,166,925

Performance Highlights

Packaged beer has decreased by 28,785 litres over the previous year. Draught beer has shown an increase of 30,265 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 132,400 litres over last year. The Spirit category has increased by 2,739 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.

PEILCC 2018-2019 Annual Report

The Wine category continued to display strong performance again in 2018-2019 selling a total of 1,748,153 litres, an increase of over 37,127 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 24 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. This event featured more than 250 wines, many of which are now included among the PEILCC’s general listings. The 2018 festival included Chile as its feature region. Wines from this state 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 beer, spirits and wine categories.

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.

PEILCC 2018-2019 Annual Report

Goal 3 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.

Performance Highlights

Audited 2018-2019

Target 2018-2019

% of Target

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, 2018 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.

Gross Receipts

116,965,595 115,000,000 101.7%

Gross Profit

35,231,910 34,800,000 101.2%

Revenue Per Litre

9.02

8.94

100.9%

Spirits

38.73

38.01

100.9%

Beer

5.69

5.63

101.1%

Wine

16.93

16.60

102.0%

Wine Coolers

7.87

7.16

109.9%

Spirit Coolers

7.42

7.08

104.8%

Draught

2.24

2.35

95.3%

Net Income

22,132,576 21,189,600 104.5%

Operating Expenses as a % of Gross Receipts

13.72% 14.03% 97.6%

Shrinkage as a % of Gross Receipts

0.00

0.01% 100%

Return to Government*

42,583,684 41,189,600 103.1%

Inventory Turnover**

Warehouse

73.6

105.1%

Stores

31.4

104.7%

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

PEILCC 2018-2019 Annual Report

Goal 4 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

Target 2018-2019

% of Target

Number of ID Checks as a % of transactions

10.5%

10.0%

105.9%

Funds raised for charities and foundations

$105,797

$90,000

117.6%

Licensee Compliance Rate

97.9%

95%

103.1%

Number of Inspections Conducted

3521

3200

110.1%

% of Sanctions without Adjudication

100%

90%

111.11%

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 $25,000 to continue the support of community programs and relief to Islanders in the time of need. The PEILCC also completed the 4TH 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 2018-19 school year, with fifteen presentations of the English language version #thepact and two of the French language version, which took place in high schools across the Island. The commission provided ongoing

PEILCC 2018-2019 Annual Report

A partnership between the PEI Liquor and Atlantic Canadian universities, Keep It Social is all about helping students make responsible decisions when it comes to alcohol. Led by students and guided by the PEI Liquor, Keep It Social is a long-term initiative designed to address and reduce high-risk consumption. Now in its third year, Keep It Social is tackling the false perceptions 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.

In 2018, UPEI and Holland College appointed several student-athletes as Keep It Social ambassadors who will lead spreading the message about high-risk alcohol consumption among UPEI students.

Also, in partnership with PEILCC, Coach Atlantic, KKP, and UPEI designed a bus wrap that will put focus on the campaign while student-athletes travel throughout the Maritime Provinces to their “away” games.

PEILCC 2018-2019 Annual Report

The Heart and Stroke Foundation’s Paper Hearts campaign took place for the seventh year in 2019 and was successful in raising over $30,894. 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 2018 for a very successful fundraiser. Pin sales from local liquor stores showed an increase over last year collecting $17,416 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 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.

PEILCC 2018-2019 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 over $1,800 in support of the Hospice Palliative Care Association of PEI through proceeds from the silent auction, held during the 24th annual Festival of Wines.

Optimal compliance to the Liquor Control Act, Regulations and 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 2018-2019, commission store staff checked 276,915 people suspected of being underage, intoxicated or with no ID and refused service to 3,331. Liquor inspectors performed 3,521 compliance inspections and 2,650 ID checks in licensed premises.

After evaluating all stores in relation to established criteria, the staff of the Alberton store was awarded the Annual CEO’s Award of Merit for Loss Prevention for fiscal 2018-2019.

In September 2017 the Check 30 program was refreshed across all corporate retail agency outlets. Initially introduced in January 2016, Check 30 replaced Check 25 which had launched in August 2006.

