Canada, AB: Alberta considering next moves after trade panel rules against craft brewer rebate

The Alberta government is weighing its options after a panel ruled it violated inter-provincial trade rules with graduated beer mark-ups and a rebate program designed to help the province's small brewers, CBC reported on July 31.

The three-person panel ruled on July 28 on a complaint laid under the Agreement on Internal Trade against the Alberta government by Calgary-based beer importer Artisan Ales Consulting.

The panel ordered the government to either repeal or amend the Alberta Small Brewers' Development grant program within six months.

Mike Brown, spokesman for Alberta Finance Minister Joe Ceci. said the government is still determining how to respond.

"At this point we are reviewing the decision and will have more to say in the coming days," Brown said in an email on July 31.

The ruling is the latest setback in the province's push to grow Alberta's small craft brewing industry, a much-touted piece of its economic diversification program.

In October 2015, the government introduced a lower markup for beers produced by smaller brewers in Alberta, Saskatchewan and British Columbia.

The province rolled back the policy in August 2016, instituting a markup of C$1.25 a litre for all beer. But at the same time, it introduced a rebate known as the Alberta Small Brewers Development program to help craft brewers.

Artisan Ales complained, alleging both measures put the company at a disadvantage and caused a drop in sales.

Mike Tessier, president of Artisan Ales, a company which imports beers from Quebec and outside Canada, said the 2015 graduated markup was the most devastating to his bottom line.

"My business is never going to recover," he said. "My sole intent right now is to make this topic all the way through the next election."

Tessier said the government, through its measures, has reduced the selection of beers available in Alberta stores, and pushed prices to the second-highest in Canada.

Tessier wants the government to return to the regime that was in place prior to October 2015, which applied the markup based on a brewery's total production, regardless of product origin.

Like Tessier, Terry Rock, executive director of the Alberta Small Brewers Association, expects the government will appeal.

Rock supports the measures the government has taken to support the province's smaller brewers.

He argues craft beers are more labour intensive and costly to produce than the products brewed by large multinationals.

He said the Alberta government needs to have some program in place to recognize those differences.

"Whether it's a rebate program or it’s a progressive markup program or something else, it's pretty clear that to have a thriving craft brewing sector, that has to be in place," he said.

Two of the three members on the panel agreed with Artisan Ales. One panelist issued a dissenting ruling. She said the Alberta government's measures did not violate the internal trade agreement, noting other provinces, including Saskatchewan, offer grants to the craft beer industry.

She said the drop in sales experienced by Artisan Ales could be a symptom of Alberta's economic downturn created by the dramatic drop in oil prices.

The Alberta government's previous graduated markup system is also being challenged in court by Toronto-based Steam Whistle Brewing and Great Western Brewing from Saskatoon.

01 August, 2017