E-Malt.com News article: Canada, AB: All brewers selling beer in Alberta now have to pay a C$1.25-per-litre markup

All brewers selling their beer in Alberta now have to pay a C$1.25-per-litre markup, regardless of where their breweries are located or how much they brew, CBC News reported.

The tax took effect on August 5 and is meant to create consistency in Alberta's beer industry, according to a July 12 announcement by the provincial government. Previously, only large brewers paid the C$1.25 per litre markup, while smaller brewers paid as little as 10 cents per litre, depending on their production volume.

A grant program for Alberta-based small brewers was promised at the time the new tax structure was introduced, though details weren't released until more than two weeks later.

Patrick Gaudet says the news came as a shock to his small-scale Edmonton brewery, Bent Stick Brewing.

"It was extremely stressful for us," Gaudet said. "We had to make pricing decisions with very little to go on so we had to just basically raise our pricing in line with what the taxing was."

Gaudet launched Bent Stick Brewing with three other brewers in June. The team has bottled and sold about 5,000 litres since, he said, which amounts to a C$6,250 tax under the new markup system.

There are about 40 small breweries across Alberta, all producing and selling less than 300,000 hectolitres annually. A grant program to help those brewers began on August 5, in line with the new tax. It's called the Alberta Small Brewers Development Program.

Money will be awarded "based on sales volumes of Alberta-made beer sold in the province," Finance Minister Joe Ceci said in a July 28 announcement.

"There's no doubt that by investing in small brewers, we will see good jobs created for Albertans and a more resilient, diversified economy," Ceci said.

Gaudet said before the grant program was announced, Bent Stick Brewing was planning to raise its prices in line with the tax increase. Now that the company knows the details, "we will not be raising prices," he said.

Dave Scott of Edmonton's Keg and Cork Liquor Company said some breweries may increase their prices by as much as C$3 more per six-pack. It will take a while for the tax increase to work its way through to retail prices, he added.

Scott said breweries in Saskatchewan and British Columbia that sell their products in Alberta will be most affected by the change, because they will pay the higher markup without benefiting from the grant program.

Michelle Hynes-Dawson, a spokesperson for the Alberta Gaming and Liquor Commission, said the full C$1.25 per litre markup likely won't trickle down to consumers.

Breweries and liquor stores may choose to absorb part of the tax instead of charging customers more, in order to stay competitive.

"It's a real free open market," Hynes-Dawson said. "Having this markup equal to all really just goes in line with that philosophy of an open market, and letting the consumers decide the products that they will purchase, and hopefully they continue to support the small craft brewery."

The real cost of the tax won't become obvious for a few months, she added, after the markup has had time to ferment in Alberta's beer industry.

"We're kind of sitting and watching," Hynes-Dawson said. "We don't anticipate any massive hikes and it's certainly up to individual retailers what that final price tag will look like."


05 August, 2016