Canadian booze-makers hope U.S. tariff threats help smash trade barriers at home
Ever wonder why you can't get a good Nova Scotian wine in B.C.?
Threats by two premiers to ban U.S alcohol if Washington imposes its threatened 25 per cent tariffs has domestic buyers and sellers calling for a loosening of interprovincial barriers.
B.C. Premier David Eby — like Ontario's Doug Ford — says he's willing to stop all American-made alcohol products at the border if the Trump administration tariffs kick in on Saturday.
"If they are not going to abide by our trade agreements then neither are we," Eby told reporters last week.
But this tough talk has some questioning long-standing protectionism within the country that makes it hard to sell Canadian-crafted wines, brews and spirits between provinces.
"Sometimes it's harder to move stuff across the provincial border than it is to ship stuff outside of Canada or bring stuff into Canada — which is ridiculous," said Tyler Dyck, CEO of Okanagan Spirits and president of both the Craft Distillers Guild of B.C and the Canadian Craft Distillers Alliance.
Dyck and others in the alcohol industry — like Wine Growers B.C. — have long advocated for loosening and streamlining the trade rules between provinces. They hope the recent U.S. threat helps cut down interprovincial barriers to get more Canadian-made booze flowing cross-country.
"Maybe this is the time. This is the catalyst for us to look at interprovincial trade," Dyck told CBC News.
Lots of barriers
There's a reason you don't see a lot of Nova Scotian wine in B.C. nor B.C. gin on store shelves in Quebec.
"We just don't know how to trade among ourselves," said Sylvain Charlebois, a professor at Dalhousie University in Halifax who researches food distribution.
Charlebois says provinces and territories have bans, restrictions and rules about shipping, storage and labelling — to name just a few things — that make it difficult for individuals and vendors to import alcohol products from out of province. The biggest markets, Ontario and Quebec, he says, have the most restrictive rules to protect their near-monopolies of alcohol distribution.
"There are barriers. Some provinces have actually signed on to open up their markets," he said, citing Nova Scotia, Saskatchewan and a recent pilot program between Alberta and B.C. as examples. "But Central Canada is is not necessarily keen in sharing sharing their customers."
"It's been it's been a bit of a struggle over the years."
That's why he says some alcohol vendors prefer buying from outside Canada, especially the U.S., which has less rules and cheaper and more varied products.
"A lot of companies actually prefer dealing with the U.S.," said Charlebois.
Distillers like Dyck get frustrated seeing liquor store shelves overflowing with international products — with few Canadian-made options.
"Why does every single restaurant have Jack Daniels? It doesn't power Canada's economy," said Dyck.
Politicians "say we need to buy Canadian, but they need to then update and repair the regulations to allow Canadian products to have the same privileges as American and European and Australian and South American products," said Darryl Lamb, the brand manager for Legacy Liquor Store, the largest of B.C.'s private liquor stores. The province has a hybrid system with 198 public liquor stores, plus 674 private liquor or cold beer and wine stores.
Lamb says provincial rules make it expensive for him to import out-of-province spirits or wine.
A hypothetical $50 bottle of wholesale scotch would retail for $60.17 in Alberta after taxes, he says, but would go for $149 in B.C., having been taxed at 198 per cent.
He also feels undercut by online sales that flout provincial restrictions and taxes by selling lower-taxed Alberta alcohol direct to consumers.
At the same time, Lamb can't offer customers a wide variety of out-of-province products because B.C. limits products that its public liquor stores do not stock.
He says major brands stocked at B.C. liquor stores are exempt from rules that force private liquor stores to order craft spirits by the case, at a prohibitive shipping cost.
Over in Alberta, liquor store owners are complaining about an interprovincial deal that lets B.C.'s 300 wineries sell directly to Alberta — but only to consumers. The deal, which is being piloted for a year, gives Alberta a share of the applicable taxes. But retailers there say they feel squeezed out by online sellers being allowed to ship direct to consumers, while they face costs and restrictions that prevent the from stocking many B.C. wines.
For many vendors, the prospect of banning the cheaper U.S. products they rely on is problematic.
Lamb points out B.C.s wine industry is struggling — local grape growers have been hit hard by extreme weather events and wildfire smoke due to climate change, and currently rely on buying American grapes.
"Canadian wine can't feel its own shelf right now," said Lamb. "It's gasping."
Jeff Guignard, executive director of the Alliance of Beverage Licensees — which represents B.C. bars, restaurants, all the private liquor and cannabis vendors — says Canada imports about $400-million worth of U.S. alcohol a year. If that vanishes, he says liquor sellers would struggle.
"There's never been a better time for governments to look at ways of stimulating interprovincial trade and removing any barriers," said Guignard, but warned liquor buyers would struggle now to replace missing U.S. bottles with affordable Canadian alternatives as they can't compete with "economies of scale" in the U.S.
"A lot of consumers like Jack Daniel's from Tennessee. If that's not on our shelves anymore, yes, we can try and steer you to a replacement product but that's going to frustrate that consumer and they may have to spend a bit more," he said.
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