Good afternoon, ladies and gentlemen. Welcome to the year end fiscal twenty twenty results conference call. I would now like to turn the meeting over to Mr. David Mills. Please go ahead.
Well, it's actually good morning, everyone. Before we begin, let's remind you that during this conference call, we may make statements containing forward looking information. This forward looking information is based on a number of assumptions and is subject to a number of known and unknown risks and uncertainties and could cause actual results to differ materially from those disclosed or implied. We direct you to our earnings release, MD and A and other securities filings for additional information about these assumptions, risks and uncertainties. I'll now turn things over to Mr.
John Peller, Chief Executive Officer. Thanks, David, and good morning, everyone. Joining you from my home here in Burlington. And also on the call is Steve Beatridge, our CFO and Randy Powell, our President. And Steve is going to speak to some of our financial results and Randy will outline some of our major business initiatives for the years.
Let me start by saying that for our year ending March 31, our fiscal twenty twenty, is another very positive year for our company. Our sales for the year were flat, but our earnings were up very nicely as we continue to strengthen our product mix into areas where we're getting higher margins. And those increased earnings have allowed us to both improve our results, but also to allow us to invest more in new areas that we need to grow our product portfolio in tire and craft beer, in the whiskey and distilled spirits. So all in all, it's been a very, very busy year and we're pleased with all the work that we've got done. So our net earnings rose to $23,500,000 or $0.55 a share from $22,000,000 in fiscal twenty nineteen.
Obviously, the last part of our fourth quarter and particularly the month of March was impacted with the onset of COVID-nineteen. We were most fortunate that right out of the gate, our food and alcohol category was deemed essential by the federal government. And as a result, the main liquor stores across the country were kept open. And we adjusted to ensure our production facilities remained open and as well as the retail stores that we have here in Ontario at our wine shop. And we had our state winery stores open for curbside pickup.
But from tourism standpoint, visitation and normal events and activities were not open for that period. They just opened out west now. As you may have heard, the aftermarkets are opening restaurants and the estate wineries are just opening now under a very strict regimen and protocol. And in Ontario, as you're aware, both restaurants and our SK wineries curbside pickup, but they get to open them up more broadly to consumer traffic. I must tell you, I'm incredibly proud of the work that our management team did.
They met twice a day remotely and through the weekends for three or four weeks to ensure that we kept our employees safe and all our operations ran strong. Our demand was particularly strong in March and particularly the four liter products were in high, high demand. And our team did a great job. And as well, not surprisingly, our e commerce direct to consumer business became very, very popular and a great deal of effort and went into ensuring that we met all the demand that came through that channel as well. If there is a silver lining with COVID for us, one of the very positive things that I think is going to come out of this going forward is that governments, both provincially and federally, are going to realize that a lot of the globalization that they promoted wasn't necessarily in their long term economic interest.
And it was made clear to me through my discussions with the provincial and federal politicians that they were lamenting the fact that so much of our manufacturing has left the country and that our supply chains in food and agriculture, obviously in PPE and health were badly compromised and that a lot of the value that we expected by promoting globalization had not accrued to us nor protected us in ways that we should have been protected. These are things that I've been promoting for twenty years, but I have been beaten back by kind of liberal trade messages. And I think going forward, for us even trying to get the interprovincial trade shipments approved, we haven't enabled simple policies that we could have done to help promote manufacturing and sustainable business models here in our country. They've not been supportive. And I really do believe that that will change positively for us going forward.
The beverage alcohol industry remains strong. You've no doubt heard us say over the years that in the last twenty years, whether it was nineeleven or the financial collapse in 02/2008 and 02/2009, over the past recessions, we tend to power right through them and perform well. And we expect to do the same this time around. And as I told you, the sales through our liquor board and grocery channels and our e commerce were particularly strong in April and May. And may offset a lot of the business that we lost because restaurants are closed.
Our own restaurants are not open. Our ski line, your tourism and special event business is down. Our sales to duty free are non existent. The airport business has dried up. And while we've been able to offset some of that and most of that in the first two months, we don't expect to be able to offset that for the entire year.
