NLC today released its financial and operational results for the second quarter of fiscal year 2024-25, ended October 5, 2024. All information is unaudited.

NLC reported net earnings for the quarter of $60.0 million, which is $1.7 million higher than Q2 of fiscal year 2024. The dividend paid by NLC to the Government of Newfoundland and Labrador totaled $60.0 million for the quarter, $1.0 million higher than Q2 of the prior year.

“Market conditions have been stronger this fiscal and have strengthened further as we moved from Q1 to Q2,” said Bruce Keating, NLC President and CEO. “Sales have been stronger as inflation eased and interest rates dropped, and have also benefited from a busy summer of major events and outstanding weather.”

Beverage alcohol sales for Q2 were $85.5 million, up 2.3% from the prior year. The increase is mainly due to higher wine and ready-to-drink (RTD) sales. Compared with Q2 of 2024, RTD sales increased 18.0% and wine sales increased 3.3%. Spirit sales were down 1.2% and beer sales decreased 1.5% compared to Q2 of 2024.

Sales through NLC’s corporate stores were up 3.4% compared to Q2 of the prior year, while Liquor Express outlets across the province experienced an increase of 1.4% compared with Q2 of the prior year. Sales through licensees increased 7.5% compared to Q2 of 2024.

In addition to direct sales, NLC earns commissions on the sale of beer through Brewers’ Agents. These commissions for Q2 totaled $19.0 million, down 5.5% compared to Q2 of fiscal year 2024.

During the quarter, NLC continued to improve and invest in the customer experience, completing the interior renovation of the Placentia Liquor Store. The renovation included new flooring, shelving, a digital monitor, and new paint colors.

NLC continued to highlight and support local business throughout Q2 by listing 42 beverage alcohol products from local small producers. Currently, there are 937 local small producer products listed by NLC. Local businesses and products were also featured in NLC’s spring/summer 2024 edition of Enjoy magazine, including spotlights on Wooden Walls Distilling, Tom’s Roadhouse, and a NL craft brewery passport.

Cannabis sales through licensed cannabis retailers (LCRs) totaled $25.8 million in Q2, an increase of 11.7% over Q2 of the prior year. Total retail cannabis sales in Q2, including online sales, were $25.9 million.

Category growth was driven by vape, ground/milled and whole flower products. Cannabis vape products sold $4.6M in Q2 of this year and represented 17.7% of cannabis sales.

Cannabis NL listed 48 products through local cannabis producers during Q2. As of the end of Q2 there were 55 LCRs in Newfoundland and Labrador, consistent with year end. A Request for Proposals was issued and awarded in Q2 with four Tier 1 LCRs expected to be open before the end of the fiscal year. The four locations are Bay Roberts, Carbonear, Corner Brook, and Placentia.

Rock Spirits produced 50,300 cases of spirits and 3,300 cases of RTDs and beer during Q2. Spirits production decreased 39% compared with the previous year, while RTD and beer production increased 6%. The decrease in spirits was driven primarily by a reduction in demand for the product of some of our co-packing partners, as well as by the timing of production. During Q2, Rock Spirts signed a 5-year agreement with Globefill Incorporated to continue the production of Crystal Head Vodka products in Newfoundland and Labrador.

During Q2, NLC’s Regulatory Compliance and Enforcement team conducted 779 inspections of liquor establishments and cannabis retailers, working closely with our licensees. This number reflects a 16% decrease from the same period in fiscal 2024. There were no illicit cannabis seizures during Q2, indicating a continued decline in the illicit cannabis market, which is encouraging for both NLC and the public.

NLC continues to deliver on its mandate to provide safe and secure access to cannabis, including keeping cannabis out of the hands of minors. As a result, Regulatory Services conducted an operation testing the compliance of LCRs and the unlawful sale of cannabis to minors. In response to the operation, the department is organizing regional education sessions in the third quarter to support our licensees in improving compliance and protecting minors.

Regulatory Services truly understands the challenges faced by the industry and appreciates the efforts of our licensees in navigating these regulations. Together, we will ensure a safe and responsible environment for all.

