Industry News

Beer, Politics and The Economy

Adam Seguin from Western Suds discusses beer, politics and the economy on the craft beer scene in Alberta.

Beer, Politics and The Economy

(Posted with permission from Adam Seguin at Western Suds)

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 & 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.

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