So that it's likely we'll have some revenue impairment in the 5% to 10% for the year. And having said that, we're really looking at investing in our business as if everything was full bore. And our eyes are definitely on our future, and we're going to continue to make the investments we know that are critical for the next five to ten years. So we're pleased and happy with the investments that we're making, and we're definitely excited with our prospects for our future. So at this point, I'll just turn it over to Steve and then to Randy.
And if you have questions at the end, we'll be happy to address them. Before we speak.
Thanks John. Good morning everyone. So sales were $82,100,000 and $382,300,000 for the three months for the year ending 03/31/2020. That's up from $79,800,000 and $381,800,000 in the prior year. So once again, we experienced solid sales growth through the majority of our well established bottled wine trade channels, resulting from the introduction of new products and product categories through the year.
We did see a softest in our personal winemaking market and in our export sales through the year. As a result as well as increased competition from subsidized lower priced imported lines in certain markets, particularly in Western Canada. As a result of our sales performance through fiscal 'twenty, we believe our share of the customer markets remains stable, a reflection of our strong product portfolio, our reputation for delivering value and the loyalty of our customer base. While our state properties, export and personal winemaking fields were affected by the pandemic, we are seeing an increase in sales through the provincial liquor store channels as well as our retail locations. We've also increased our emphasis on direct to consumer sales, leveraging the strong brand recognition at our estate wineries, and we're seeing positive momentum in this channel.
Our gross margin improved in fiscal 'twenty to 43.5% of sales, up from 41.6% last year. Margin for the fourth quarter also improved, rising from 43.3%, rising to 43.3% from 39.2% in the prior year. Our gross margin continues to benefit from our increased focus on higher margin products and our programs over the last few years to enhance efficiency and reduce costs. As we discussed in the past, our acquisition of three wineries in October of twenty seventeen, we recorded an increase of $10,400,000 in inventory to represent the fair value of the goods acquired. This increase is being expense to earnings as these goods are sold, thus reducing our gross margin.
In fiscal 'twenty, we reported a charge of $1,700,000 in cost of goods sold compared to $5,500,000 in fiscal twenty nineteen. Our sales and admin expenses were lower in fiscal twenty twenty due primarily to a $3,200,000 reduction from the change in accounting for lease obligations adopted in April of twenty nineteen. Personnel offsetting this decrease were one time costs, consulting and professional fees related to our implementation of a new enterprise resource planning system and an increase in the allowance for doubtful accounts due to a potential impact from the COVID-nineteen pandemic on certain customers. Selling and administrative expenses as a percent of revenue in fiscal 'twenty improved to 27.4% from twenty seven point eight percent in the prior year. With increased sales and stronger margins, our EBITDA rose to $61,500,000 for the year, up to $52,900,000 for fiscal 'nineteen.
Adjusted EBITDA, which includes the one time acquisition related charges, also increased to $53,200,000 in fiscal 'twenty, up from $58,300,000 in the prior year. Interest and amortization expenses increased in fiscal 'twenty due primarily to the recently adopted accounting treatment for lease obligations in accordance with I4X 'sixteen. Other expenses in fiscal 'twenty include $1,700,000 in restructuring costs. We posted a net unrealized noncash loss in fiscal 'twenty the result of mark to market adjustments in our interest rate swaps and foreign exchange contracts mainly due to declining interest rates. Net earnings for fiscal 'twenty were 23,500,000 or $0.55 per Class A share, up from $22,000,000 or $0.51 per Class A share in fiscal 'nineteen.
Now turning to the balance sheet, overall debt increased to $165,200,000 at March 31 from $154,800,000 at the end of the prior year. The increase is due to lower cash from operations and our regular debt repayments. Cash from operating activities in fiscal 'twenty was $31,500,000 compared to $49,000,000 in the prior year. Shareholders' equity rose to $245,000,000 or $5.63 per common share, up from $5.31 per common share on March. At year end, we had capacity on our operating credit facility of approximately $24,000,000 with another $112,000,000 on our investment facility.
We believe we have the management experience and the financial resourcing and flexibility to meet the liquidity needs presented by the pandemic. Having said that, we'll carefully review all capital allocation to ensure we remain financially stable and well capitalized going forward. In summary, as John mentioned, we're very pleased with our results in fiscal 'twenty and we remain confident that our track record of solid performance will continue over the long term. Thanks very much for your time and attention. And I'll now turn things over to Randy.
