Buck-a-beer bad busi­ness, brew­ers warn

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Many brew­ers in the na­tion’s cap­i­tal say they can’t af­ford to of­fer cus­tomers $1 beers be­cause di­al­ing sale prices back to 2008 lev­els — when the cost of ev­ery­thing it takes to make the beer have in­creased — is just bad for busi­ness.“I cer­tainly don’t want to have the same prices on my product as we did eight or nine years ago be­cause the cost to pro­duce that product has gone up sig­nif­i­cantly,” said Paul Meek, owner of Kich­esippi Beer Co. “I’d be shocked if you saw a lot of brew­eries jump on this buck-a-beer thing.” His thoughts are shared by Lon Ladell, brew­mas­ter at Big Rig Brew­ery.“I want peo­ple to have a fair price but you can’t keep rais­ing the taxes provin­cially and fed­er­ally on our product,” Ladell said.“With the cost of in­gre­di­ents, ev­ery­thing keeps go­ing up ev­ery year. It’s hard. It’s a hard busi­ness,” he said. “The mar­gins keep get­ting tighter and tighter and you want to in­vest in your com­pany, to grow and cre­ate more jobs.”At a news con­fer­ence in Prince Ed­ward County on Tues­day, Premier Doug Ford an­nounced he would be in­tro­duc­ing leg­is­la­tion to roll back the min­i­mum price that brew­ers can sell beer for from $1.25 per 341 mL bot­tle to $1. He said the change will be made by Aug. 27, just in time for the Labour Day long week­end.“No­body is be­ing forced to lower their prices and there will be no sub­si­dies or tax hand­outs,” Ford said at the event.The PC govern­ment is call­ing the move the “buck-a-beer chal­lenge” and said the move is aimed at cre­at­ing more com­pe­ti­tion in the mar­ket among brew­ers.The $1 price is for 341 mL bot­tles only. It doesn’t ap­ply to canned beer or draught. The caveat spec­i­fy­ing that only bot­tles qual­ify for the price comes at a time when the LCBO and the Beer Store are push­ing sup­pli­ers to ditch bot­tles in favour of 473-mL cans, which are grow­ing in ap­peal to con­sumers.A check of the LCBO’s web­site shows that only one bot­tled beer comes close to the ex­ist­ing pro­vin­cial min­i­mum price. Stonewall Light from Cool Beer Brewing Co. sells for $1.45 per 275 ml bot­tle. De­spite com­ing in a small con­tainer (76 mL less than a reg­u­lar-sized beer bot­tle), it still costs 20 cents more than the cur­rent pro­vin­cial min­i­mum.Even a brand like Laker, which once prided it­self on its $1-a-bot­tle price point, is re­tail­ing at $1.95 for a 473-mL can. A case of 24 341-mL bot­tles of Laker Light sells for $33.95 at the LCBO, or $1.41 a bot­tle. Based on the cur­rent pro­vin­cial min­i­mum price of $1.25 per bot­tle, the low­est a 24-bot­tle case of beer can be sold for is $30.The prov­ince’s move to try to roll back prices at a time when the cost to pro­duce beer is at an all-time high is puz­zling to many across the prov­ince.“The main­stream brands are $35.50 (per 24). It’s in­ter­est­ing that there is no­body at the $30 floor,” said Scott Sim­mons, pres­i­dent of the On­tario Craft Brew­ers As­so­ci­a­tion. “No­body even jumps into that (price) from a pro­mo­tional stand­point.”Kich­esippi Beer’s Meek sees the govern­ment’s an­nounce­ment as a non-starter.“I don’t see it be­ing a thing. I hon­estly can’t see how a brewer can pull that off,” he said. “I don’t see any ben­e­fit to this at all. We have product sales from time to time. We have a cus­tomer ap­pre­ci­a­tion sale around our an­niver­sary, we do some Black Fri­day stuff, but it’s never been any­where near close to that price.”Taxes on al­co­hol sales in Canada have been steadily in­creas­ing for decades, with the most re­cent hike hap­pen­ing in April 2018 when the fed­eral govern­ment raised taxes on lo­cal and im­ported beer by two per cent.The price of beer cans has jumped in re­cent months be­cause of the es­ca­lat­ing trade war with the United States, which has slapped a 10-per-cent tar­iff on alu­minum. The min­i­mum wage hike to $14 per hour has also played a role in push­ing up beer prices, as have in­creased prices on the in­gre­di­ents needed to brew.For com­par­i­son, $1 in 2008 is equal to $1.16 in to­day’s money, once in­fla­tion has been ac­counted for. The PC govern­ment’s “buck-a-beer chal­lenge” is re­ally a chal­lenge to see brew­ers pro­duce beer more cheaply to­day than they did a decade ago, de­spite the higher as­so­ci­ated costs.“There’s def­i­nitely no money in it,” said Big Rig’s Ladell. “We would prob­a­bly be los­ing at least half of that. The mar­gins are so tight.”On­tario Craft Brew­ers’ Sim­mons said he isn’t hear­ing much sup­port for the ini­tia­tive from his mem­bers.“None of our mem­bers are go­ing to be in­ter­ested in par­tic­i­pat­ing sim­ply be­cause they can’t af­ford to,” Sim­mons said, adding that if the govern­ment wants to lower beer prices for con­sumers it needs to look at low­er­ing the taxes ap­plied against al­co­hol sales in the prov­ince.“I’d like to pay less for a case of beer when I go into a store. But, I think the first place we need to start is look­ing at the pro­vin­cial tax struc­ture, which would be the high­est com­po­nent of the re­tail price we pay.”

Pro­test­ers mock Premier Doug Ford’s buck-a-beer prom­ise out­side the an­nounce­ment in Pic­ton on Tues­day.

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