Beer policy is not as simple as it looks

Alberta remains more open than other provinces, writes Jason Foster

Woe to the government that raises the ire of beer drinkers, or beer producers. Last week the Alberta government shifted its policy around how it raises revenue around beer. The shift has sparked a firestorm of controversy and claims of protectionism from B.C. and Saskatchewan. In all the anger and vitriol, some important context is being missed.

The policy affects what is called the mark-up — the price government adds to the wholesale cost of liquor. Historically Alberta has had a multi-tiered mark-up for beer. Smaller breweries paid 10 cents per litre. The mark-up jumped in stages until the full rate of $1.25 per litre for the largest breweries.

Historically, the rate applied to any brewery selling beer in Alberta. Last fall the government shifted to grant the lower rates only to Alberta, B.C. and Saskatchewan breweries — members of the New West Partnership.

That resulted in fury from importers and a lawsuit from Toronto’s Steam Whistle Brewing. In response, last week’s announcement scrapped the tiered mark-up. As of Aug. 5, all breweries, including Alberta, will have $1.25 added to the price. However, the government also announced a grant program for Alberta breweries aimed to offset the price increase. B.C. and Saskatchewan breweries, and the Saskatchewan government, are crying foul.

Simple story, right? Alberta is being protectionist by favouring its breweries over those from other provinces. Not so fast. Let’s set aside for the moment the argument that it might be a legitimate government goal to promote the creation of a vibrant local craft beer industry and the jobs and economic development that come with it.

What the offended breweries (and governments) aren’t telling people is that Alberta has the most open beer market in the country and that the barriers facing Alberta breweries trying to get into provinces like Ontario or B.C. make Alberta’s slight price differential small potatoes.

Alberta is the only province with a policy of open borders. Fill out a two-page form and pay the application fee and your beer can be sold in Alberta. Further, Alberta’s privatized liquor retail system means getting your beer on shelves is a free-for-all.

While this has expanded selection for consumers, for Alberta breweries it has meant an onslaught of competition. Until the new policies those imports even got the same government price break despite not employing people or adding to the economy in a significant way.

In contrast, the importation of beer in every other province is controlled by Liquor Con- trol Boards. They have long used that power to restrict the amount of competition their local producers face. Further, they can use their control over government-owned liquor stores to promote local products through guaranteed shelf space, preferred placement and promotions.

Craft breweries in those provinces have grown up under the protective shield of their liquor commissions, giving them the space to thrive. Alberta’s breweries have for years been exposed to the full brunt of international competition, which has stunted their growth and explains why Alberta’s craft beer industry lags.

It raises the adage that breweries which live in protectionist glass houses may not want to throw stones. If Alberta is protectionist, what should we call the systems in other provinces? Jason Foster is an Alberta-based beer writer and educator and longtime observer of the beer industry. He is the creator of onbeer.org.