Province stifles craft brewers even while celebrating them, industry says

Microbreweries are popping up all across the province, but leaders in the craft beer industry say they're being held back by government policy and regulation.

Krista Ross, CEO with the Fredericton Chamber of Commerce, said there are 30 craft breweries and microbreweries in New Brunswick, nearly half of them in Fredericton.

People within the industry want to have a greater say in how their products are marked up, she said.

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Ross said that once a microbrewery's production reaches a certain size, 15,000 hectolitres, it falls under higher fees or taxes, and remains in that bracket even if its production slows again.

The way products are priced is a disincentive to growth, she said, and it's important to address the issue soon.

"Everyday that a business has regulations in place that are not helping them to grow, is too many."

Potential for money from export

The craft beer industry has been considered a real opportunity for economic development in New Brunswick.

Microbreweries support agriculture, manufacturing, professional services, wholesale trades and employment, Ross said.

"This is an industry that's going to create jobs, create growth economy, tourism. We see it as a tremendous engine."

And the best type of growth is in exporting, since it brings new money into the local economy, supporting local businesses that employ local people, who then put money back into the community.

"If our regulatory environments say that a microbrewery is one size and is taxed at a certain rate, but other jurisdictions have a much larger definition and taxe at a lower rate, then in order for us to be competitive we need to be comparable," she said.

'Money is all that matters'

John Way, a partner in Sunset Heights Meadery, wants government to work directly with the industry on changes that will help it grow.

When Way and his wife started in the mead business, New Brunswick Liquor told them the government sets an amount of money at the start of the year that the industry has to pay.

"So right at the first step, they're telling you that money is all that matters and there isn't anything in their structure to help support the growth of the sector," he said.

Way suggested the government set aside money that craft brewers could use to promote local industry, create jobs and drive the economy, all while paying the 10 per cent HST attached to any drink, keg or bottle sold, he said.

The tiered structure currently in place creates problems, especially for larger producers, such as Picaroons and Pump House, which now have to decide whether to grow and export.

"Because growing and exporting puts them into a higher bracket they are not allowed to roll back from," he said.

But there are barriers to exporting, even for smaller producers, he said.

They want to grow the market, they all love to jump up and down, and say this is great for tourism, this is great for this and that. They do nothing towards actually supporting that.- John Way,  Sunset Heights Meadery

If the meadery wanted to sell its products outside the province, it would cost 40 cents a bottle because New Brunswick does not have its own bottle distributor, he said.

And yet the province is not creating incentives to help the producers export, despite losing out on reaching major markets across the country, he said.

 "They don't take any of that into account," he said.

"They want to grow the market, they all love to jump up and down, and say this is great for tourism, this is great for this and that,

"They do nothing towards actually supporting that."

Not quick to change

He suggested the province test the industry's potential for growth by eliminating markups for a few years, and work with producers to track their job creation and sales.

"You would see growth," he said.

Ed Teale, owner of York County Cider in Fredericton, said the province doesn't need to give handouts to the industry but should sit down with producers and work out a better system to promote products.

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Some of his suggestions included basing markups on how much money a producer makes per year, and marketing New Brunswick products more visibly in stores, perhaps by attaching a sticker or flag to it.

But he also said that one of the biggest problems producers face is that NB Liquor is not quick to change, and the fast-growing craft brewing industry caught the corporation by surprise.

"We are in a very fast-moving, fast-changing industry and NB Liquor is still used to dealing with Molson, and Moosehead, and their traditional suppliers," he said.

'We are in a very fast-moving, fast-changing industry and NB Liquor is still used to dealing with Molson, and Moosehead, and their traditional suppliers.'- Ed Teale, York County Cider

"And we are coming up like dandelions."

Ross said Opportunities New Brunswick is in the early stages of working on an innovation project involving craft breweries in the province.

She also said the Minister of Finance recently met with the association of craft brewers to work towards more "mutually beneficial ways of dealing with some of the regulations that are in place," she said.

CBC contacted the Department of Finance and Opportunities New Brunswick for more information but neither responded.