Thanks, Steve, and good morning, everyone. As we've discussed over the last number of years, our goal at Andrew Heller Limited is to increase our shareholder value through a handful of key strategies. The first one of course is strengthening our product portfolio. John commented on it earlier. We know that we rationalized in the last few years some underperforming brands, but then we brought in some and added some powerful new brands like the three acquisitions of Black Hills, Tinhorn Creek and Grey Monk.
So a wonderful trade that really increased the profitability of each and every one of our sales. Another key strategy is investing in our consumer brand building, innovating at a much higher level than we have done in the past. And of course, entering into other beverage alcohol segments other than wine. We have seen over the years that consumers are buying across these categories and we want to make sure that we participate in that. Of course, we've modernized our systems and processes.
The largest of note is the work that we've been doing in replacing our ERP system. At the same time, as we've been driving these strategies, we've been very vigilant to make sure that we drive efficiencies throughout the organization and ensure that we capture sustainable cost reductions. We believe that that not only contributes to our success here in 2020, but really puts us on a strong platform as we face the COVID-nineteen pandemic. So I thought I'd take a moment to talk about some of the key drivers in 2020 to give you a sense of what drove some of the strong performance elements of our business. From a brand perspective, the relaunch of the Pellet Family Vineyards brand has continued to do very well, driven by new product optimization, differentiating marketing programs, innovative packaging, strong in store merchandising, and I think a really strong presence in the digital campaigns that we've put in the markets.
We've seen some strong growth there. Our partnerships from day one continues to grow with Lane Direct Speed, and we've seen some real benefits associated with that of late. The sales of our brands and our spirits continue to grow. And then of course, we're very proud of the introduction of Wayne Gretzky nine nineteen and longer last year. That was primarily focused in fiscal twenty twenty to Ontario, but we have two wonderful new products we'll be adding to that portfolio, 99 session ale and our 99 kl ale.
We'll be building that national distribution of all three of those products across the country this fiscal year. It's a very exciting, another dimension to that strong Wayne Gretzky beverage alcohol brand. Our entry into the craft cider business embedded fabulous with Noble on Sunday, very, very strong and successful from the very beginning. Sales were up again significantly in 2020 And with a strong roster of new product innovation, we think it will grow at that same strong level, if not even stronger in fiscal 'twenty one. Dry rose cider, cider in cans and most recently, even under the no boats on Sunday, we've launched some ready to drink products or RTD seltzers as we call them.
Our own retail stores, the wine shop continues to do very well across all formats, including the co located stores, which are in grocery stores, they're doing particularly well these days. It's also always been continued to prove out to be a great place to test new products. So as we're getting more and more into innovation and driving new products out, what a gem to have our wine shop or TWS, we call it internally, available to us to get live feedback from consumers on a very instantaneous basis. Importantly, in this COVID-nineteen environment, we're seeing growth as I think both John and Steve had mentioned in our direct to consumer business. Our wineries have always been a very important brand builder and source of profitable volume in the direct to consumer business.
Obviously, in this environment, we're implementing a number of new programs that allow consumers to buy their favorite brands across our whole product offering, wine, beer, spirits, cider, RTDs online delivered directly to your home. From a sales perspective, Patrick O'Brien, our EDP of sales joined us in September. He has settled in beautifully and we're seeing a more hand in hand with our marketing team and our major customers in driving execution of our programs into the marketplace and importantly, our innovation in store. We're also strengthening our customer solutions team and really leveraging that revenue management and category management effort with our customers. I can tell you that our customers are the trade customers are thrilled with the value that we not only bring with outstanding all class product but also with the insights that we can bring to customer solutions.
So a real strength in there and a benefit to all. Finally, looking at our operations overall, we continue to drive cost savings, strong cost savings and operational improvements across that entire platform. Stephen mentioned that our margins had gone up from 41.6% to 43.5% in 2020. Obviously, our ops team and the great work they're doing is one of the drivers behind that. I'd also like to just take a moment and note that we will be we have actually consolidated our wine kit operation for Port Coquitlam.
