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Alberta Says No To Craft Beer – BC Craft Brewers May Be Forced Out

In a counter-intuitive move by the Alberta Provincial Government the province has placed a No Craft Beer sign at every border of the province. That said, any Alberta based craft breweries are not necessarily all that much better off. As of August 5, 2016 craft beer sold in Alberta will go up by as much as $1.15 per litre or 2.45 wholesale per 6-pack. That may translate as up to $3.50 added consumer cost at retail after markup.

Last year, the Alberta Government revised their Provincial markup schedule on beer to the advantage of small brewers. Beer was taxed at a graduated rate for Western Canadian breweries depending on the quantity of beer that the brewery produced. For Breweries producing less than 10,256HL per year the tax rate was $0.10 per litre. This scaled up to a maximum of $1.25 for breweries producing more than 400,000HL. In this scale, BC’s larger craft breweries (Phillips, Central City etc.) would fall in the $0.20-$0.30 range.

A graduated tax rate is common for craft beer in Canada. British Columbia uses a similar system to encourage small business. The lower tax rate helps to offset the economies of scale that macro breweries have and encourages price competition among breweries of all sizes. With the elimination of a graduated scale all western Canadian craft breweries will see a significant rise in their prices. Alberta based breweries will also be affected but there will be some grants available for in-province brewers. Details on these grants are not yet available.

As of August 5th, Alberta residents are going to see a significant rise in the price of craft beer. Macro beer will not be affected as they are already paying the $1.25 per litre. This will result in a large gap in prices. A 6-pack of craft beer will likely be in excess of $15.00 at retail after August 5th.

So why should BC residents care about pricing in Alberta. Well, Alberta loves BC craft beer and as much as our local breweries have found success locally, Alberta has become a major source of revenue and growth for our favourite breweries. There are an estimated 35 BC craft breweries that are currently selling in Alberta. This tax change will likely cause a significant number of BC breweries to back out of the Alberta market completely as they can no longer afford to operate in the market. This change will equate to higher consumer prices, lower consumer demand and slimmer margins for breweries.

When speaking to Business in Vancouver, BC Craft Brewers Guild Executive Director Ken Beattie commented, “The consumer in Alberta should be outraged if you’re a craft beer consumer because your price just went up almost $2 dollars a six pack for your craft beer … and your keg price went from $205 to $262. So the consumer is going to be hurt, the hospitality sector is going to be hurt, because they’re going to have to raise their prices and everybody is going to have to be drinking foreign owned domestic lagers.”

BC Breweries that export to Alberta include:

Arrowhead Brewing
Bad Tattoo Brewing
Barkerville Brewing
Bomber Brewing
Bridge Brewing
Canuck Empire Brewing
Category 12 Brewing
Central City Brewers
Dageraad Brewing
Dead Frog Brewery
Deep Cove Brewers
Driftwood Brewery
Fernie Brewing
Tree Brewing
Fuggles & Warlock
Howe Sound Brewing
Lighthouse Brewing
Moody Ales
Mt. Begbie Brewing
Nelson Brewing
Old Abbey Ales
Old Yale Brewing
Parallel 49 Brewing
Persephone Brewing
Phillips Brewing
Postmark Brewing
Red Collar Brewing
Russell Brewery
Steel & Oak Brewing
Cannery Brewing
Tin Whistle Brewing
Three Ranges Brewing
Tofino Brewing
Townsite Brewing
4 Mile Brewing