Price Check: 4 L of Milk at Nova Scotia Atlantic Superstores $5.29 – $7.69

Canada is like an old cow. The West feeds it. Ontario and Quebec milk it. And you can well imagine what it's doing in the Maritimes. – Tommy Douglas 

Where the problem all begins? I doubt it. Photo: rogerlloydwilliams, Flickr ccl

NOTE: The prices reflected in this post were accurate as of the day of posting, June 18, 2011. I have not checked for updated information since that time. From personal experience the overall trends seem to have remained the same as of this writing, September 9, 2012.

I'm feeling squeezed... I use a lot of milk in making Kéfir and yogurt so this is a topic near and dear to my heart.

Let’s have a talk about the price of milk in Nova Scotia, or more specifically, the price of milk at the Atlantic Superstores in Nova Scotia. I'm not particularly "picking" on the Superstore, but their pricing does leave one scratching one's head. I chose the Atlantic Superstore because they are a high profile chain that has stores in every region of the province. I restricted my enquiry to the Superstore chain because for the purposes of a post a province-wide comparison of all competitors would be overwhelming.

It can probably be safely assumed that other major players in the region have similar pricing "structures." (Although usually structures have a solid base...) I have discovered that Sobeys marches in lock step with Superstore in at least three stores in downtown Metro Halifax. So that does support trending, as opposed to anything particular to Superstore's pricing policies.

There's a massive difference in 4 L milk pricing throughout the province and even throughout the Metro region, all within one single company! It's exactly like if select Canadian Tires had different prices for hand tools, or Future Shops for iPads. Their pricing is the same, regardless of where the store is located.

Milk is a dietary staple, and is an important part of healthy eating according to Canada’s Food Guide (and everyone else except those lactose intolerant). Anyone with growing children understands how much milk a family can use in a week. The elderly also require the calcium from milk to maintain healthy bones and teeth. That you can't rely on a steady price across a province as small as Nova Scotia— within one retailer—is a bit on the mystifying side.

Here’s some info from Stats Canada & the Nova Scotia Government:

• Canadian consumers purchased 1.2 million kilolitres of milk and cream during the first five months of the 2010-2011 dairy year. The selling of milk is big business.
• The actual dairy farmers only receive 10% of the regulated cost per litre of milk. The “regulated” cost is NOT what it is sold for at stores.
• The regulated cost of of milk in Nova Scotia is $5.19 for 4 L.* This is a regulated minimum price for which milk can be sold at retail. 

It beggars belief that a minimum price would be legislated, as opposed to a maximum. Who exactly is this law written to protect? Obviously not consumers.

My data was gathered by direct conversations with dairy department employees from the Atlantic Superstores listed below on June 17, 2011.

To clarify my "study":

• I did not call every Superstore in the province. I did call stores located in specific geographic locations so I could get a feel for the cost of milk at the Atlantic Superstore province-wide. 
• There are 30 Atlantic Superstores across Nova Scotia. I called half of them (15). Most not contacted are in smaller centres with minimal competition and thus probably have milk at a higher price.
• I spot checked three stores of Superstore's biggest competitor (Sobeys) in the Metro core. Results were Windsor Street $6.45; Queen Street $7.25; Mumford Road $5.49. These stores are close geographically to the Superstores, in order, Quinpool $6.39, Barrington $7.25 and Joseph Howe $5.49. Nearly complete correlation, but why the wide variance?
• None of these milk prices were subject to sales, offers, promotions or coupons of any kind. The prices listed were regular prices at these locations as of the stated date.

Distribution of Atlantic Superstores used  for telephone pricing survey.
Click on the image to view larger size.

Some plausible assumptions to make based on market dynamics:

1. One would expect that, because the Atlantic Superstore (part of Loblaws) is a large grocery chain, they would purchase for all of the retail locations throughout Nova Scotia. Therefore the base cost of milk to all Superstore locations should be the same.

2. One would expect that as product radiated out from a main distribution area that pricing would increase due to increased shipping costs, storage, etc. Therefore the further from distribution, the higher the cost should be.

3. One would expect that areas with competition would have downward pressure on their prices. If a location has a Walmart, big box-type store, Sobeys and Superstore in close proximity their prices should be less due to increased market competition. Large areas, such as Metro, with much close competition should have pressure to decrease prices.

4. In 1997, the provincial government regulated pricing for the dairy industry in Nova Scotia. The most recent pricing, in place since 2005, states 4 L of milk cannot be sold at retail for less than $5.19. This regulated cost would be assumed to already have a profit margin for the farmers, milk companies and resellers, the same way gas regulation has for refiners, distributors and resellers.

So what is the result of my telephone survey?

Let’s take a look...

I have divided the province into Metro (Halifax, Dartmouth, Bedford, Sackville) and the outlying areas. A valid assumption would be that sales in, or near, the metropolitan hub of Nova Scotia would account for the lion's share of milk sales throughout the province. Prices are listed highest to lowest.

Results of telephone survey to select Atlantic Superstores, June 17, 2011.
Click on the image to view larger size.

1. There appears to be no direct correlation between distance and pricing. If there was, milk prices would steadily increase the further one went from a distribution centre  (assuming it's Metro). In fact, milk at Halifax's Barrington Street store is more than both of the far ends of the province: Yarmouth (+10¢); North Sydney (+80¢).

2. The cited stores in Metro are all located in a triangular area that is 9 km x 20 km at its maximum distances. Therefore distribution costs should not factor into pricing in the metro area.

3. It is difficult to rationalize a price difference of $1.76 between two stores that are only 7km apart (Joseph Howe and Barrington). The difference is $1.96 between Barrington and Portland which is marginally further apart.

4. Why is there an anomaly of pricing in Bridgewater on the South Shore? Sobeys and Walmart are the only resident competition for an area that is a hub for the majority of the South Shore of Nova Scotia. The market should be there to support all players at a more "normal" price ( such as Liverpool).

5. Truro and Windsor are approximately the same distance drive (1 hour) from Metro, yet there is a price difference of $1.52.

6. Metro has (nearly) the most expensive, and the cheapest, milk in the province.


7. The highest prices in Metro are in stores located closest to the majority of Halifax's (less mobile?) university students. (Barrington Superstore and Queen Street Sobeys)

There's something else that's really odd...
All this seems to be happening only with 4 L milk. Fat content is not a factor as all 4 L are the same cost regardless if skim or whole milk. 1 L and 2 L seem to be relatively on par across the board, within cents. What that means is at the Atlantic Superstore store you'll be paying about $3.80 for 2 L, but anywhere from $5.29 to $7.69 for double the quantity. The price difference doesn't seem to make any sense.

What do YOU think is going on?

*Fluid Dairy Pricing Regulations made under clauses 9(c) and (d) of the Dairy Industry Act S.N.S. 2000, c 24, N.S. Reg. 189/2011 (April 8, 2003) as amended by N.S. Reg. 189/2011 (May 20, 2011).

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