GOOD BEER FOLKS BLOG
Steam Whistle Fights Alberta Government On Beer Tax Hike
Steam Whistle Brewing and other independent Canadian craft breweries, were blindsided yesterday by the Alberta Government’s triple-pronged changes to beer mark-ups.
(Toronto – October 29, 2015) – Steam Whistle Brewing and other independent Canadian craft breweries, were blindsided yesterday by the Alberta Government’s triple-pronged changes to beer mark-ups, in which it seeks to take $39 million from consumers’ pockets via higher alcohol prices.
What is most objectionable is the new “Us vs. Them” protectionist measures for the ‘NEW WEST PARTNERSHIP’ favouring only Alberta, BC and Saskatchewan-based craft brewers, to the exclusion of craft brewers from the rest of Canada in an unprecedented and divisive legislated guideline.
Overnight, Alberta, BC & Saskatchewan craft brewers will benefit from the graduated tax system at a blended average of $0.48/litre on Annual Worldwide Production below 200,000 hl*, while other Canadian craft brewers (previously taxed at the small producers rate) were vaulted into the Base Tax Rate of $1.25/litre. This represents a 260% increase in taxation to Canadian craft producers, while foreign-owned domestic producers like Molson and Labatt saw only $0.05/litre or 4.2% tax hike in Alberta.
“Why does the Alberta government want to build barriers between craft beer brethren across the country in an industry segment characterized by camaraderie and collaboration? Why would the Alberta government now treat legitimate, Canadian entrepreneurial companies as though they were import aggressors,” challenges Cam Heaps of Steam Whistle, “meanwhile providing minimal tax impact to the big domestic brewers who channel profits out of Alberta to foreign-owned parent companies?”
Steam Whistle Brewing has been an outspoken advocate for the craft brewing industry in Canada, as the leading independent craft brewer in its home province and as a founding member & current Chair of its industry association, The Ontario Craft Brewers Association. Steam Whistle’s co-founders have helped small, Canadian-owned brewers gain much-needed shelf space and profile with retailers, has lobbied for small business tax relief and has helped to educate the Canadian beer drinker about the traditional brewing methods, all-natural ingredients and community-supportive ethos of the small producers.
This new tax measures will hurt the beer consumer’s wallet & choice in Alberta.
The new Beer Tax legislation will have a dramatic and immediate impact on prices in liquor stores and bars & restaurants. As an example, overnight, Alberta has imposed an additional $6.05 in beer tax per 24 pack of Steam Whistle Pilsner, and $37.00 per 50 litre keg. Meanwhile, Labatt and Molson products have only gone up $0.48 per 24 pack. Albertans, already hit by a struggling oil-based economy will feel this as they are a province of beer drinkers, consuming 68.15 litres of beer per capita, 7.6% more than the Canadian average. (Source: www.beercanada.com )
Alberta has long been the most open market in Canada for beer retailing; the only province with no government-run liquor stores. The free market system has meant unprecedented choice on store shelves for Alberta beer consumers but the new tax structure will impose hardship on small producers from outside of the NEW WEST PARTNERSHIP through lower sales, which will limit selection to consumers going forward. This is the second time this year that retailers and producers have been impacted by overnight pricing changes from the Alberta Government’s alcohol tax grab. In March of this year, an additional $0.08 / litre beer tax was already levied.
This new tax measures will hurt the hospitality industry in Alberta.
“Restaurateurs, bar owners and other food service operators in Alberta are struggling with rising food, liquor and labour costs combined with a slowdown in consumer spending,” said Mark von Schellwitz, Restaurants Canada’s vice president for Western Canada. The question remains as to how the hospitality industry will absorb these higher fees, already struggling as reported by recent Stats Canada data detailing -6.8% declines in sales at Canadian drinking establishments Q2 2015 vs 2014.
This new tax measure will hurt Canadian craft breweries operating in Alberta while boosting foreign-owned domestic producers. This will have lasting impact on the Canadian economy.
By drawing inter-provincial trading boundaries overnight, the Alberta government is impacting the growth of the Canadian craft beer segment as a whole. Steam Whistle knows intimately that a healthy Canadian craft brewing industry is good for consumers and the nation’s economy. In its home province, craft brewers hold only 5% of the market share yet provide an equal number of jobs as the two largest domestic brewers. In fact, craft brewers have provided 100% of the new job creation in the beer industry in the last two decades while the big foreign-owned brewers – spared these astronomical tax hikes – have implemented cost cutting measures which cut jobs. (Source: Ontario Craft Brewers Association).
Steam Whistle Brewing urges beer consumers, restaurateurs and other Canadian craft brewers to voice their concern to their local government.
*Three-pronged changes to Alberta Beer Markup: (http://aglc.ca/pdf/liquor/LiquorMarkupQandA.pdf ) The base rate for beer tax went up by 5 cents per litre to $1.25
Alberta’s small brewer mark-up policy was amended to include a graduated tax structure. There will be distinct mark-up rates for brewer’s Annual Worldwide Production (AWP) levels as follows:
- 10 cents per litre for up to 10,000 hL AWP;
- 30 cents per litre for AWP over 10,000 hL and up to 50,000 hL;
- 55 cents per litre for AWP over 50,000 hL and up to 200,000 hL; and
- $1.25 per litre (standard mark-up rate) for AWP over 200,000 hL.
Each brewer will receive a unique mark-up rate based on its production volumes and a combination of the above rates. In this new system, small brewers maintain the benefit of each production threshold as they grow.
Only small brewers residing in Alberta, Saskatchewan and BC are able to take advantage of the Small Brewers reduced tax rate. Alberta’s small brewer mark-up policy was amended to focus the program on breweries located in provinces that are in the New West Partnership – British Columbia, Alberta and Saskatchewan. There are no reciprocal agreements in place for Alberta small brewers to receive preferential tax treatment in BC or Saskatchewan.
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To arrange an interview with a Steam Whistle Co-founder, contact:
Tim McLaughlin, Communications Director
Steam Whistle Brewing
(416) 362-2337 x 264
Email: [email protected]
About Steam Whistle Brewing
Steam Whistle, an independent brewery housed in Toronto’s historic railway Roundhouse, has a passion for making just one beer of exceptional quality that Canadians can be proud of. A 2012 Gold Medal winner at the Canadian Brewing Awards, their refreshing Pilsner is crafted with traditional European brewing methods and only four, natural (GMO-free) ingredients under the watchful eye of their Czech Master Brewer. Steam Whistle Pilsner is packaged in signature green glass bottles, cans and draught, and is shipped fresh from B.C. to Newfoundland to Beer and Liquor Stores as well as licensed bars & restaurants. Highly awarded for their premium beer, business success, environmental practices and community support, Steam Whistle has earned titles for being one of Canada’s Best Managed Companies for seven years running and one of Canada’s Clean 50 Companies. Thanks to their commitment to “Do one thing really, really well” Steam Whistle Pilsner is the leading independent craft beer brand in Canada. www.steamwhistle.ca
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