The 2025/26 Alberta Provincial Government was tabled last Thursday. Most of the talk revolved around the proposed income tax cut, the size of the deficit and what responses might come as a result of Trump tariffs. The government (and the AGLC) was much quieter about significant changes to markup policy in the province. The Alberta government has significantly altered the definition of who is a small producer, without any advance notice or consultation with the province’s craft brewers.

[A potentially even larger change is the creation of an additional markup on “high value” wines, which will add between 5% and 15% to the price of wines retailing for about $22 or higher, but as that is not my beat I will allow others to speak to that.]

The change centres around the Small Brewer Markup Schedule. Breweries who sell beer in Alberta are applied a markup based on their production volume. Small brewers get what can be a significant cut in markup rates. This policy is a recognition that small producers lack economics of scale. It is also an effort to make small breweries more competitive on liquor store shelves. Before the budget a large producer paid $1.25 per litre. The small brewers paid between 10 and 80 cents, graduated over 72 steps based on size.

The key changes are to the definition of small and to the schedule. Before last week, a small brewer was defined as anyone with an annual worldwide production of 400,000HL or less. The budget cuts that figure to 180,000HL. The schedule is reduced to 36 steps. The range of ten cents to $1.25 remains the same. (See the new schedule here. They deleted the previous schedule from their website, but I have a copy.)

A comparison between the two tables reveals the following:

  • Production under 14,000 HL unaffected at 10 cents/litre
  • Production between 14,000 and 74,999 see a reduction in markup of between one and 16 cents, with the biggest decreases going to between 40,000 and 50,000
  • Production between 75,000 and 179,999 will see markup increases of between one and 50 cents
  • Production between 180,000 and 400,00 will see increases of between 45 and 62 cents, with the biggest hit on lower production

So, what does this mean? I see three interrelated impacts.

1. Big Hit to Regional Brewers

Big Rock is hit hard by these changes. I suspect so are Great Western out of Saskatchewan and Ontario’s Steam Whistle. These are all significant regional brewers (in a Canadian context) who have production numbers in six figures. Each one of these breweries essentially saw a significant markup increase this weekend. My back-of-napkin math suggests that Big Rock’s markup, for example, will go up about 20% overnight. That is about $1 million in extra “tax” (figuring out the actual numbers is hard) that Big Rock either has to tack on to its price or eat as lower margins. Given Big Rock has lost money the last three years, the latter is hard to do. Likely similar numbers apply for Great Western and Steam Whistle. (There may be other breweries affected but I have less of a handle on the size of some other breweries.)

2. Negligible Impact on Small Brewers

Every other brewery in Alberta comes nowhere near any of the relevant numbers, so for them their markup either stays the same or they get a small one- or two-cent break. Nothing here gives them any extra advantage and break. Status quo.

3. A Win for the Big Boys

What is clear to me is that this is a big win for the big corporate brewers. They have lobbied for years to lower the threshold for small brewer status. The benefit for them in a lower threshold is reduced competition. They can’t make craft beer go away, so their strategy more recently has been to make sure it stays small. Most locally-focused breweries are of no concern to them – the big boys spill in a day what these breweries make in a year. It is the breweries that threaten to break through to the next level that concern them. A lower threshold means the costs of expanding go up exponentially. By cutting off that avenue, they maintain control over beer pricing, especially in the value and non-premium segments. Should you doubt this, please see Beer Canada’s response to the Alberta budget calling the change “fairer” (see here).

How Big Should “Small” Be?

There is a legitimate policy question here about when does someone stop being a “small” brewery. I will save that broader question for another day, but for now offer some comparisons.

First, Alberta’s definition has shifted over the years. Until 2015 there was no small brewery category. From 2015-18 the threshold was 200,000HL. It briefly dropped to 50,000 in 2018 and then bumped to 400,000 in 2019, where it has sat until last week.

B.C. sets their threshold at 350,000, while Saskatchewan is at 400,000. Quebec sits at 150,000 and Ontario at 50,000. The U.S. puts it at a whopping 7.2 million, but that is not a fair comparison. Clearly beer tax policy is all over the place. No wonder. Small brewer associations advocate for lower thresholds while big beer pushes for lower numbers. Where governments sit tells you a lot about their political priorities.

Good for Trump, Bad for UCP Optics

One final observation. This seems a really strange time to hand a policy victory to some U.S.-based multinationals. AB-Inbev, the largest beer company in the world with headquarters in St. Louis and Leuven, Belgium, and Molson-Coors, based in Chicago are the big winners of last week’s budget. Given the need for Canadian governments to do everything they can to support Canadian industry in the face of Trump’s punitive and incoherent tariffs, it seems just a bit tone deaf to pull this stunt right now. Why kneecap legitimate Canadian businesses to benefit a handful of multinationals? I recognize most of the ABInbev and Molson-Coors product sold in Canada is produced here (fair enough), but the profits go south. Why hand the Trumpist quislings something to crow about?