Ingredients for booze ease pain of energy slump
Program gives boost to craft distillers as barley-rich Alberta looks to diversify
Energy-rich Alberta is looking to ease the financial pain of the worst oil and gas slump in decades — with more production of the ingredients for booze.
In addition to its vast underground deposits of petroleum — the third-largest in the world — Alberta is the nation’s top supplier of barley used in beer and spirits. Last week, the provincial government said it will encourage development of more craft distillers in the province under an assistance program similar to one already in place for local breweries.
“If you are looking for diversification, this was an easy win for the government,” said David Farran, owner of the Eau Claire Distillery in Turner Valley, about an hour’s drive from Calgary. He makes gin, vodka and whisky from local grains and runs a tasting room inside a converted 1920s-era movie theatre frequented by tourists travelling the Cowboy Trail, a series of highways through small towns in the foothills of the Rockies. “This is a major step for the industry.”
The collapse in oil prices three years ago led to a slump in the provincial economy, one-fifth of which is tied to hydrocarbons. Oil and gas sales generate about eight per cent of government revenue. To ease its dependence on energy income, the government is trying to stimulate other industries with things like royalty credits for new petrochemical plants and loans for small and mid-size businesses, up for a second straight year.
Promoting more local booze production probably won’t close the budget hole, but it may help by promoting another domestic resource. The province produced 4.4 million metric tonnes of barley last year, accounting for about half of the country’s output, according to Statistics Canada. The grain is a key ingredient for spirits, and Alberta’s supplies are shipped all over the world, from the U.S. to Japan to Europe.
“Alberta barley has a beautifully sweet flavour,” said Farran, who is also president of the Alberta Craft Distillers Association. “When you taste a good malt whisky, that sweetness comes from the barley. Alberta is considered to be one of the best, if not the best, barley producers in the world.”
Details about the distiller subsidies are still being worked out, said Mike Berezowsky, a spokesperson for Finance Minister Joe Ceci, who announced the program last week. The goal is to encourage existing distillers to expand and to attract new ones. A new distiller might spend more than $1.5 million for equipment, according to Farran.
The new incentives may mimic those already in place for local craft beer that the government says are creating jobs and driving new investment. Last August, the government began the Alberta Small Brewers Development Program, which offers grants of as much as $1.15 per litre sold to small manufacturers. That program is included as part of $135 million earmarked in the 2017-18 fiscal budget to “support ongoing efforts to expand existing and open new markets for Alberta’s agriculture products,” according to budget documents.
Albertans drank eight litres of distilled beverages per adult last year, second among Canadian provinces behind only Newfoundland and Labrador, according to Spirits Canada, a trade organization representing the country’s distillers. But local products are only a tiny portion of a market dominated by international brands.
Calgary-based Alberta Distillers Ltd., a unit of Suntory Holdings Ltd., is among the largest local producers, according to Jan Westcott, president of Spirits Canada.
While encouraging more craft distillers is a “great thing,” the potential downside is that government support could unfairly disadvantage the larger, more-established distillers, and discourage international investment, Westcott said.