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Bar Room Brawl – Alberta Kicks ‘Em Where It Counts

As we noted in our two previous articles “Of Beer and Borders” and “The 2 Million Dollar Case of Beer”, the Alberta government had taken a bruising over its beer markup and Alberta-only Small Brewers Development Program rebate.  After retreating to its corner for a while to prepare for the next round,   the Alberta government came out with a patched up small brewer assistance program, and a left hook directed at heavyweight Ontario, who didn’t even know they were in the ring.  

November 29, 2018 was the six month deadline for the Alberta government to change or drop their markup/rebate scheme that a trade panel previously ruled was violating the Canada Free Trade Agreement among provinces.  In response, in a press conference on November 27, Alberta Trade Minister Deron Bilous announced that the beer sales system in Alberta would return to something similar to the pre-2015 model: the AGLC will continue to apply a standard markup of $1.25 per litre of beer sold in Alberta. However, this markup will not apply to brewers who produce less than 50,000 hl of beer annually, regardless of location. Those brewers under that threshold, who sell beer in Alberta, will pay a lower markup of $0.10 to $0.60 per litre, scaled to their output.  (Among Alberta brewers, only Big Rock and the mass producers like Labatt and Molson currently exceed the 50,000 hl level of beer production.) 

This means the playing field (in the Alberta beer market) has been levelled for all smaller craft brewers, and  Alberta craft brewers are getting a better seat at the bar versus larger brewers from other provinces and countries.  The Alberta government plan also helps ferment the collegiality among smaller craft brewers everywhere – small craft brewers from elsewhere were merely slightly awkward frenemies under the prior Alberta scheme that specifically favoured only small Alberta craft brewers.

But as part of the November 27 announcement, the Alberta government did not just pour out its beer after being busted by the trade panel– it disclosed it had initiated the same kind of Canada Free Trade Agreement complaint it had faced, but against the Ontario government – a provincial market notorious for a beer sales playing field heavily sloped against any Alberta producers wishing to sell their products in that populous province.

The potential trade complaint contest between Alberta and Ontario will be interesting, as it will undoubtedly feature some political wrangling apart from the actual legal arguments over free trade issues.  It will probably be a lengthy process, and may not result in the economic equivalent of a craft beer pipeline from Alberta to Ontario.  But the announcement of the new  “below 50,000 hl” price break may have allowed the Alberta government an unspoken Nelson Muntz “HA-ha” moment regarding their legal foes Steamwhistle Brewing and Great Western Brewing.  As we previously reported, those two breweries won a $2 million case of beer against Alberta earlier this year (which decision is under appeal) for unconstitutional trade practices.  Now those two breweries, who both produce over 50,000 hl per year, can consider themselves victims of their own success regarding the Alberta marketplace, which once again has the back of the little guys and their kegs.