NB Liquor implements new policies for craft beer producers

NB Liquor is bringing in a range of new policies regulating the province's craft beer industry and one brewery is arguing the changes are too restrictive and are going to hurt businesses financially.

Among the changes, which started on April 1, is a new tiered cost system that increases the amount a brewery pays the corporation based on how much beer or cider it produces. 

The changes also increase the amount paid to NB Liquor for each keg sold or packaged by small scale producers, from 73 cents per litre to $1.05 per litre of beer and $1.60 per litre for cider.

That cost increased to $1.75 per litre for the larger craft beer producers and $2.10 for cider producers. 

The smallest brewers, making less than 49,900 litres of product don't pay per litre for sales.

NB Liquor is eliminating the requirement for a brewer to open their retail outlet for a minimum number of hours per day.

It is also allowing brewers to sell other beers made in New Brunswick from their own stores, in addition to their own product.

Craft brewers react

"There is some good here," said Stephen Dixon, the president of the New Brunswick Craft Alcohol Producers Association.

"But most of it is not." 

Dixon, who is also the founder of Grimross Brewing, said New Brunswick brewers must pay the markup prices per litre on top of regular business taxes and HST.

He said the tiered system, increasing the amount a brewer pays according to production or as the brewer becomes more successful, is unfair. 

"There is no other industry in New Brunswick that has a penalty for growth, and that's what this is in my mind — a penalty," said Dixon. 

"There can be reasonable fees for services, I don't have a problem with that, but this is way out of whack and way out of proportion." 

Dixon said the costs paid to NB Liquor are too steep.

"NB Liquor doesn't see the beer," said Dixon.

"They don't make it. They don't package it. They don't handle it. They don't transport it. They don't have anything to do with the sales process. They do nothing except for the end of the month we give them a cheque for the amount of litres we've sold, times the markup. That's not what a markup is — that's a tax." 

Changes benefit brewers

NB Liquor said the policy contains cost increases and decreases that balance out. 

"The changes we've made are revenue neutral compared to this year's revenue," said Gary Von Richter, director of customer service at NB Liquor. 

"Yes, there are increases in the keg rate, but there are corresponding decreases in the packing rate. So overall it's revenue neutral." 

Von Richter said that the growth of the industry in the province is a testament to how well the Crown corporation is supporting craft beers and ciders.

"There are 23 brewers out there producing right now," said Von Richter.

"And seven more coming, with 25 more expressing interest. That says success to me." 

Mark Barbour, spokesperson for NB Liquor, said the small brewers are charged 50 per cent less than mainstream domestic breweries.

"So the industry is being cared for by us at ANBL and the government as well in terms of helping this industry continue to flourish and go forward because we charge them less for the markup in order for them to be in New Brunswick," he said.

New brewers cautious

Jake Saunders, a founder of Trailway Brewing, is in the middle of building his new brewing facility in Fredericton. He said potential cost increases can give those considering brewing pause.

"You're going to be a little bit cautious," said Saunders.

"And a little bit nervous about some of these changes that are getting made." 

The changes also increase the total amount of stores a brewer can operate, to a maximum of four if the brewer sells between 1,000,000 and 2,499,900 litres of beer a year.

Grimross's Dixon said the restrictions on new stores is a roadblock for small businesses.

"If I'm successful, I should be able to open as many stores as I want, and hire as many people as I want to work," said Dixon.

"But they are a monopoly and even though our sales are so small in comparison, they don't want us doing that."