New beer battle brews as 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 Alberta-brewed 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-of-province players — including those in Saskatchewan.
Now, after losing three trade-related 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).
Alberta is 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.
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,” Ontario Economic Development Minister Todd Smith said in a statement.
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 inter-provincial trade battles that the province has spectacularly lost in the past two years.
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 mark-up — 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.
Now, 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.
The new rules are getting mixed response from businesses. Neil Herbst, 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 calls Monday’s changes disappointing, saying mid-sized Canadian craft breweries won’t qualify for the lower mark-up rates.
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 the Notley government has created on the beer front, it’s about time.