Craft brewers says costs alone make Tory plan impossible

Premier Doug Ford’s plan to set the minimum price for a beer at $1 by Labour Day is an impossible ask due to the increasing cost of beer production, according to Ontario breweries.

Etobicoke-based Great Lakes Brewery has two types of cheap beers available at both LCBO and Beer Store — the Canuck Pale Ale, priced at $2.80 per 473mL can, and the Pompous Ass English Ale for $2.65 a can.

That’s as cheap as the brewery is willing to go, given the total cost of producing the beers, said marketing and communications manager Troy Burtch.

All the raw ingredients — including grains, water, yeast and hops — plus employee hours and packaging, mean the prospect of selling at $1 is virtually impossible, he said.

“The tariffs that were just imposed on aluminum cans coming in to Canada have hit us hard,” he said. The brewery imports eight to 10 truck trailers of cans per month (that’s about a million cans) from the United States, and each shipment is now costing about $2,600 extra.

Burtch said the price of ingredients has been significantly increasing over the years due to factors like weather, product shortages and increase in demand with more breweries being created.

“We haven’t even given two thoughts about this. Why would anyone do this?” TROY BURTCH GREAT LAKES BREWERY

“And if you live in Ontario you’ll know your water bill has been going up,” he said. “Water is the biggest ingredient in the production of beer. For every 10 litres of beer, you’re using maybe 100 litres of water.”

As for Ford’s buck-a-beer policy, Great Lakes Brewery has no interest in participating in the experiment, regardless of the incentives.

“We haven’t even given two thoughts about this,” Burtch said. “Why would anyone do this?”

Other brewers reacted coldly to the announcement, saying the price of everything that goes into producing a beer has increased since 10 years ago, when the floor pricing was moved up to $1.25.

Steve Himmel of Henderson Brewing Co. in Toronto’s west end said the tax for a beer is about 40 cents, and a can costs around 20 cents. It is impossible to use the remaining 40 cents for the cost of ingredients, the equipment and the labour to brew, filter, package and ship the beer.

“I’m not sure we could fill the can with water and still stay in business,” he said, noting the cheaper the selling price, the worse the quality will be.

“Buck a bottle of wine? Who would drink that? How about buck a pound of steak? Who would eat that?” said Himmel.

Eastbound Brewing Company’s co-founder Dave Watson called Ford’s announcement entertaining.

“You’d have to make a beer with adjuncts and cheaper ingredients, such as corn, syrup and rice,” Watson said. Craft brewers generally focus on quality and creativity, both of which would suffer if the final selling price was set as low as a loonie, he said.

“There’s just no business case to be made for a craft brewery to be playing in that segment,” he said.

People’s Pint, a local brewery in Toronto’s Junction neighbourhood, tweeted they’d not be joining the buck-a-beer “race to the bottom.”

“We firmly believe that you really do get what you pay for.”

Ambarish Chandra, assistant professor at the University of Toronto’s Rotman School of Management who researches advertising in the brewing industry, called Ford’s announcement a populist move that will probably achieve nothing.

“There is no reason we should have a minimum price for a beer,” he said, noting even the $1.25 policy was never followed. He suspects some major breweries may consider dropping the price to $1 for a short stint when the policy becomes official, just for the sake of publicity.

“That’s good for them but in the long term, this is not sustainable and it’s highly unlikely that any brewer will do that.”