That has now been consolidated into one facility nationally, which is in St. Catharines, Ontario. That was completed the last day of the fiscal year. So much of the work has been done, but the benefit will actually start to be realized in fiscal 'twenty one and we will see that business continue to strengthen its financial margins as a result of that. So clearly, you can see 2020 was a busy year.
We laid a lot of foundation that allowed us to get the strong results that we did in fiscal twenty twenty. And certainly, we're encouraged by the strengthening even more so in Q4 of twenty twenty. But we also believe that the foundation puts us in very good stead. I think John said it well. I think it puts us in very good stead as we look at the pandemic.
And although, yes, we are doing all we can to ensure we face that pandemic, we are very, very excited within fiscal 'twenty one and beyond. When we have a number of new products, we typically would average a dozen or so new products that would be a fair amount to bring in the marketplace. Any one particular year this year, we're seeing kind of a four fold increase in that resulting in products that we're bringing to market. Part of that is the great innovation we're bringing to wine and part of that is the new participation in some of these other alcohol segments where we hadn't participated before. But we really believe we're bringing a colicold bundle of innovation forward to our trade customers.
We have seen a significant surge in our online business as my other two colleagues had mentioned. So those of you online, go check out the wineshops.com website. It's a fabulous website that allows you to buy any of our products across our portfolio in Toronto area. And this is meaningful in Toronto area. It's one day same day or one day delivery, kind of two days elsewhere.
And I will tell you the delivery is free, so take advantage of that. The Wine Club as our Wine Club continue also to do very well in our consumer direct to home business. So we're seeing those, which have always been strong, see further growth in this current environment. Lastly, our production facilities are performing at vector levels of efficiency. We're very proud of the work that these people have that our team has done.
And we're confident they will continue to drive margin improvements that they have for the last number of years. So in closing, I just wanted to echo John's comments, which was to thank all of our people for their hard work and dedication and contribution dreams, really challenging times. You can see the power of our culture and our innovation and performance in times like this and very proud of the way that they've shown up every day and allowed us to perform at this high level. I do believe when the pandemic is all said and done, and it will be all said and done at some point, we will emerge from this even stronger when we run-in. We are pretty strong going in.
So with that, I'd like to thank all of you for joining us this morning and maybe I'll hand it back over to the operator to answer any of the questions that you might have for John, Steve or myself. Operator?
Thank you. We will now take questions from the telephone line. The first question is from Amor Ezaat from Echelon Partners.
Randy, appreciate your comments in your prepared remarks on the trends that drove, I guess, sales in 2020. But if I'm thinking specifically for a typical Q4, you had a 3% jump year on year after a few quarters of flattish year on year sales, and I know you guys commented the past few quarters, you were sort of impacted with the low priced imports that have been an issue. I'm just wondering what's changed for the March to cause the healthy jump in sales? Is there anything specific there? And then if you could also comment on what's driving it in terms of volume, price increases or product mix, that would be helpful.
Sure.
I'd be happy to. I think there's John commented, I will kind of let's take the COVID part of it out of the upfront handle, but it's much more than that. As John commented, we saw some very healthy gains in parts of our business, the retail part of our business in particular, as the last couple of weeks as it resulted to COVID. But of course, we saw some down elevators that were fairly significant as well associated with our hospitality and our export business. So those two kind of there was a fair bit of canceling out of each one of those.
I would say that we have seen some strengthening in Western Canada in particular. We saw growth across the board. I want to be clear. I don't want to make any one region. We saw growth across the board in the fourth quarter.
But I'd say that the way that we're approaching Western Canada and our partnerships there as well as some of the new products that we have brought into the market, I think were the larger contributing factors to an increase in Q4. And I think really, I would say it's slightly different than that, maybe it's a return to a growth rate that we're more used to.
Okay. That's fantastic. So that's mostly volume, I guess,
that drove that? Yes. Okay.
So if I'm looking ahead to the current quarter, the June, and I understand the situation is like still fluid depending on geography and the channel, but you guys already spoke to the retail channel, ecom, liquor boards being up seasonally, and obviously, exo business is soft, cost obviously is soft as well. I know John mentioned 5% to 10% impact for the year. So is that relative to fiscal 'twenty? And then are you guys assuming the bulk of that impact will be in the June?
