The craft beer industry in Nova Scotia says it’s thriving and growing, but some producers say policy still penalizes those who are becoming the most successful.
“Nova Scotia craft beer is a real success story,” says Brian Titus, the president of the Craft Brewers Association of Nova Scotia (CBANS). “It’s a great thing for this province. It helps retain young workers, it draws tourists — it’s something we need to support.”
There are about 70 craft breweries scattered across the province, many in rural areas.
While commercial beer sales at the NSLC are relatively stable, Titus says 20 per cent of beer sold in the province is made by craft producers.
While the NSLC has added craft brewers to its palette, the craft sector says it’s working with policies that pre-date its growth, and hurt those who are trying to expand.
“Nova Scotia is literally at the bottom of the barrel,” he says. “We have the highest markups on small producers, we have the lowest limit before you become a full commercial brewer.”
“So that’s a doubly whammy,” says Titus, who is also the owner of Garrison Brewing.
“Somebody who would be paying a six or seven per cent markup in Ontario or Quebec as a small producer pays 40 per cent here,” Titus says. “And if you show any growth, they pay 85 per cent.”
The producer would pay an 84.5-per cent markup if production exceeds 15,000 hectoliters of beer. At that point, they’d be paying what a commercial producer would pay.
Nine Locks Brewing in Dartmouth hasn’t hit that threshold yet, but one of its co-owners says they’re still paying much more now.
That’s because of a stipulation added in early 2020, adding a “margin benefit cap” at $750,000. That means if a company reaches $750,000 in markup differences (between 40 and 84.5 per cent), they would be paying the more-than-double rate.
So, Nine Locks has hit its ceiling for the “preferential” markup reduction, despite producing 11,000 hectoliters — about 26 per cent less than the original target.
“We start making less money on our beer years before we thought that we would,” says Shaun O’Hearn, a co-owner at Nine Locks. “It’s a difficult pill to swallow because we were told when the policy came out that it wouldn’t adversely affect anyone.”
The craft sector warns other craft producers will soon face the same crunch, halting some successes or putting difficult business decisions at the forefront.
“Nine Locks has reached that $750,000 margin benefit limit for this fiscal year. That means it will receive the higher commercial mark-up for the remainder of this fiscal year,” Ware says in an emailed statement.
“On April 1, 2022, they will then again receive the lower preferential mark-up until they reach either $750,000 margin benefit limit or 15,000 HL in production, whichever comes first.”
Industry is calling for a tiered approach to markups.
But Titus says all of CBANS’ requests to the new government have been “shut down.”
“Everything we’ve asked for has been dismissed,” he says. “We weren’t asking for ‘nice to have’ things, we were asking for opportunities for our breweries to stay in business.”
Other ideas include adding more independent stores — like RockHead Wine & Beer Market or Bishop’s Cellar: Wine, Beer & Spirits in Halifax — or allowing craft producers to see each other’s product, similar to a model in New Brunswick.
Gary Andrea, a spokesperson for Finance Minister Allan MacMaster, who is also the minister responsible for the NSLC, acknowledges the craft beer industry has grown significantly under its current framework.
“Since taking office, the new government has had extensive written communications with CBANS, and the Minister plans to meet with CBANS in the near future,” Andrea says in a statement.
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