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Recent SLGA policy changes has craft industry in Saskatchewan excited

The co-owners of Hudson Bay Distillers, along with other craft producers in Saskatchewan, are excited by changes made by the SLGA to the craft designation. Hudson Bay Distillers / Supplied

Tim Karchut has a simple mission.

“We want to be the Kentucky of the north,” the distiller and co-owner of Hudson Bay Distillers said.

“We got the grain, we got the space, we’ve got the people, we’ve got the manpower. Why are we not producing world-class spirits?”

For Karchut, that starts with what he calls some of the best malt barley in North America — grown in the Biggar area of Saskatchewan.

“This area has been famous for its malt barley since the late 60s,” Karchut said, “and malt barley is one of our mainstays.”

Click to play video: 'The Kentucky of the north' The Kentucky of the north
The Kentucky of the north – Feb 1, 2021

Using locally sourced material is also important for Sue Echlin.

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The co-proprietor of Living Sky Winery said starting with whole fruit is an important part of their business.

“Growing fruit in this province isn’t exactly the smartest thing you can do. So there are definitely times we have to buy from other producers,” Echlin said.

“Whether it’s grapes or apples, (it) doesn’t really matter, you have to be one hundred percent fruit.”

Read more: Craft beer pint consumption more than doubles in Saskatchewan since 2014

Both are excited about recent policy changes made by the Saskatchewan Liquor and Gaming Authority (SLGA) that now categorizes them as Type 1 producers.

Type 1 manufacturers use 100 per cent raw inputs, while Type 2 manufacturers use less than 100 per cent under the new SLGA classifications that came into effect on Dec. 1, 2020.

“If you use really raw inputs like grain or raw fruit like apples or strawberries and you’re the one who brings them on-site and then you crush them or manufacture them to some process, then that’s considered a Type 1 producer,” said Greg Gettle, vice-president of liquor wholesale and distribution for SLGA.

“A Type 2 producer is someone who would maybe get apple juice or fruit juice into their facility, someone has already crushed that product and now you’re taking the juice, you’re going to ferment it and go through that processing.”

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Gettle said with spirits, a Type 2 producer will buy neutral grain spirits and then process it instead of mashing and fermenting grains on-site.

Click to play video: 'The difference between Type 1 and 2 craft wineries' The difference between Type 1 and 2 craft wineries
The difference between Type 1 and 2 craft wineries – Feb 1, 2021

The changes were made after consultation with the industry, Gettle said.

“They have been growing tremendously over the last five years and because of that growth, we felt it required more attention from SLGA,” he said.

The changes are creating benefits for the sector, Gettle said.

“By splitting it out and recognizing the difference between Type 1 and Type 2, it allows us to continue to recognize both of those producers as a craft producer,” he explained.

“But because of the additional processing required as a Type 1 producer, we wanted to recognize that they would receive the largest financial benefit because of the additional investment they are making in their operations.”

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Craft industry moving forward

Sue Echlin said this is a big step forward for the industry.

“A lot of provinces have had quite strict regulations in the past about what is a local wine and what is just a bottle of wine. So we were behind on that for sure on the winery side,” she said.

“And then I think it was also a drive to be recognized for the difference in ethos for those of us that are striving to produce the Tier 1 wines, the truly craft wines.”

Cavrin Karchut, CEO and co-owner of Hudson Bay Distillery, called it an exceptional opportunity for the sector.

“The biggest attribute is the distinction that there is a Type 1 and Type 2, because what was getting overpopulated in the craft market was everybody sourcing alcohol and then repackaging it and selling it in the craft area, when in reality it’s a commercial-grade product,” Cavrin said.

Tim Karchut called it a big step by the SLGA to make Saskatchewan only the second jurisdiction in Canada, after British Columbia, to make this distinction.

“(B.C.) are very hardcore and it’s the same thing with their wine and their breweries, all of their manufacturers, you either make it from scratch or you don’t get to call yourself craft.”

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Jeff Allport said it’s also a matter of pride.

“We’ve always produced beer in the manner in which we currently do from grain mashing, fermenting everything on-site, because it produces a better product,” the owner of Nokomis Craft Ales said.

“In my opinion, essentially repackaging of liquid is not a craft production and it is not a craft producer.”

Locally-sourced agriculture products

They all agree on another point — Saskatchewan produces some of the best, if not the best, agriculture products in the world and to them, it makes sense to use locally-sourced materials in their products.

Karchut said besides malt barley and wheat, they are using other Saskatchewan-grown agriculture products to produce spirits.

“We’re the first distillery in Canada to make a spirit with pulse crops. It took us over a year to crack the code and to get it down to a science. But now we have a spirit line made out of 100 percent pulse crops,” Karchut said.

“Pulse crop spirits are pretty phenomenal because (it is) 100 percent gluten-free, 100 percent grain allergen-free.”

It’s also a matter of knowing where your materials are coming from, said Echlin.

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“If you’re buying juice from somewhere, you don’t know how it was produced. You don’t know how it was harvested, whereas if you’re buying from local producers for fruit, you have the ability to find that out,” she said.

“I think there’s also recognition that on the wine side, for us growing fruit or buying fruit from local producers, we’re putting money back into the Saskatchewan economy.”

Read more: Craft beer industry says ‘cheers’ to local brewery expansion

Allport said there are also incentives with the levy changes.

“It allows us to invest more into our breweries, into our staff and benefits for our staff. It allows us to grow and in turn hire more people,” he said.

He said it will also allow production to increase without losing the craft designation.

“It’s sort of a tiered graduated levy structure, so as you grow, so does the production levy you pay grow with that, whereas the previous structure is almost incentive to not grow your business once you’ve got close to that ceiling,” Allport said.

Click to play video: 'The impact of the new SLGA craft producer policies' The impact of the new SLGA craft producer policies
The impact of the new SLGA craft producer policies – Feb 1, 2021

Changing attitudes

Echlin said the SLGA’s attitude toward the craft industry has changed over the years.

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“We’ve seen a huge shift in SLGA from when we first started, which frankly, was an exercise in frustration. But they’ve come a long way in their support of craft,” she said.

“I feel like we have a great amount of support with SLGA now. The specific craft division they’ve set up has done some great work in trying to help all of us know that no matter what sector of the industry we’re in, be more successful.”

Gettle said the feedback from producers has been positive.

“This is a great program. I think it’s a real positive change for the industry. They’ve done an incredible job of gaining consumer attention over the last number of years,” he said.

“I really believe that the changes that we made last month will encourage that to continue to happen. Small startup businesses, medium and large craft producers, everyone has something here that really will help them grow into the future.”

Which is the goal for Karchut and all craft manufacturers— creating a product they can grow and be proud of.

“The underlying goal of our whole distillery is we’re barreling whiskey that I’m going to be dead before anybody drinks it,” he said.

Echlin compared it to a relationship.

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“When we make a batch of wine it’s a commitment, a long-term commitment,” she said.

“It’s like a relationship you can’t quite break up with.”

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