Yes, I would I'll comment on the quarter and maybe let John comment in the backup some of the thoughts you had behind your comments. But it's always I'll tell you, April versus May versus June all look wildly different right now. I think that's kind of direction I can give you is that the up elevators continue to go up. Those are the ones that John had mentioned, which are retail, our own retail stores. Those tend to be our online business, our wine clubs.
Those tend to continue to go up. And the question for us that really makes it challenging is trying to figure out how big the down elevators are and how long they'll stay down. Will hospitality, which is a big part of our business and how long will that be suppressed? We saw some regions open up in Ontario and they open up this Friday. Tomorrow, they're allowed to open up.
This Niagara happens to not be one of them. However, we're seeing our Western in BC, we're seeing those open up. It isn't only them opening up, though. It's also consumers' interest and comfort in visiting them. So it is a bit of an unknown.
What we do know is that where we're strong, we believe we'll remain strong. And not only because of the way the people, the channels that people are buying that belt will fall through, but also the innovation that we bring to and strategies that we bring to that market. So we're quite confident there. What we don't know is the how low will the down elevators how low will they be and how long will they be. So that's the challenging part.
I can't give you any more direction. We just had a board meeting yesterday. I couldn't get women further direction. I was asking as to how I thought the first quarter would go. But the elements that John commented on are absolutely the right ones.
It's just a matter of quantity. So maybe I will bounce it over to John just to if you have any further comments on
the year.
I think that's well said. We did better in the first two, three months than we expected, but those were low contribution months from those other channels. And as we get into the summer fall months with the other those three channels like the states contribute significantly more and knowing that most of them will be open and operating in post meeting, it will be hard for us to make some of it in other areas, but not all of it. So I think we're thrilled that we're as little affected by the pandemic as we are And we're doing well. It doesn't change the way we're going to operate or invest, but it's hard to me to foresee.
Even though we did better in the first quarter, it's hard for us to see that we'll do escape the full year without a small hit to our revenue as a result of those channels that are closed. But we'll update you in six months and tell you how intrinsic we'll be at our AGM and we'll keep an honest and open perspective on how we're doing and we just think it's better to be straightforward upfront.
Fantastic. Okay. So let's switch gears, I guess, to longer term and margins. Another fantastic performance there. When I'm thinking about your overall portfolio and look at it a few years ago, you are probably underdeveloped in premium and probably a bit overdeveloped in value.
Can you give us a sense of where the portfolio mix stands now? And what can we sort of expect in the next, call it, three to five years?
Well, I can tell you we are thrilled with our portfolio as it sits today. I think that this portfolio has been built over the last number of years, twenty years, where we can where we as you know, we participate in the largest wine kit business on the planet. So we are the largest in the world and all the way through to kind of the premium wonderful premium lines that we have in our portfolio. I think the way that John and the team has built it over the years really puts you in a good position because in good times, we have much we have as you know, we felt that we needed to premiumize and add to that part of the portfolio and did so very successfully with Black Hills and Tim Hortons and Grey Monk. So that really strengthened that part of the portfolio.
But we are very proud and excited to have the full range. So when you get into, in this case, it's a pandemic that led us into recession, but our portfolio will stand up in a recession as we've seen in the past very, very well because of that. So today, I would say we have the most balanced portfolio that we've had probably ever, only because of the way that we built the portfolio. But I feel very confident that we have a portfolio and we will fare well as a result of that as you look forward not only through what could be a more challenging what we predicted to be a challenging and deep recession. We've got the portfolio for that.
And as we on the other hand, we still have a wonderful premium offering for those who want it now and definitely as we come out of more challenging economic downturn.
Then going forward like maybe like three, five year perspective, would we see like a larger premium mix or are you guys like happy with that current balance?
Yes, I think that we have a I think we've got a strong premium portfolio today. I think that maybe I'll ask John to maybe comment because I just wanted to I just want to make sure that we're looking at our gold portfolio, we've got wine, but remember we have other segments that we're participating in now. So maybe I'll just ask John to let you make any comments on that. Well, I think you've covered it well, Randy. I mean, we're the one reality of the beverage alcohol industry, everyone used to stay in their lane and now everyone's trying to take the crap out of everybody across the board so that the spirit companies and the beer companies are coming out with seltzers and ciders and spirit brands are in the refreshment and wine cocktails.
