Is the AIT decision on beer mark-ups in Alberta really something worth celebrating?

Recent news reports have covered the decision of the Agreement on Internal Trade’s (AIT) decision regarding “the dispute between Artisan Ales Consulting Inc. and the Government of Alberta regarding mark-ups on beer.” Essentially, this decision forces the Government of Alberta to dismantle their program of higher mark-ups on all beer sold in Alberta to fund a rebate program only available to Alberta craft brewers. Artisan Ales, an agent for beers from Quebec, Belgium, and France, launched this action, supported by the Canadian Constitution Foundation, claiming it had hurt their business, resulting in a drop in sales. At this point, I believe we are all supposed to swear and mutter something about the “damn Socialists” and, “How dare the government not support unfettered free enterprise?”

Predictably, our local newspapers trumpeted this decision as a victory for “the little guy,” free trade, and the battle against misguided provincial government policies. The articles were full of quotes from the victors, but precious little counterarguments from the government, the Alberta Small Brewers Association (ASBA) or the “other little guys,” Alberta craft breweries.

But, is it really a victory? And, for whom? To consider this, a little unpacking of the whole affair is required.

Agents, such as Artisan Ales, sell booze. To the government. To liquor stores. To bars. If they are smart, they also market booze. Important distinction. Often, they are home-based businesses that represent various breweries, wineries and distilleries and assist in moving the products from manufacturer to distribution (controlled by the provincial government) to places for purchase to the consumer. Agents, typically, are small and the “value-add” that remains in Alberta is from employee salaries and tax revenue generated by beer sales. A sizeable portion of their revenue goes out of the province or the country back to their suppliers. Full credit is due to Artisan Ales. They have brought an enviable product list to Albertans, particularly from Quebec where they represent some of the top brewers (a trip to NYC a few years ago emphasized the skill of these brewers as the only Canadian beer in the bars and restaurants I visited were from Quebec).

The Canadian Constitution Foundation (CCF) is a non-profit organization claiming that “we defend the constitutional rights and freedoms of Canadians in the courts of law and public opinion.” Sounds great and aimed at the common good, yet employees and directors of this organization appear to have links to other organizations such as the Manning Centre, the Fraser Institute, and the Canadian Taxpayers Association, as well as former employment with politicians such as Stephen Harper and Jason Kenney. In other words, their conservative “cred” (small and large “C”) is strong.

On the other side of this dispute are the Alberta craft brewers. These organizations have grown five-fold in the last five years according to the ASBA. Being a brewer is labour intensive and requires employees. A number of employees — brewers, sales reps, business and marketing managers, tap room servers, and others. It also requires substantial capital investment. And they also use a lot of home-grown Alberta products, mostly in the form of barley. It would be pretty easy to argue that this small industry is spending capital and hiring employees faster than almost any other industry in the province currently. It is a good news story for the province and the government while the oil industry is in a slump.

One other factor to consider is that Alberta is already the most open market for beer in Canada. We have the least restrictive policies, the least restrictive distribution, and the greatest selection of beers from outside of our borders. Alberta brewers basically cannot sell outside of Alberta unless, as is the case with Big Rock, they establish operations in other provinces allowing access to those markets. So, while our province technically contravenes free trade policies between provinces, we are, ironically (Alanis Morissette-approved usage), the best example of free beer trade in the entire country.

Here are some questions that would be interesting to answer:

  • Would Artisan Ales have launched this action had the CCF not been involved?
  • Would the CCF have been involved without any opportunity to embarrass the provincial government?
  • How much have Artisan Ales sales dropped over the time the program has been in place? How much would they have dropped as a result of more and more beer listings in Alberta? And, what percentage of their sales have they spent on marketing over the same period?
  • How many Alberta brewers would be in operation had the rebate program not been in place?

Let’s be clear, new employment in craft brewing makes only a small dent in the jobs lost in the oil industry. But, it is a true feel-good success story as the province recovers. And everyone loves beer, don’t they?

Did the tribunal make the correct decision by law? Certainly. Did they make the right decision? I will leave that for you to decide. Personally, I buy mostly Alberta beer now. I do that because the quality and selection has evolved to be worthy of my money. Would that have happened without a rebate program? That is hard to say, but I would guess the program helped.

Jay Nelson is a beer geek, not snob, who has written for a small number of mostly forgotten publications, in a wildly erratic manner, since being named the Editorial Editor of his High School newspaper. He is a non-award winning home brewer and a non-BJCP certified judge, although he aspires to both.