Beer, Politics and the Economy

A lot of people have been asking me what my thoughts are on the recent changes that the Alberta NDP government has implemented; particularly those impacting beer and brewing. I’ve also noticed that there has been a lot of noise surrounding these changes in the media; some of it has been a little more emotional than factual. It is because of this that I have decided to write a little something about how I view these recent changes.

Hey I’m a Consumer too!

My initial reaction to these changes might shock some of you. Of course I applauded the introduction of a graduated increase of tax for production. This was something that was long overdue. The former method introduced by a previous government actually stopped many microbreweries from expanding past a certain point since they would have been taxed retroactively on all of the beer that they produced for the year and this would have resulted in a huge tax bill. Basically there was a good chance that they would make less of a profit even though they increased their sales. Thankfully common sense finally kicked in.

However, when it came to the increase of taxes for small breweries outside of Alberta with the exception of BC & Saskatchewan (the New West Partnership) my first thought was anger over possibly having my choices limited. First & foremost I am a craft beer lover and a consumer who likes to have a wide variety of choices. I have always argued that we need to do more to support, promote and encourage our local craft brewers so that our local craft beer scene grows and improves with time; but I still like having the option to buy great beers from around the world and have praised the selection in Alberta.

So you might say that I was a little ticked off.

Take a deep breath and look around you

Since that time I have taken the time to read through some of the media surrounding these changes and have spoken to people affected by these changes. I have friends on either side so I have received both sides of the argument. This has slightly changed my outlook on certain things.

When I hear people claim that Alberta is being protectionist I sort of cringe. Alberta was the only province that permitted everyone else to export beer there and receive the same treatment as the local microbreweries. That was why we have such an incredibly diverse beer selection. If you had the capacity to support the additional sales why wouldn’t you enter the Alberta market? It was a great way to tap into another populace and increase your overall sales.

But no other province reciprocated this opportunity; rather they put up regulatory hurdles when it came to others trying to export their beer to other markets. Instead they focused on growing the local craft brewing industry through tax breaks, subsidies and by creating (in many ways) a captured market. To be clear, outside breweries can still export their beer to be sold here in Alberta. There are no bureaucratic barriers keeping them from doing so. It will just cost a little more to purchase some of them. Some import agencies are worried that this price hike will put them out of business and that many outside breweries (i.e. Muskoka) will pull out of the market.  I sincerely hope that this is not the case.  I know that I, for one, will gladly pay the extra cash for beer that I really want to drink.

The success of these incentives is pretty clear. BC (115 breweries), Quebec (120 breweries) and Ontario (over 150 breweries) all have a huge amount of craft breweries putting out some fantastic beer. Even a small province like Nova Scotia has no less than eighteen microbreweries and brewpubs.

Yet Alberta (20 breweries) has so few. Now of course, the former minimum brewing capacity rule in Alberta was a huge reason for the lack of small breweries starting up, there is no doubt about that. However, there is a strong argument to be made that even after that was scrapped there was no real incentive to start a brewery here. Why not just go to another province and start one there? That way you could get all of the breaks from that provincial government and when you get big enough just export your beer to Alberta. Makes sense doesn’t it?

The Political Reasons

So, why would the government implement these changes to foster growth in the local craft brewing industry?

Well when you grow a local industry you end up growing your local economy. Breweries employ a number of people; there are brewers, marketing departments, delivery drivers, sales teams, accountants, etc. But it doesn’t stop there, in Alberta we have some of the best barley in the world and breweries need malt in order to brew beer. So they end up buying malts from local malting facilities who get their grains from local farms. Plus the beer is sold in numerous restaurants, bars and liquor stores in the area. So the economic ripple effect is quite substantial.

Growing the economy is one of those feathers that governments like to have in their caps. It looks really good come election time. Plus a larger working force results in more tax revenue for them to put to use.

What I really Wish Would Happen

You might say that I am a little torn on certain things. I love being able to grab incredible beers from all over the world but I can also see the numerous benefits of fostering growth in the local craft beer industry.

What I would really like to see is for places to start removing their barriers so that outside beer can be sold there. If everyone did this we would all be on an equal playing field and consumers everywhere would benefit from all of the options available to them.

