Beer War: Sask. slashes markups for small breweries in battle with Alberta

The Saskatchewan government is drastically cutting the markup it charges smaller breweries.

Jeremy Harrison, minister responsible for the Saskatchewan Liquor and Gaming Authority, said the move is a shot back at the Alberta government’s decision to raise markups on Saskatchewan beer sold in that province, a move the Wall government has called protectionist.

“Our response, as opposed to massively increasing taxes and imposing new regulations, was to significantly reduce taxes and to cut regulation so that our producers could compete in a free-market environment,” Harrison said during an announcement at the 9 Mile Legacy brewery in Saskatoon.

Under the old markup structure, brewers were charged $0.74 per litre on beer sold through the SLGA’s distribution centre if they produced under 5,000 hectolitres a year, equivalent to about 10,000 50-litre kegs.
 
Once a brewer hit that threshold, the markup nearly doubled to $1.415 per litre.  Harrison said this amounted to punishing successful brewers who wanted to expand.
 
Effective Nov. 1, the old two-stage markup structure will be replaced with a seven-stage scale of increases.
 
At the lowest end, producers brewing less than 2,500 HL per year will pay $0.40 per litre.
 
The scale slides up to $0.75 per litre for producers brewing between 20,001 and 200,000 HL per year.

At the absolute top of the scale, producers brewing over 200,000 HL would see a small increase from the $1.415 under the old regime to $1.565 per litre under the new one.
 
The new markup structure comes alongside a series of previously announced changes, including allowing brewers to open one offsite retail outlet and allowing them to charge for samples sold onsite.
 
Co-founder of 9 Mile Legacy, Shawn Moen, said his business has taken off in the 18 months since they opened their doors.
 
They’re now set to open up a new, larger brewery and taproom that will be about four times the size of their current facility.
 
He said the changes to the fees and regulations will allow him to continue employing more people and buying more inputs from Saskatchewan growers.
 
“I think that the suite of changes actually makes a small brewery like ours financially viable,” he said.
Meanwhile, one of the province’s largest regional brewers also applauded the changes.

In a media release, Great Western Brewing Company CEO Michael Micovcin wrote:

“The Alberta government’s recent decision to raise the mark-up on out-of-province regional brewers has significantly impacted our business, so we are appreciative of the fact that our government here at home is doing what it can to support small brewers.”
 
Harrison said there are no plans to impose any extra costs on Alberta brewers.
 
“This isn’t something that is their fault.

This was a decision taken by the Government of Alberta to completely change their tax policy to discriminate against producers from Saskatchewan,” he said.

Harrison said each province handles its liquor markups a bit differently, so it’s not easy to directly compare between them.

He said he was confident Saskatchewan’s changes will make the province’s markups among the lowest in the country.