PEILCC 2018-2019 Annual Report

Goal 5 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 2017-2018

Target 2018-2019

Actual 2018-2019

Target 2019-2020

Target %

Training Hours per Employee - FTE

17.29

N/A

12.80

N/A

EMPLOYEE EXCELLENCE Plan

89.56%

100%

69.2%

95%

Employee Wellness Rate

98.83%

98%

98.51%

99.4%

98%

Lost-Time Frequency

2.84

2.97%

168.3%

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 2019. The PEILCC surpassed its fiscal 2019 goal and provided over 17 hours of training time per employee FTE. This increase above target was in part due to increased opportunities with Wine and Spirit Education Trust (WSET) partnership development which resulted in more training availability in this area. The PEILCC has continued usage of the internal training and development fund to complement efforts made in performance management. 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 in fiscal 2019. Success in this regard continues to be attributed to the diligence of PEILCC leadership in the administration of the

PEILCC 2018-2019 Annual Report

EMPLOYEE EXCELLENCE program which was piloted in fiscal 2017, and rolled out across the entire organization in 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 has had continued success in fostering high levels of workplace wellness and safety over fiscal 2019. 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 three-Year Strategic People & Culture Plan that was developed the previous year.

The objective of this plan, as is such in the traditional HR Planning context, is to foster an engaged workforce that is aligned with the strategic objectives of the organization. Through the effective implementation of this Three-Year Strategic People & Culture Plan, the PEILCC has the opportunity to enhance its ability to accomplish these goals.

PEILCC 2018-2019 Annual Report

MEAD

What is Mead?

Mead is made by fermenting honey with water to create an alcoholic drink. Like beer, though, mead is sometimes flavored with fruits, spices, grains or hops, resulting in a wide variety of flavours and aromas in the finished product. While often grouped in with wine, Mead is its own beverage with an enormous range of potential flavor, sweetness, and alcohol profiles. Mead is generally higher in alcohol than beer and a bit lower than wine - usually between 8 and 20% ABV.

Pick a mead that suits your tastes

Mead is produced in a variety of flavours and sweetness levels, from bone-dry to lusciously sweet. Every wine and mead on the shelves of PEI Liquor Stores has a “sweetness code” indicated on the shelf label and online. This code helps identify the level of sweetness you can expect from your selection and can help with food pairings, too. The sweetness code is based on the amount of residual sugar left in the wine or mead after the fermenting process is complete. The code for a selection containing 0-5 grams of sugar per litre will be 0, the code for 6-15 g/L is 1, and so on. So you can expect wines with a low sugar code to be drier and a little tart, and wines with a higher code to be sweeter and more syrupy the higher the number.

In addition to sweetness, meads vary in flavours and aromas as well. Many producers add in aromatics such as herbs, spices or fruits for added complexity. These all add character to the final flavour and experience.

Honeydew Apiaries 6718 Canoe Cove Road, Canoe Cove, PE 902-675-3690 | peihoneywine@gmail.com

Owners Daniel and Beatrice Ficza have been producing their mead commercially since 2008. This past year has seen the couple expand with four new flavours and some sharp new packaging. They now produce five varieties of mead; a traditional dry, a semi- sweetened version with a stronger honey taste, an oak-aged mead with a smoky finish, as well a beet mead and an award-winning rhubarb variety. TRY: Honeydew Starling Traditional Dry Mead with cheese boards or with our recipe for Roast Turkey with Apple and Sage Stuffing.

PEILCC 2018-2019 Annual Report

Island Honey Wine Company 820 Millboro Road, Wheatley River, PE 902-621-0085 | www.islandhoneywine.ca

Relative newcomers to the PEI mead scene, “Agropreneurs” Charles and Laura Lipnicki are the owners of “La Serena” a working farm in central PEI. Island Honey Wine Company is also home to certified organic fruit orchards, lavender field, and a honeybee sanctuary. They offer 3 varieties of lightly sweet and aromatic mead; a traditional wildflower honey, as well as a lavender and a haskap-flavoured selection. TRY: Island Honey Wine Wildflower Mead paired with baked brie, blue cheese, nuts or with our recipe for Pear, Gorgonzola & Walnut Flatbread

Rossignol Estate Winery

11147 Shore Road, Little Sands, PE 902-962-4193 | www.rossignolwinery.com

Owner of PEI’s first commercial winery, John Rossignol has been making wine and mead since 1994. John grows a variety of fruit and grape vines on his beautiful property in Little Sands, PEI and a blackberry mead made from John’s own blackberries and honey from a nearby farm. TRY: Rossignol Blackberry Mead poured over ice cream, with sharp cheeses, with chocolate desserts, or with our recipe for Spiced Apple Crumble.

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 and financial 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 $42.4 million for the 2019-2020 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.

