BEER BATTLE
Alberta targets Ontario
It took three years and several embarrassing losses for the Notley government to finally figure out the best way to stop other provinces from allegedly discriminating against Albertabrewed beer.
The province is shifting from defence to offence by launching its own trade challenge.
In the past three years, the NDP government’s strategy to stimulate the brewing sector in Alberta was, effectively, to discriminate against out-ofprovince players.
Now, after losing three traderelated hearings, they’ve finally moved to the right answer: go after provinces they think aren’t playing fair with Alberta companies.
The first target is Premier Doug Ford’s government in Ontario.
On Monday, Finance Minister Joe Ceci and Economic Development Minister Deron Bilous declared Alberta will launch a trade challenge against Ontario over what it considers to be discriminatory booze policies.
They believe Canada’s largest province has kept Alberta craft beer off the shelves of stores of the Liquor Control Board of Ontario (LCBO).
Bilous sent a letter to Ontario Economic Development Minister Todd Smith, pointing out under the Canadian Free Trade Agreement between provinces, it can trigger a 120-day consultation period to talk about the “treatment against Alberta’s alcoholic beverage products.”
He’s alleging Ontario has refused to list Alberta products in favour of domestic goods, giving local brewers access to LCBO outlets on a preferred basis, and providing domestic firms with preferential location on liquor store shelves.
“It doesn’t make sense that it’s easier to sell Alberta beer in Tokyo than it is in Toronto,” Bilous said in Edmonton.
“This trade challenge is hopefully a wake-up call to Ontario that they need to fall in line.”
Ontario officials seemed perplexed with Alberta’s broadside.
“Just last week, I sat across from representatives from the government of Alberta and not once did they mention this to me,” Smith said in a statement.
As part of its new policy, Alberta will also comply with a trade ruling and, effective Dec. 15, ditch subsidies given to small brewers in the province.
Existing government grants handed to Alberta brewers led to a series of legal and interprovincial trade battles that the province has spectacularly lost in the past two years.
“You don’t help Alberta by putting trade barriers around our province,” said Derek From, a lawyer with the Canadian Constitution Foundation, who helped a local beer-importing agency fight one of those cases.
“What helps Alberta businesses and Alberta consumers is to tear down the barriers.”
The problems surrounding Alberta’s beer policies began after the NDP decided to forcefully kick-start the craft brewing sector three years ago.
Up to that point, the province applied a higher markup — essentially a tax it collects — to beer manufactured by large multinational brewers, and offered a reduced rate to smaller Canadian craft brewers, based on their production volumes.
In October 2015, Ceci upended that system, boosting the markups on beer produced by all small breweries outside of Alberta, Saskatchewan and B.C. The change increased the price of a six-pack of non-Alberta beer by about $3.
Faced with a legal challenge by Ontario-based Steam Whistle Brewing, Ceci tweaked the program the following year, applying the higher levy to all beer, and then gave a grant back to small Alberta brewers.
Last June, a Court of Queen’s Bench judge and an independent trade tribunal both found Alberta’s policies were offside of the country’s free-trade provisions. The province was given six months — until later this month — to fix it.
Today, what was old has become new again.
Beginning next month, the province will offer a preferential mark-up rate for beer produced by all brewers — both in Canada and internationally — who manufacture less than 50,000 hectolitres annually.
Instead of paying a flat rate of $1.25 per litre, they will see the beer mark-up drop to between 10 and 60 cents, based on their size.
From, who helped Calgarybased Artisan Ales Consulting in its successful trade case against Alberta, said he’s pleased Ceci decided to implement a volumebased mark-up rate, although he believes the province was painted into a corner to do the right thing.
The co-owner of the beerimporting agency pointed out it’s taken more than three years and several challenges to force Alberta to return to the old policy.
“I can’t believe the colossal waste of money that has gone into this,” said Mike Tessier of Artisan Ales.
The new rules are getting mixed response from businesses.
Neil Herbst, owner of Alley Kat Brewery Co., supports the change and assistance the province has given the sector. Since 2012, the number of craft brewers in Alberta has ballooned from 10 to about 100.
Herbst, who is also chairman of the Alberta Small Brewers Association, applauded the province for taking steps to fight for equal access to liquor stores in Ontario.
But Steam Whistle Brewing, which successfully took Alberta to court over the higher initial markups, is unhappy it’s facing bigger beer levies in this province again.
Company officials call Monday’s changes disappointing, saying mid-sized Canadian craft breweries won’t qualify for the lower mark-up rates.
“We are not opposed to the government supporting small craft breweries, but the number of 50,000 hectolitres is quite arbitrary,” said Tim McLaughlin of Steam Whistle.
“It creates an environment where it’s not good for beer drinkers because ultimately, we are going to see the price of beer go up.”
Alberta isn’t backing down. Bilous noted Ontario liquor stores only import about 20 products from Alberta. Yet, Alberta retailers list 745 liquor products from that province.
Instead of erecting barriers, doling out subsidies and violating inter-provincial rules — and getting called on the carpet by trade panels — Alberta has decided to flip the script.
It will now pursue a similar path against those it believes aren’t playing fair.
Given the past problems this government has created on the beer front, it’s about time.
I can’t believe the colossal waste of money that has gone into this.