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Alberta to scrap lower markup for craft brewers

A lower markup rate for Alberta-based craft beer brewers is being put on ice.
The Alberta government is scrapping a lower markup rate for local craft brewers, but a yet-undetailed grant program should offset the financial impact to small businesses.
The Alberta government is scrapping a lower markup rate for local craft brewers, but a yet-undetailed grant program should offset the financial impact to small businesses.

A lower markup rate for Alberta-based craft beer brewers is being put on ice.

“The recent change to the beer markup will bring consistency to all beer products sold on Alberta shelves, regardless of size or region of brewery,” said Leah Holoiday, spokesperson for Alberta Finance in an email to the Rocky View Weekly. “In the coming weeks, the government will announce a grant specifically for small brewers in Alberta.”

As part of its 2015 provincial budget, the Alberta government lowered the markup rate on beer originating from small breweries in Alberta, British Columbia and Saskatchewan, while applying a rate of $1.25 per litre to beer originating elsewhere.

That move sparked outrage from other small Canadian breweries, including Toronto-based Steam Whistle, which attempted to secure a court injunction.

The latest changes will scrap that markup, setting the price of beer at $1.25 per litre regardless of the size or location of the company.

However, under a yet-to-be-detailed grant program, the move could essentially be a wash for Alberta craft brewers, according to Terry Rock, executive director of the Alberta Small Brewers Association.

“We expect Alberta brewers to be no worse off under the new system. At this point, we’re saying, ‘cautious optimism,’” Rock said. “We’ve made our position clear about what the needs of these small businesses are. Our expectation is the government will listen to what we’re saying. We are one of the fastest growing industries in the province.”

Though the grant program has yet to be detailed, Chris Heier, president of the Cochrane-based Half Hitch Brewing Company, said he had concerns with how and when those grants would be administered.

“We’re not going to see any change in revenue, but one of the big concerns we’re going to see is on the cash flow ends of thing,” he said. “I have to eat the additional dollars that the keg is going to go up in price by (while the grant is administered).”

For beer aficionados, the new markup is unlikely to affect pricing of Alberta-produced brews, as brewers expect the grant program will cover associated costs. However, price tags on beers imported from British Columbia and Saskatchewan breweries are likely to increase.

“Cash flow (is) the chief concern. On (revenue), the end result will be no different than it is today,” Heier said.

“We will still have a wholesale price and we’ll see the same net revenue coming in at the end of the day. It’s more of how it’s going to work on the back end.”


Airdrie City View Staff

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