In the wake of the LCBO strike settlement, Ottawa breweries say they welcome Ontario’s plan to allow grocery and convenience stores to sell beer, wine and ready-to-drink cocktails, saying it is an encouraging, but long orverdue move for the local market.
But without financial incentives for small breweries, dedicated shelves for local products in sales outlets and a re-evaluation of taxation, there could be little benefit for their businesses, Ottawa brewers told Capital Current.
“There are a lot of factors you have to look at with that,” said Chris Lemieux, a co-founder of Brew Revolution.
“Is your distribution channel able to keep up with that? Do you have a sales force that can now beat the pavement to those additional 8,500 locations? What does it mean from a logistic perspective? There is a lot to go on with.”
Launched about four months before COVID-19 hit, Brew Revolution has been in “perpetual startup mode” ever since, trying to pave the way to growth. But Lemieux said no one has yet had a chance to recover fully.
“If they are going to open up a new market space, maybe also open up some grants and some funding that allows small businesses to ramp up and go after that,” said Lemieux.
“All small businesses are struggling right now.”
He also added that if the government did not launch financial incentive programs to support small local breweries, it would be harder to compete with large established operations.
The co-owner of Bicycle Craft Brewery, Fariborz Behzadi, echoed Lemieux saying that it is unclear yet how the system is going to work.
Although The Beer Store will be the primary distributor of beer until at least 2031, there is no detail of how local suppliers would work with convenience stores yet.
“I think it is going to be better for consumers in a sense that they can have access to whatever they want to try. Whether it be better for us as small brewers, I don’t know,” said Behzadi, adding that bigger producers have more concrete sales force and capacity that put smaller ones at a disadvantage to competing with them.
“Most of the corner stores are going to carry bigger brands in general.”
Behzadi suggests the government could help by dedicating a portion of the sales to Ontario’s small producers.
“It would be good to have a percentage of the shelf space dedicated to small local breweries,” he said
“Consumers get access to more elements, and local brewers have space in the market. That is good for all.”
Concerns about facing economic challenges and accessing new opportunities in the local market resonate with Andy Nita, the founder of Nita Beer. At the same time, Nita said it is important for the government to urgently reassess the taxation system.
“Ontario has the highest beer taxes in Canada on one hand,” said Nita “On the other hand, working with the federal excise tax is another thing. That system is a complete disaster,”
“We are getting fines more in penalties than we actually pay on excise for the whole year.”
The federal government have maintained a cap on excise duties for alcohol at two per cent until 2026 after it was set to rise last April by 4.7 per cent, tied to inflation.
Calls for Ontario to revisit the tax system have been there for years.
Earlier this year, President of the Ontario Craft Brewers, Scott Simmons, urged the Ford government to take action before it opens up the market to help local breweries to grow and expand.
Simmons wants an end to the environmental tax of 8.93 cents on each non-refillable container of beer, wine and spirits, saying that the tax is outdated. It was introduced 30 years ago to limit imports from the United States.
Taxes for breweries in Ontario include a basic beer tax, a beer volume tax and an environmental tax, when applicable, regardless of the size of the brewery.
Nita pointed out that keeping the same system would only benefit big producers, and left small local breweries out of the equation.
“The more regulations you can lift, I think the better,” said Nita
“I think we are moving in the right direction by opening up more retail opportunities, but there are things to consider.”
