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Nova Scotia Craft Brewers Battle WIth NSLC, Part II

Jan 12, 2018 | Business

 

Editor’s Note: This story is free to read for subscribers and non subscribers.

By Andrew Macdonald

Kirk Cox, head of the Craft Brewers of Nova Scotia, says the Nova Scotia Liquor Corp needs to hit New Brunswick and Prince Edward Island craft beer makers with the same taxes and fees it hits Nova Scotia micro-breweries with.

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In a year-long battle with NSLC, the province’s monopoly retailer, Cox says New Brunswick and PEI craft breweries can sell their kegs in Nova Scotia cheaper than Nova Scotia beer makers.

Imported beer from Moncton-based Pump Ale House or Gahan from Charlottetown, is 20 to 30 per cent cheaper for Nova Scotia bars than product from 20-year-old Halifax firms, such as Garrison Brewery and Propeller Brewery, that deal with larger taxes and tariffs.

Last week, I spoke to Garrison founder and owner Brian Titus, who wants the 44 craft brew companies in Nova Scotia to have the same rights under the 1992 Maritime Beer Accord that allows New Brunswick and PEI brew companies to avoid tariffs and fees when retailing in Nova Scotia. Those are fees that Garrison and Propeller and the other Nova Scotia beer companies have to pay to retail in their own home province.

“It is our biggest issue in the industry right now,” says Bridgewater-based Cox, who says the Nova Scotia industry has been lobbying the NSLC since January 2017 for a more equitable arrangement.

Over the past year, NSLC has refused to budge on calls for a more equitable playing field, yet when it releases its financial results, the corporation always highlights the strong consumer growth of Nova Scotia craft brews.

“It was about a year ago that we found out from the NSLC that kegs of beer made in Nova Scotia and sold to Nova Scotia bars and pubs are more expensive than kegs bought from brewers in New Brunswick and PEI and retailed in Nova Scotia,” says Cox.

“So you can imagine when we found out, how surprised we were.

“We always thought the regulators would see this was a mistake in government policy, and that it would be quickly fixed, but we have been (lobbying government) for a year, now,” Cox tells The Macdonald Notebook.

“We’ve been working on this for a year, both with the Nova Scotia government and the NSLC, and there has been no resolution.”

Cox says provinces tend to have protectionist policies when it comes to retailing suds made at plants in those respective provinces, as opposed to export beer sales.

“We understand that. But in Nova Scotia, the actual opposite is happening. Beer from outside the province is sold cheaper than beer made in Nova Scotia. That’s because of the way Nova Scotia beer is taxed. And we believe Nova Scotia beer should not be taxed higher than beer from New Brunswick and PEI.

“It’s a substantial problem, because a bar in Nova Scotia and Halifax can buy a keg of beer from New Brunswick for $20 to $30 less than a keg of beer from Nova Scotia.”

Cox tells The Macdonald Notebook the price difference is only because of the NSLC fees on Nova Scotia made beer, and not because beer from New Brunswick and PEI is cheaper to buy from a brewery in those two provinces.

“It’s not because our breweries are selling beer at a high price. It’s only because of the tax…that is creating a burden and unfair advantage for beer from outside of Nova Scotia,” adds Cox.

“When Nova Scotia craft brewers sell a keg to a bar or pub in this province, the NSLC takes a remittance tax on it — a cost of service fee of $2.64 per 12-pack retailed in Nova Scotia,” he says.

“When breweries in New Brunswick and PEI sell beer in Nova Scotia, they do not pay that remittance fee.”

So concerned are the 44 craft brew entities in Nova Scotia that in mid-December they pressed their case directly with Nova Scotia’s Finance Minister Karen Casey, who told craft brewers she was sympathetic and supportive, recalls Cox.

“She told us she was going to talk to the NSLC about options to resolve this matter. We’re going to follow up with her in the next few weeks to see how those discussions are going with the NSLC,” Cox tells The Macdonald Notebook.

Cox and his brew association are also hopeful that change will come sooner rather than later because Premier Stephen McNeil in a late December speech to the Craft Brewers Association of Nova Scotia acknowledged the year-long battle with the NSLC.

“We do have a stated commitment from the premier. The premier gave a speech to the industry in December. He spoke and said, ‘I hear it is your top priority’ and ‘We are going to fix the inequities of beer being sold in this province from New Brunswick and PEI, and beer made in Nova Scotia’,” Cox quoted.

Garrison owner Titus emphasizes the tax policy is dangerous to the health of the Nova Scotia craft industry because a bar owner can buy cheaper product from outside the province.

Another sticking point with Cox, is that breweries in Moncton and Charlottetown can directly sell to bars and pubs in Nova Scotia, while Nova Scotia product sold in New Brunswick and PEI has to go through the New Brunswick liquor corporation’s warehouse in Fredericton.

So a barkeep in Sackville, N.B., has to wait for those shipments from the New Brunswick liquor corp warehouse. Nova Scotia brew companies don’t enjoy the same benefits by being able to sell to New Brunswick and PEI bars directly.

“When we go to New Brunswick, we can’t deal directly with bars the way breweries can sell directly to Nova Scotia barkeeps. That is cumbersome for us and it’s another disadvantage for Nova Scotia beer makers,” says Cox, noting extra shipping costs to ship to the New Brunswick liquor corp warehouse in Fredericton.

While giant beer makers like Oland and Molson Coors have seen a reduction their beer sales, Nova Scotia craft brewers are seeing a sales uptick, and each financial quarter they sell between $2 million to $3 million worth of craft suds.

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