Craft distilleries say steep markups are keeping their products off B.C. Liquor Store shelves
Producers say exorbitant markups put their products at a competitive disadvantage compared to wine
B.C. craft liquor manufacturers say that the province should remove barriers to their products being sold in provincial liquor stores, as interest grows in homegrown alcohol due to U.S. tariffs.
The province has pulled U.S.-made alcohol from provincial liquor store shelves over the trade war with the U.S., incited by President Donald Trump's imposition of 25 per cent tariffs on Canadian imports.
Trump's move has been met with an upsurge in patriotism in Canada, as well as an encouragement from government officials to shop local to help the provincial economy.
But some craft liquor producers in the province say that they're not featured in B.C. Liquor Stores due to steep markups, meaning many customers are losing out on the chance to buy locally-made booze.
The producers also say that B.C. wineries have access to tax benefits that they don't, putting them at a competitive disadvantage at a time when interest in their products is spiking.
"We're saying if it's good for the goose, it's good for the gander," said Tyler Dyck, CEO of Okanagan Spirits Craft Distillery and president of the Craft Distillers Guild of B.C.
"You cannot discriminate based on grape versus grain. We're just looking for parity. We're looking for fairness."
Dyck said that many B.C. wineries receive money and benefits through the Vinters Quality Alliance (VQA) program, which incentivizes the sale of B.C.-produced wine in stores through sales agreements.
The distillery owner said that a winery owner that's part of the program would receive wholesale rates — around $22 for a bottle sold at $45 at retail — for having their product stocked in B.C. Liquor Stores.
But he says that a craft liquor manufacturer would have to pay higher markups, resulting in them only getting around $12 or $13 per $45 bottle.
Some distilleries facing closure
Alex Hamer, the founder of Artistan Distillers Canada, says that economic headwinds mean that some distilleries were facing closure this year even before tariffs were introduced.
He's had to cancel the annual B.C. Distilled liquor festival this year, saying he's received calls from distillery owners who can't attend as their costs are increasing and sales are either down or flat.
Hamer says that craft distilleries would get access to a much broader distribution network if they were allowed to be stocked in B.C. Liquor Stores, and he is pushing for sections in each store that highlight locally produced spirits.
"We happen to have a lot of shelf space right now. They've just removed all of these American spirits," Hamer said.
"Any craft distillery can list their product with B.C. Liquor right now, but they'll lose money on every bottle that they sell, so they can't," he added.
To qualify as a craft liquor manufacturer in B.C., booze producers have to produce no more than 100,000 litres of spirits per year and have all their grain, fruit and produce sourced from B.C. alone.
Dyck argues that the manufacturing cap should be abolished, saying that wineries in the province produce much more than that per year.
He says that distilleries face steep financial penalties if they produce more than that amount.
"There is no cap [for wineries], and there shouldn't be," he said. "Because it powers B.C.'s economy. It powers B.C. jobs. It just makes economic sense.
"To cap the value-added benefits for producing in the province is asinine."
The B.C. Liquor Distribution Branch said in a statement that all distilleries, regardless of production volume, need to use the LDB's central distribution channel to be featured in B.C. Liquor Stores.
"[Distilleries] are subject to the standard wholesale mark-up rate that begins at 124 [per cent] with reduced graduated mark-up applied to higher cost products, on sales through the LDB central distribution channel," a spokesperson wrote in a statement.
The spokesperson said that the distilleries can deliver directly to private liquor stores and bars without any markup, and the LDB was a "strong supporter" of B.C.-based liquor.
"The LDB works closely with B.C. manufacturers and industry associations to discuss shared industry issues," they added.
However, the spokesperson did not address whether the markup was higher than that applied to B.C. wines, and how many sales B.C. Liquor Stores make compared to private liquor stores.
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With files from Tom Popyk and Liam Britten