Alberta trade challenge takes aim at Ontario
EDMONTON Alberta has taken the first step in a trade challenge against Ontario over what cabinet ministers describe as unfair liquor policies that disadvantage brewers.
The government also cancelled the small brewer grant program, which was part of a drawn-out battle over beer pricing after the NDP overhauled the beer markup system.
“To put it simply, it doesn’t make sense that it’s easier to sell Alberta beer in Tokyo than it is in Toronto,” said Economic Development and Trade Minister Deron Bilous at a news conference held at Blind Enthusiasm Brewing Company in Edmonton Monday. “It’s ridiculous and it’s unacceptable.”
The trade challenge aims to address barriers that Alberta producers face putting bottles onto Ontario shelves, he said. Alberta lists 3,700 products from other places in Canada, including nearly 750 from Ontario.
“Yet we can only find about 20 Alberta liquor products listed for sale in Ontario,” Bilous said. “We are asking for equitable market access in Ontario.”
The challenge was launched Monday with a letter sent to Ontario’s trade minister, triggering a consultation period between provincial governments under the Canadian Free Trade Agreement. There’s a 120-day deadline.
Bilous said although other provinces also have unfair liquor rules, Ontario was targeted because it has the largest market and is “the most egregious. They ’re unwilling so now we’re going to go through the courts. It doesn’t mean that will be the only trade challenge Alberta issues.”
Neil Herbst, co-owner of Alley Kat Brewing Company and chairman of the Alberta Small Brewers Association, voiced his frustration with the current rules.
“We’ve sold beer in South Korea but we can’t sell beer in Ontario, or B.C., or pretty much any other province,” he said, adding that non-tariff barriers include storage fees, receiving fees and lab fees.
“It seems like any time you think you can get in … there’s something new that is applied.”
Finance Minister Joe Ceci said the controversial small brewer grant program will end Dec. 15.
In its place, the province is launching a universal small brewer markup for producers who make less than 50,000 hectolitres of beer annually. Eligible breweries will be subject to markups of between 10 and 60 cents per litre, much less than the standard $1.25 markup.
“Small brewers in the Alberta market, regardless of where they ’re from, will now be able to apply for a reduced markup rate on the sales of their product,” Ceci said at the news conference. “Brewers will be able to use their additional funds to reinvest in their businesses, hire staff and bring forward new product offerings.”
It’s a return to similar rules adopted by the Alberta government in 2002, which had a graduated system whereby the markup increased depending on the size of the producer. Breweries making less than 20,000 hectolitres of product each year were subject to a 20 cent markup compared to 40 cents per litre for producers making up to 200,000 hectolitres. Higher markups applied to even larger breweries.
Initially, the NDP instituted the $1.25-per-litre rate on beer with the exception of breweries in Saskatchewan, British Columbia and Alberta. But in summer 2016, that exemption ended, and Alberta brewers were eligible for the soon-to-be-defunct grant program instead.
The Great Western Brewery Co. in Saskatoon and Toronto-based Steam Whistle challenged the markup system, arguing that it created interprovincial trade barriers. In a June ruling, they won the suit and were awarded more than $2 million in combined restitution payments. In a separate case, Calgary-based Artisan Ales Consulting claimed the program cut into its beer import business by unfairly raising the cost of products brewed outside Alberta.
A trade panel found that the grant “distorts the playing field and, as such, results in ‘less favourable treatment’ of beer produced in other provinces.” The decision gave the province six months — with the deadline this week — to change the program