PEILCC 2018-2019 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

PEILCC 2018-2019 Annual Report

Statistics Retail Gross Receipts by Store

Year Ended March 31, 2019

Year Ended March 31, 2018

Year Ended March 31, 2017

Retail Store

Gross Sales

Alberton

$2,010,170

$1,986,853

$1,817,694

Gateway

$2,319,723

$2,249,928

$2,084,138

O'Leary

$2,193,053

$2,079,069

$2,079,567

Summerside - Granville

$8,179,486

$8,872,691

$8,448,902

Summerside - Waterfront

$5,521,993

$4,690,551

$4,384,985

Tignish

$3,097,433

$3,033,307

$2,862,010

Kensington

$3,932,996

$3,702,602

$3,468,300

Wellington

$ 786,233

$1,357,384

Tyne Valley

$1,343,989

$1,298,988

$1,210,424

Charlottetown - Queen Street

$4,176,445

$4,119,492

$3,917,053

Charlottetown - University Avenue

$16,177,238

$16,022,712

$15,545,070

N. Rustico

$3,793,707

$3,552,099

$3,245,429

Charlottetown - Minna Jane Drive

$13,603,873

$13,459,098

$13,110,271

Licensee

$20,382,722

$19,434,309

$17,888,896

Cornwall

$6,181,129

$5,932,856

$5,644,252

Stratford

$9,568,277

$9,342,808

$8,676,642

Cardigan

$1,804,085

$1,851,096

$2,104,732

Souris

$3,325,721

$3,324,804

$3,175,940

Montague

$7,137,448

$6,540,273

$5,353,215

Other

$2,216,107

$1,750,261

$1,632,275

Total

$114,030,030

$108,007,179

$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 $4,894,750, an increase of 23.73%.

PEILCC 2018-2019 Annual Report

Statistics Summary of Profit and Expense Ratios Two-year Comparison

(in 000s)

2019

2018

Gross Receipts

$116,966

$114,030

Gross Profit

$35,232

$34,584

Net Income

$22,133

$21,378

General and Administrative Expenses

$16,045

$16,001

Gross Profit as a Percentage of Gross Receipts

30.12%

30.33%

Net Profit as a Percentage of Gross Receipts

18.92%

18.75%

General and Administrative Expenses as a Percentage of Gross Receipts

13.72

14.03%

Our Spending... All Profits Stay Here

Operating Costs:

Salaries and Benefits:

5,504

10,541

116,966

Total Sales:

42,584

45,140

36%

39%

Returned to PEI:

Cost of Product:

13,197

11%

HST & Other:

PEILCC 2018-2019 Annual Report

Sales Volumes... (litres) by Category

Fiscal Year 2019 T O T A L : 1 2 , 9 7 4 , 5 3 4

Beer 9,742,511

Spirits 789,166

Wine 1,748,153

Coolers 694,704

FEATURED PRODUCT ADVISOR This spring I had the opportunity to do some study at the German Wine Academy. It was a great experience that allowed me to learn about the are serious about investing in the industry. Modern new wine making equipment seemed to be the norm.

rapidly changing industry there, and to do winery tours and talk to wine makers in various parts of the country. The evolution of the wine industry is especially noticeable in Germany. A new generation of growers has taken up the reins and is offering a fresh new interpretation on the country’s great wine making traditions. I was most surprised to see how the industry was thriving here. While touring wineries and walking through vineyards, it was obvious they

The glorious historic vineyard sites have been helped by the effects of climate change. Every wine maker I talked to brought the topic up and described how they are adapting their vineyards to benefit from the warming climate. 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.

LATESUMMER2018

DeRoche

PEILCC 2018-2019 Annual Report

Total Licenses and Special Permits March 31, 2019 and March 31, 2018

Year Ended March 31, 2019

Year Ended March 31, 2018

License Type

Dining Room

197

212

Lounge

102

104

Club

Military Canteen

Special Premise

119

117

Caterer

Agency Store

Liquor Agency

Winery

Micro-Brewery

Tourist Home

Distillery

Brew Pub

Ferment on Premises

Package Sales

Total Licenses in Effect

557

565

Special Permits Issued

Year Ended March 31, 2019

Year Ended March 31, 2018

Class I

141

123

Class II

156

136

Total

297

259

PEILCC 2018-2019 Annual Report

Management’s Report Mr. Quentin Bevan, Chairman PEI Liquor Control Commission PO Box 967 Charlottetown, PE C1A 7M4

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

HOLIDAY 2018

CELEBRATE HOLIDAY2018

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

PEILCC 2018-2019 Annual Report

Online & Social Media

Check out our new website! www.liquorpei.com

Subscribe to our eFlyer: www.liquorpei.com/subscribe

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@PEILiquor

PEILCC 2018-2019 Annual Report

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