Who knows, maybe this New West Partnership is the first step towards this. If BC and Saskatchewan reciprocate and allow Alberta microbreweries to sell their beer at no extra cost on their home turf perhaps the other provinces will catch on and we will see it spread across the country and eventually maybe even the continent.

So while I am not exactly jumping for joy about this recent tax hike to imported beer I can definitely see why it was implemented. The whole point of this blog is to educate, enlighten, support & promote the Alberta craft beer scene and I do not intend to stop doing this because I believe that having a local craft beer industry is critical to spreading the culture surrounding good beer. So let’s all join together and raise a cheers to local craft beer wherever your local scene might be.

Full disclosure: many of you know that I am involved in the local craft beer scene but I just wanted to state this clearly for everyone to see. I am employed by and own shares in other microbreweries in Alberta.

 

19 thoughts on “Beer, Politics and the Economy

  1. Great response to the conversation going on. I agree 100%, Alberta needed to do something to foster its local brew scene and they did not bar interprovincial brewers from coming here, they just made them premium beers. People will pay a higher price for a beverage if it is good. I feel like rather than take their ball and go home breweries such as Muskoka could do a better job of working with their govt to build a better national brew scene.

  2. Great job and a very balanced blog even though you have reason to be biased. The one thing that ticks me off most is Agents and breweries who are speaking on behalf of consumers that did not even ask an saying we will not tolerate the increase. Defeatist attitudes generally don’t breed solutions. They need to wary with the negative messages that Mr consumer will no longer buy expensive beer lest we take heed of their dire warnings.

  3. I wish I agreed but I do not. The new tax laws are crazy and affect not only the prices in Alberta but hurt BC and SK as Alberta is a big market in the west. I am also sad as I just got a bottle of Imperial Porter from Last Best Brewing and I will no longer review it as I will not review Alberta beer as long as their new laws affect other provinces choice for beer.

    • Well Mike maybe one day your province, my province and every other one will make it so that everyone can compete on a level playing field in a free market.

      • Each province and territory having a liquor board is a joke. Alcohol should like all canadian products be sold freely inside Canada. To add these new huge tax increases are ridiculous.

      • But you should be able to see the reason why a provincial government would do so. To be the only one not doing it leaves that province at a disadvantage when it comes to growing a local craft beer industry. I am not arguing that these changes are a great thing; I am only trying to lay out the reasons why they were made. There has been too much emotion and yelling on social media about this and that has led the conversation away from a rational & informed discussion.

    • Mike: I understand why you may feel the way you do, but why protest by ignoring beers from Alberta brewers? The government made the policy, not the brewers. You’re also depriving your audience of a wider range of reviews and indirectly punishing them because you’re mad at the Alberta government. Just my two cents. I still like ya. 🙂

      • Its probably a temporary avoidance for the majority of Alberta beer with the exception of one very vocal brewery which I will not be drinking anymore unless things change. It was the government that made the change yes but the breweries of Alberta are supportive of it. The only way I can protest it is to abstain.

      • I see what you’re saying, Mike: Alberta breweries didn’t impose these changes, but they’re benefitting from the unfair rules — kind of like dozens of B.C. breweries that sell their beer in Alberta. Will you boycott them, too, until and unless they speak out against this outrage?

        To help your principled campaign, I’ve come up with a partial list of B.C. breweries you should avoid and/or cease reviewing on your blog until they renounce their ill-gotten bounty from Alberta’s tyrannical regime: Central City, Parallel 49, Canuck Empire, Russell, R & B, Dageraad, Steel & Oak, Steamworks, Howe Sound, Postmark, Fernie, Cannery, Tree, Tin Whistle, Townsite, Mt. Begbie, Driftwood, Phillips, Lighthouse, Persephone….

        Fight the power! Good luck!

      • Not sure how that makes sense Jason. No I do think it is wrong that Bc and SK breweries get this discount also. I think the whole two tiered system is wrong. But how can a BC brewery lobby to change alberta laws? Only breweries in Alberta can change these.

