Alberta backtracks on graduated beer tax for craft brewers

Click to play video: 'Alberta government shifts on beer-pricing policy'
Alberta government shifts on beer-pricing policy
WATCH ABOVE: The way beer is priced in Alberta is changing again. Shallima Maharaj explains what the government is changing and how those in the beer industry are reacting – Jul 13, 2016

The government of Alberta is changing the way it marks up beer, moving away from the graduated fees for small brewers announced in October to a flat price for all brewers no matter how much they produce.

Alberta Finance Minister Joe Ceci said Tuesday he has directed the Alberta Gaming and Liquor Commission to set the beer markup to $1.25 per litre.

“The latest change today will treat all beer consistently and we have a great system here,” Ceci said. “What the change does is it treats them all the same.

“If you’re producing beer and it’s coming into this province, everyone is being treated the same. That’s our direction.”

In the NDP budget tabled last October, the province said it would charge beer manufacturers based on how much they produced.

Story continues below advertisement

The graduated structure applied to all beer manufacturers in the New West Partnership region, which includes Alberta, B.C. and Saskatchewan:

Beer markup as of October 28, 2015. Credit, AGLC

Edmonton-based beer writer Jason Foster has been hearing mainly positive feedback from industry players.

Financial news and insights delivered to your email every Saturday.

“If you only look at the markup change, you can see it as a bad news story, but the fact that they’re also going to be giving a grant to Alberta brewers to help compensate for that change, in the end makes it a good news story,” he told Global News.

However, the Great Western Brewing Company calls the new markup “a shockingly short-sighted policy change.”

“Don’t be fooled by the nice sentiments in the government’s statement about treating all brewers equally,” Michael Micovcin, president and CEO of Great Western Brewing Company, said.

Story continues below advertisement

“Setting the markup rate at $1.25 per litre… will do nothing but raise the cost of beer supplied by smaller, regional Canadian breweries such as Great Western that now represent a significant and growing market segment.”

READ MORE: Liquor taxes go up, but Alberta ‘shifts the beer playing field’

In a media release sent Tuesday afternoon, the government said the change is part of “ongoing efforts to promote local jobs, economic development and trade consistency.”

The specifics of the grant for Alberta-based small brewers have yet to be unveiled, though Ceci said they would be made clear in the coming weeks.

The government said a grant will be available for Alberta-based small brewers, and promised details “soon.”

While details of the grant will not be released for a few weeks, Ceci said Alberta small brewers are happy with the changes.

“We’ve been in consultations with them. They know where we’re going with this and they’re fully in support of where we’re going,” Ceci said.

“It’s going to be supporting and advantaging the growth of that industry in the province, which is so critical at this time.”

The Alberta Small Brewers Association said it appreciates the government’s ongoing efforts to make brewing a signature industry for the province.

Story continues below advertisement

“The facts are clear: other provinces have built visible and invisible barriers that restrict Canadian-made beer importation, while privileging their local producers. Only Alberta has an open market. It is time for the rest of Canada to get on board, and we thank the Government of Alberta for their continued support of our industry,” Neil Herbst, chair of the ASBA and owner of Alley Kat Brewing in Edmonton, said in a statement.

Herbst said he is waiting to hear more about the grant. The ASBA was among those the province consulted with ahead of the announcement.

“We’ve been told that they will make us whole, so that the net will be the same as it would have been under the old system. So there won’t be an impact,” he said.

The markup change comes into effect on Aug. 5.

-With files from Shallima Maharaj.

Sponsored content