Over the past couple months I have noticed a fascinating trend on Alberta liquor store shelves. There has been a rather large increase in the number of B.C.-based breweries arriving in the province. I have counted about a dozen new arrivals since December alone. It is noticeable enough that I decided to focus my CBC Radio column on the subject a couple weeks back. You can now listen to the column here.
By my count there are now 30 B.C. breweries selling beer in Alberta, roughly one-third of breweries operating in that province. About 10 of those have been in Alberta a long time. Another sub-set of a half dozen or so started importing to Alberta in the last year or two. And then there is the dozen that have arrived in the past four or five months.
The veterans are some of the well-established, larger breweries in that province, not surprisingly. Among the newer group we find smaller, younger operations. One only opened its doors in November and is already shipping beer to Alberta!
A related observation is that some of those longstanding breweries – Central City, Phillips and Parallel 49 just to name three – have noticeably increased their presence in Alberta recently. They have increased the number of brands they import and they are taking up more shelf space/tap lines than before.
So I asked myself, why is that?
The answer is simple. The new mark-up rules implemented in last fall’s provincial budget. I won’t rehash the argument here as it is well worn (read here and here if you need background). Yet, it is clear that B.C. breweries have spotted a competitive advantage and moved quickly to fill it. Given that they get the same mark-up as Alberta breweries, they have a distinct price advantage over other imports. This is especially true for those newer and smaller breweries.
At the time I warned that including B.C. and Saskatchewan (as signatories to the New West Partnership) would water down the effects of the new policy. I appear to have been correct in that worry. It may be, at least at this early stage, that B.C., and not Alberta, is reaping the bulk of the benefit of the new policy.
Why not a Saskatchewan invasion? Well, my theory is that Saskie breweries are in a different phase of their development. There are a relatively small number of breweries in Saskatchewan (nine operational at the moment) serving what is a rapidly growing market for craft beer. I think their breweries are simply too busy meeting demand in their home province to make a big push westward. Whereas B.C. is a more mature market and capturing new markets is more necessary.
Is this a good or a bad development? As usual it depends on your perspective. I know the B.C. invasion is a serious thorn for some of the Alberta brewing community, and I can’t imagine the agents for other imports are pleased. For the consumer, it may all come down to whether you appreciate the beer that is arriving on our shelves.
March 7, 2016 at 9:49 AM
If you notice on the shelves too that BC Beers are cheaper than Alberta beers on their on shelves! Some as much as 2-3 dollars cheaper. Yet they still have to pay the taxes and distribution fees too. Why is that?!
March 7, 2016 at 9:24 PM
Serious question: where is the local Alberta market at? Seems to be dragging behind. Why arent AB breweries taking up this new shelf space? I am not close enough to the fire to understand, just observing from next door.
You are right about some of us in SK. We get contacted all the time by AB sales agents and people trying to sell us canning lines. The truth of the matter is that we are growing as fast as we can and selling every drop of beer in SK as draft / growler only.
March 9, 2016 at 10:10 AM
Mark- The Alberta market is definitely dragging behind. Up until a couple of years ago, I could count the number of craft breweries in the province without taking off my socks. The momentum is shifting, however, and there are a lot of new breweries popping up all over the province, although it seems that most of them are focusing heavily on local markets outside the larger centres. Regardless, there is plenty of buzz afoot, and more and more tap lines seem to be opening up to local stuff.
I have great hopes. I suspect that the current wave of start-ups will have some level of success, as there is a lot of passion there, combined with a sudden influx of graduates from Olds College to give some amount of brewing ability to what I sometimes call the “MBA” breweries (6 months of home brewing, dad’s venture capital / kickstarter and a business plan).
March 9, 2016 at 11:23 PM
I’d say the fact that Sherbrooke’s “Alberta” beer offerings have expanded from 1 to 2 full vertical shelves in the last 6 months or so is highly indicative of where the local scene is at, full stop. Yeah, it ain’t everywhere just yet, but with Beer Rev and the Underground putting up the same new guy taps every chance they get, things are looking up at a faster pace than anyone has any right to really expect around here.
March 10, 2016 at 6:50 AM
Good to hear!
March 8, 2016 at 1:51 PM
Let’s lengthen that last sentence: For the consumer, it may all come down to whether you appreciate the beer that is arriving on our shelves, and whether you miss the beer not arriving on the shelves (from brewers that have given up on Alberta) or beers that are harder to find (because their distribution has shrunk). If I lived there, I would not be happy with the government’s role in my beer choices and prices.
March 8, 2016 at 9:10 PM
I have noticed that. I haven’t done any methodical review of pricing, so opted to leave that element of the issue out of the post. But some breweries are selling the beer at quite low prices, taking a smaller margin to increase market share.
Jason
March 8, 2016 at 9:11 PM
Bob. A fair point. Completely. That is totally a part of the picture.
April 25, 2016 at 8:05 PM
Many breweries are departing as Alberta is unfair to small businesses like Yukon and Quidi Vidi who are being treated unfairly by the illegal tariffs by Your Alberta government which is making more income on beer markups than Oil Royalties. Alberta is the highest craft beer tax jurisdiction in North America and Alberta seems oblivious to NAFTA and other ratified trade agreements since 1867.
April 26, 2016 at 9:31 AM
Vern,
I truly appreciate that you are upset by the new policies and as a beer importer you have suffered a direct economic impact from them. However, please be careful about how you frame things. For one, it is not true that the government earns more from beer mark-ups than from royalties. Even in this depressed economy the government earns a billion in oil royalties – which is nowhere close to what they make in beer mark up. The most likely figure is that the new policy netted the government $14-17 million.
Also, you would be hard pressed to claim that Alberta is the “highest craft beer tax jurisdiction”. These systems are complex and that is a far too simplistic statement. I won’t even start on your claims of “illegal” and being “oblivious to NAFTA”, which I will interpret as over-zealous spin.
While I appreciate your anger and understand where it comes from, I would gently urge you to be mindful that there are multiple legitimate perspectives on this issue and inflamed rhetoric doesn’t help forward the debate.
An alternative approach might be to offer a solution to the policy issue. The status quo wasn’t working for Alberta breweries, who also have a legitimate interest. What policy might satisfy all parties?