Province cuts markup for small beer brewers

Postmedia file photo. Ian Kucerak / Postmedia, file

Starting Friday, eligible small beer brewers are now able to apply for a reduced markup from Alberta Gaming, Liquor and Cannabis (AGLC), a move that could cut the fee one brewer pays the provincial government to sell its booze by almost 50 per cent.

“It’s small, but obviously has a big impact. It is a success in that there is predictability — and it stayed the same for the bulk of our membership,” said Mike McNeil, executive director of the Alberta Small Brewers Association.

The change solved an “urgent” issue for Calgary-based Big Rock Brewery, which was being assessed at the same rate as much larger beer manufacturers, McNeil said.

After the province announced the change, a press release from Big Rock said that the company anticipated it would significantly reduce the corporation’s overall beer tax.

Big Rock can now take advantage of reduced markup rates along with every other brewer that produces less than 400,000 hectolitres per year.

AGLC adds a markup to the liquor it sells to liquor licensees, and that markup goes to the government’s general revenue fund.

Reduced markup rates are graduated, depending on how much a brewer produces each year. The rate begins at 10 cents per litre for those who brew less than 14,000 hectolitres per year, but rises to $0.80 per litre for those who make 400,000 hectolitres per year.

Based on the AGLC’s changes, Big Rock said its mark-up on Alberta beer sales could be reduced by almost 50 per cent, to $0.64 per litre from $1.25 per litre.

“This change really re-aligns with what the AGLC considers small manufacturing,” said McNeil. It could also help producers like Big Rock, which is large compared to most craft brewers but small compared to brands like Heineken or Molson Coors, better compete against large international companies.

The move should also give small brewers a “runway,” to expand, McNeil said. While it won’t change anything for most of the association’s membership, which produces below 50,000 hectolitres per year, the change could give many of them the ability to expand without getting dinged with a higher markup rate.

“It provides our industry with more of a window for growth,” said McNeil.

Big Rock said the new framework gives them the ability to evaluate growth within a predictable regulatory environment during the current government’s term in office.