So we thought it was critical that we developed brands that were strong in all categories across the board and we're in the early phases of doing that, but we're doing them with great brands that can command thing and pricing and solid margins. I think our premium wine business and BQA premium business has a great future. It's taken us thirty years to get where we are and we're very confident about the positions that we have. I think in the value wine business, when I made my comments about the government's oversight of our industry, it certainly doesn't help us to make things that the LCBO was selling Spanish wine for under its cost. And when I've gone to the government and said, hey guys, give me a break here.
Spain doesn't let anybody, not even France, nearly anybody sell value wine into their country. And you're letting them discount and subsidize the wine at the LCBO? And naturally, the product did well. And similarly, out west, the DC Liquor Board is now bringing in their own private labels and undercutting the market. And we're going to go to the government there and it will not be a pleasant conversation.
It's completely ridiculous that a local monopoly undercuts the local industry. So I think that that's where some of the softness in our value products has come from. And I think the governments will start Those other countries don't allow that in their country for a valid purpose. They want that manufacturing and the contribution to the economy to stay with them. I don't know how well you've followed the food industry over 65 food companies in Ontario in the last six years, sold their facilities and now only shipped their products up from The U.
S. That was a mistake for us to let that happen. The Americans would never let that happen. And I think this change in view and valuing what these companies contribute to our economy requires some policy support in the same way they're being supported in other countries. We've been totally naive and taken advantage of.
So I think that value that this will strengthen going forward. And I don't think we either want to over rely on it or under invest in it. We need to have a balanced portfolio. And that's why we spread out our product offerings. We offer products in wine at value, wine kit and premium and ultra premium.
And now we're into the other categories as well. So I think balancing our portfolio the way we have will hold us in good stead going forward.
Okay. That's helpful. Maybe one last one for all of these days. Can you perhaps give us an update, I guess, on the M and A and the landscape, how it's evolving in light of COVID and what sort of opportunities you're seeing. Then maybe as well an update on the discussions you've been having with your corporate bankers.
Just wondering how accommodating your balance sheet is to execute on acquisitions if you're you're going to see a period of even if it's temporary of lighter sales and earnings?
I'm happy to address that. I mean, I think first and foremost, the balance sheet is in great shape. And our debt has been slightly this year more because we've built some inventory more than anything to support our ERP transition and the closing of our kit business. But I'd call it $100,000,000 it was $150,000,000 it's up to $165,000,000 it normalizes at $150,000,000 That's kind of not even inventory value. And on top of that, we're holding properties for sale to the market right now, two properties in Western Canada that are just surplus real estate and they have considerable value.
So that unlike 02/2008, '2 thousand and '9, where we had a fairly much more significant level of leverage, we've gone into this in a very good shape and we know we have credit available to us. I think from the opportunity side, I've explained in the past that the beverage alcohol segment has been on an incredible run for the last ten years. There was a considerable amount of M and A activity and especially from larger players, large brewers, large distilleries and Constellation in The U. S. And they set precedence for unbelievable EBITDA multiples.
And it's why for the last four or five years, it's been very difficult to buy at reasonable values. So I think to a large extent from my perspective, the packed brewery, the roses off the broom a bit. And I'm sure you've heard the story that the factory that Constellation bought Ballast Point, they did $1,000,000,000 for the company at $80,000,000 in revenue and $20,000,000 in earnings. They did $1,400,000,000 5, 6 years ago. They sold it three months ago for $32,000,000 And I'm sure every craft brewer thinks they're worth what Palace Point was paid.
And it's not dissimilar with a lot of the small wineries. There are lots of small wineries for sale. And we're very picky about brand quality and how their wineries fit within our portfolio. And with the overall competitiveness of not just the wine space but the beer business, it's imperative that if you do buy, you buy at good pricing. You can pay fair prices, which are still healthy multiples.
The expectations people had were unreal. And I suspect they'll moderate going forward. And we'll see how it goes. If we feel we're in a good position and if there are good opportunities for us there, we're prepared to invest. And it's always been part of our strategy and it will be part of our strategy going forward.