    • Seems like a big ask Mike. After decades of oppressive taxation that made sure small craft brewers could not grow in Alberta they have got what they need so badly to become successful. It seems unreasonable to suggest that Alberta small craft Brewers should bite the hand that has finally fed them.
      Let be clear on one thing here. The brewers in Alberta have only ever advocated for assistance in changing the production tax structure that saw taxes being retroactive to litre 0 when passing thresholds. I can’t think of one brewery that was lobbying to have agents suffer incredulous tax increases. In fact most brewers I deal with had no idea we had a Western Partnership until the new tax writ came down. I see the fact that the AB government chose to try and extend an olive branch to provinces on either side as a very good start. Hopefully it will catch on and create reciprocity and spread to other provinces across Canada. Something I think we can all agree would be a benefit for the consumer and meet your personal goals.

  4. We’ve been spoiled for choice for a long time in regards to the availability of imported beverages, and I think it creates a difficult market for Alberta brewers to compete in. Alberta chose to tip the scales one way, other provinces chose the opposite, and now we’re trying to catch up. I believe 100% that this will positively benefit the local beer scene, even if it’s at the expense of the imported choice, or affordability of that choice. It gives local brewers a bit of a jump start, and in 5 or 10 years, we’ll be awash in beer that hasn’t travelled across the continent.

    This is similar to a lot of changes that we’re seeing in the province. I think they’re positive changes, but they aren’t without some short term pain.

    • Positive changes? For who? It sure isn’t the consumer. The people that drive industries like craft beer. The only thing that happens when choice is reduced though unfair taxing is complacency. At some point your government will decide BC beer is selling to well and will tax them like crazy. Consumers can not afford these increases. Alberta will become BC before our craft beer boom where the beer is boring and uninspired.

      • Doing nothing wasn’t going to help anyone, but this will help local industry which is what the government was trying to do. It’s difficult to balance everyone’s needs, and there’s definitely some compromising. Personally, I want to see locally produced product, so I think it’s a win.

        I would be very surprised if we’re all of a sudden flooded with uninspired beer. Consumers are becoming increasingly educated, and won’t choose a product if it’s poor value.

      • Without outside competition the scene does stagnate. It happened in Vancouver once already before this boom happened. If BC and SK beer sell to well they will be next for this tax increase. It may take a while to happen as Albertas boom is in such an infancy right now but keep your eyes out for this.

      • Just to be clear, no imports are being kept out of the province. It is still a private system here. The prices on some imports have risen so they will cost a bit more to purchase. We still have a very wide selection available to us.

  5. I have never met a happy person when they get taxed more. I spend a fair bit of time in BC and had not noticed that beer there was substantially less expensive. But if anyone knows about over taxation from the Province, the citizens of BC are probably a good authority.
    It does baffle me that otherwise balanced individuals suddenly refuse to drink and or review a product based on its taxation. It certainly says something about the objectivity of the reviewer and your probably best to do so until the nasty taste of taxation has cleared you pallete Mike. Keep in mind you put yourself in a position that might affect a lot of your reviews of canadian beer as other provinces look to increase tax revenue to replace lost revenue. They always go after the low hanging fruit first and we are dealing in a country now that is dominated by liberal/NDP policy which leans to unbalanced spending and therefore higher taxation at some point to cover the expenditure.
    Not sure how much time you have spent in Alberta but it is only recently that our beer started to move from boring and uninspiring. In 40 years of drinking beer it has only been the past few years that things have really been changing in a flavourful direction.
    Taxes cant stop great beer from being made only greedy accountant types can that put money and and profit before craft and artistry. Dont deny yourself or others good beer for the sake of politics.

    • Yes BC has some of the highest taxes in Canada on alcohol but they have one system for Alcoholic beverages. There is PST and GST. Is there duties to bring into BC probably but this is not a taxation issue. Their is not a two tiered system depending on where the beer is made. You do not have to agree with me or my stance but to say I am not unbiased on my reviews because I am making a stand is ridiculous. I am sorry if I have offended people but it is my belief and many others inside and outside of Alberta that this is wrong. Much like in politics in Canada I am aloud my opinion and you are aloud yours.

      I will leave you guys to your discussion.

  6. Pingback: Moralité says au revoir to Alberta - THE DAILY BEER

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