During Q2, NLC’s corporate social responsibility efforts highlighted key areas such as community giving, corporate sustainability, and public trust.

As a crown corporation with the responsibility of ensuring the safe importation, sale, distribution and management of beverage alcohol and cannabis, public trust is a major priority. To ensure that NLC is delivering on its mandate, a public opinion survey was carried out during Q2. Survey results show a high level of trust with NLC with a score of 6.9 out of 10, which reflects our commitment to making this a priority in our everyday actions and decisions. In addition, over 80% of respondents indicated a positive opinion of NLC.

From August 23 - September 1, NLC held its Keeping Families Close campaign in support of Ronald McDonald House Charities NL and the Red Shoe Crew Walk for Families annual event. Through the generosity of customers, supplier partners, and NLC staff members, $79,007 was raised which included a NLC corporate donation match of $15,000. NLC staff members also took part in the Red Shoe Crew Walk for Families in various locations throughout the province and was awarded the top corporate fundraising team at the St. John’s Walk.

To further its commitment to diversity, inclusion and belonging, NLC recognized the National Day for Truth and Reconciliation by closing its stores, office locations, and the distribution centre to acknowledge and remember residential school survivors and victims. NLC employees also participated in education and engagement opportunities provided by the National Centre for Truth and Reconciliation and the Canadian Centre for Diversity and Inclusion (CCDI).

In keeping with its focus on employee health, safety, and wellness, NLC provided Respectful Workplace and Harassment Prevention training to all employees during Q2. NLC management also delivered an Occupational Health and Safety Plan focused on improving NLC’s safety performance and strengthening NLC’s overall safety culture.

As part of NLC’s commitment to environmental sustainability, NLC’s executive team and senior leadership participated in a climate action strategic planning workshop facilitated by Fundamental Inc. The workshop provided an overview of NLC’s Greenhouse Gas emissions for fiscal 2023-24, allowing NLC to set a benchmark for future goal setting and climate action planning, all key to ensuring that NLC can continue to reduce its carbon footprint and help build a more sustainable future in the province.

With a priority on board stability and effective governance, NLC was pleased that the Government of Newfoundland and Labrador reappointed Janis Byrne, Kevin Dumaresque, Kendra MacDonald, and Lynn Zurel for a second three-year term effective September 9, 2024. Lynn Zurel was also reappointed as Vice-Chairperson of the Board. During the quarter, the Board took additional steps to strengthen corporate governance by approving changes to NLC’s Enterprise Risk Management Framework and taking steps to strengthen oversight of and assurance concerning NLC’s regulatory activities.

As President and CEO, Bruce Keating said, “We will continue to work on all fronts to make NLC the very best organization it can be for the people of the province. We have continued to focus on our customers and delivering on our financial goals. As importantly, we are taking important steps to balance purpose and profit, and earn the public’s trust in everything we do, including our important roles in regulating the liquor and cannabis industries; social responsibility; corporate governance; diversity, inclusion and belonging; and as a corporation - proud to be owned by the people of Newfoundland and Labrador.”

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

NLC is one of the largest retailers in the province. Through 28 corporate retail locations, over 140 liquor express stores, more than 550 Brewer’s Agent outlets, and over 1,400 restaurants, lounges, and other licensees, along with private order services, NLC offers over 4,000 products per year to consumers and its retail partners from more than 20 countries. It also regulates and distributes to 55 licensed cannabis retailers across the province, and offers customers a secure, legal online environment for cannabis purchases via ShopCannabisNL.com. NLC operates a 77,000 square foot distribution centre, as well as a manufacturing operation, Rock Spirits. The facility, which runs world-class blending, bottling and canning operations, ships to more than 30 countries around the world and has been in operation for over 65 years.

NLC operates with the expectation that it will generate revenue for the Government of Newfoundland and Labrador, with 100% of its profits reinvested in the province to fund key public services. NLC aspires to build trust in everything it does - with customers, employees, retailers, commercial partners, and communities, along with Government, to ensure a stronger Newfoundland and Labrador.