So we'll see how people fare to the next year. And I'm sure they'll look at the opportunities and if they're at decent values, they'll be interested.
Great. Thank you. I'll pass the line.
Thank you. Next question is from Nik Kupuram from Acumen Securities. Please go ahead.
Good morning and congrats on a strong quarter. Just a couple of questions for me. The first is in your press release, you indicated that alcohol consumption has been relatively stable. I'm just wondering if that's in terms of dollars or volume. I don't mind just giving my perspective because the news channels kind of exaggerated the sale of beverage alcohol because they were just quoting that grocery was up 20%, thirty %.
So naturally when all the restaurant channels were closed, you'd expect that volume to migrate to those other trade channels. And I think having read many sources, not just in Canada but in The U. S, the general feeling is that overall beverage alcohol trends are up slightly and consistent with their cost trend and maybe a little bit more. In other words, the business sense that in home consumption, people are entertaining their families and themselves more at home. But they think it may have been a small pickup.
But I think if you're referring to the fact that they were reporting these huge increases in alcohol consumption, that's not true. They're at least equal to what they were maybe up slightly from the previous year. And that sounds like it's in terms
of volume, in terms of
dollar amount. Have you seen any indication whether it's been flat or slightly up? No, that's a fair question because I think it's driven by volume. If anything, pricing is consumers are migrating to more value pricing. And I think that's just a reaction to recession.
And so that total dollars, now that you mentioned are likely to be closer to flat. I haven't seen anything reliable range. I don't know if you've seen anything more current. What we see right now is exactly what John is saying. I'd say the dollars are up slightly, volume is up more.
So you're leaning a bit more towards the value proposition. Total dollars are up, but slightly where the volume is up at a more regular run rate. Okay. That's great. And then maybe just shifting to your portfolio.
What have you seen early on in the crisis compared to maybe going through Q1 in terms of consumer preference? Like it sounds like early on in the crisis, they have migrated towards more value based. Have they moved back towards more premium or has it been fairly constant? No. I think what you'll see in the portfolio we'll see across everyone's portfolio, and John had mentioned earlier is there's COVID, but let's remember that it's also leading us that we're now into a recession.
So I think we're seeing consistently from what it started a marbling towards the value part of the portfolio. I don't want to in any way say that premium is empty, but you're definitely seeing it on the value part of the portfolio. And I don't think this is a secret that you're seeing it definitely in the, say, the bagging box side of the portfolio. So you're seeing some really strong that's great value line in bagging box. We've always been very proud of the quality that we put out there.
And so you're seeing across all bagging box a significant lift in volume in particular that one has taken that one takes the lead. But I would say that that's been true from the beginning with that jump with both COVID going into the recession. I suspect you will I know that you will see that as we work our way through the recession. And then how should we think about that in terms of the impact that you have on overall margins going forward? The wonderful thing about our portfolio is as we said earlier is that it's a balanced portfolio.
So we have worked hard. The efficiencies that we've driven through operations will allow us to have a strong performance on margin. Without misleading you though, we all know that the premium associated with the smaller volume of higher premium, the margins are higher. However, from a dollar perspective, bagging boxes got a much stronger dollar Great. And then I'm just wondering what conversation you have with the private charge.
I know they've been talking about opening up access to alcohol across the province. Do you think online could potentially fill the gap that they've been trying to get from increased access points to the convenience stores? I mean, that is a $64 question still. And I'm trying to figure a way to answer it honestly. I don't really think the government understands the complexity and the challenge of making significant changes to their current beverage alcohol system.
I mean, the whole thing started with this notion of a bucket here and somehow migrated to Joe and Mulroney met with Korean convenience store owners and made this to them out. And then on top of that, there's the reality of a peer agreement that the local government made with large brewers that the government struggles with. But I think the best thing that's happened is Rod Phillips coming into the Ministry of Finance through all these three platforms and all of a sudden they're listening and they're realizing that they have quite a few interests and balance, the most important one being their own revenue base Because one of the greatest ironies in all of this is this originally started eight years ago with their efforts to privatize the CBL. Now they've decided they're not going to do that and they're going to make new changes everywhere else. I think the priority of this has fallen considerably.
