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In a trade battle over beer, Saskatchewan companies like Great Western Brewing could stand to lose a lot of business under Alberta’s new tax regime.
Right now, smaller provincial breweries are classed as regional and pay a lower rate of tax to export into Alberta, but as of August 5, those companies will fall under the same tax rate as multi-national breweries like Labatts or Molson. The mark-up on beer made outside Alberta amounts to $1.25 per litre.
Mike Micovcin is the CEO of Great Western Brewing based in Saskatoon and he joined Gormley on Tuesday to offer his perspective on what this tariff could do to Saskatchewan companies.
He says about 60 per cent of Great Western’s sales are in Alberta. He says the new tax policy will force the company to significantly increase the price of a case of beer there.
“Brewhouse is our largest brand in Alberta, it sort of competes in what we call the value price segment – priced every day below the big national brands. And we would expect to see – with this new tax rate – the price of Brewhouse to increase by almost 25 per cent, or almost $7 a case overnight.”
The new Alberta tax system would give preferential treatment to Alberta-based breweries which don’t have to pay the higher rate. The Saskatchewan Liquor and Gaming Authority (SLGA) Minister, Don McMorris is calling it a subsidy that flies in the face of the New West Partnership that is meant to open up trade between provinces.
Micovcin is waiting to hear more about exactly how the Alberta breweries will stand to benefit, but he is sure that it will put regional breweries in other provinces at a competitive disadvantage.
“It’s not only devastating for us, I think it’s devastating for the Alberta consumer, because I think the risk is there could be beer brands that just simply pull out of the province because they just can’t compete, given the new economic realities of doing business in Alberta,” he commented
He adds that smaller microbreweries in B.C., Saskatchewan or Manitoba are currently taxed at an even lower rate around $0.20, and if they have to pay the same rate as a multinational company to sell in Alberta, he doesn’t see how the craft beer industry could compete at all.