I don't think there's any agreement inside the government on what's the best way for them to go forward. And I think that they have a really big fish to fry right now and their policies are naturally focused on the pandemic and the economic fallout from it. So that I think temporarily it's been pushed aside. It will come back and we're there working as hard as we can on this file and I expect our position in the process to improve going forward. So it's not clear to me at what point they're going to want to start making changes, but I think to the extent that they do make changes going forward, they'll be far more sensitive to the impact on local industry than they were going to be a year or two ago.
Great. And maybe I'll just ask that a different way. Are there any regulations that might be impacting the growth of your online business right now? Or do you think that the government policies in place are allow for growth of that business? I think they're okay with that.
There aren't a lot of restrictions. There are inter production trade restrictions now that are completely absurd. But I think fair to say that most people in the industry, they ship anyway. So that even though there's a lot of banter about them opening up the markets, I think those people are just getting on with business and as they should, right? They should be able to sell new products freely in their own country.
And I think anybody's steps in front of that will get shamed. So I think the biggest interesting one is that the government has allowed restaurants now to sell beverage alcohol with their takeout orders to help them. And I think restaurants are going to want to maintain that type of a privilege. In The U. S.
Markets, there are some jurisdictions that support that. And I'm sure there'll be a push around that. But I think it'll have to get dealt with in the context of all the other changes in terms of where they're headed. And I think that's going to take a lot more time and thoughtful efforts on government so that they're careful about what they do. And I was terrified a year or two ago that they were talking about making decisions where they didn't even weren't even mildly informed.
Now they're quite a bit more informed, and I think they'll feel thoughtful going forward.
Next question is from shareholder Barry Roderick.
I've watched with interest the developments that have gone on in the last two or three months. And I think wine tourism, which sort of spells out one of our interests, we'd like to go to Niagara
On The Lake. And
do you see the wine tourism getting back in the near future?
I know that it seems logical that if people can't leave the country, that they're going to want to support local efforts more. And so I think that will be a positive factor for us. And having said that, the protocols they're putting in place for the next six months about when people come on the property, how many people can be together in the same room and how we manage all that. I mean, we're not going to have any of the large events like we've had in the past years, which were significant impacts on our business. So I do believe I'm a big believer in the value of that business for the long term full stop.
And that I believe that millennials and younger consumers appreciate the value proposition of spending a great day in the weekend down in the Niagara Region more than ever and in the Okanagan. And I think we'll get some pickup from people's interest in the short term, but it'll be offset by those restrictions. I mean, until we get a vaccine, those businesses won't like sporting events and theaters and the like. So we'll be open, but if there'll be some restrictions on that will hold them back a bit.
Well, the fallback position for me here for across the country and maybe an opportunistic for you would be that Canadians as a whole could be members of your wine club.
In fact, that's happening. So we feel very encouraged with the support that we've had in our e commerce and wine club business, Gary. It's been very positive. Well, thank you. I continue to be a
you have a wonderful story from the time of your I guess your grandfather coming over. And I think that you're a great example for what can happen in Canada.
We've got two next generation family members in the business, my son, Jordy, and my brother, Gusus and Joey. And I definitely tell our people we got where we are because we plan for next generation and we're making investments to strengthen our business going forward for the next generation and hopefully we'll have the same good fortune.
Thank you. Next question is from Amul Azad from Pachar and Partners. Please go ahead.
Yes, guys. Just a quick follow-up. John, you mentioned a couple of properties for sale out of this. Do you have another property outside of Port Moody you guys are selling? Is it Port Coquitlam or is it Port Coquitlam?
Yes. That's the location of where our Wyantec facility was. So it's actually very close to our Port Coquitlam facility. And it's a couple of acres in an industrial park. It's very attractive property.
And there's a strong market for industrial property in the GBA, the Greater Vancouver area. And it's definitely surplus property that will sell in due course.
Great. Thank you.
Thank you.
We are
now further questions at this time. I would like to turn the meeting back to Mr. Powell.
Okay. All right. Thank you again everybody for joining us this morning. Always great to be able to talk to you about the business, where what we've done and where we're going. If you have any further questions, as always, please don't hesitate to call us at any time.
Thanks again and have a wonderful day.