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Who Says You Can’t Win A Battle With Monopolistic NSLC?

Jan 26, 2018 | Business

By Andrew Macdonald

Who says you can’t win a battle with a monopolistic entity like the Nova Scotia Liquor Corporation?

As regular readers of The Macdonald Notebook know from my recent reporting, the Craft Brewery Association of Nova Scotia has been lobbying the NSLC for a change in beer policy to no avail for a whole year.

An arcane policy of the NSLC actually favours micro breweries from New Brunswick and Prince Edward Island, when it comes to those provinces retailing kegs in Nova Scotia.

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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 Halifax firms, such as 20-year-old Garrison Brewery and Propeller Brewery, that deal with larger taxes and tariffs.

For a whole year, Kirk Cox, head of the Craft Brewers of Nova Scotia, has said that the NSLC needs to hit New Brunswick and Prince Edward Island craft beer makers with the same taxes and fees faced by Nova Scotia micro-breweries.

I recently 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.

Premier Stephen McNeil and Finance Minister Karen Casey, who oversees the NSLC, vow a resolution will be soon at hand to make the playing field level for the Nova Scotia craft brewers.

The premier acknowledged the concern of the Nova Scotia breweries in December, when he spoke to craft brewery owners in this province.

Casey also met with breweries, such as Garrison.

I spoke on Friday with Casey, who called the NSLC policy an inequity for Nova Scotia breweries, including a popular micro brewery in her riding, in Tatamagouche.

A keg from New Brunswick and PEI can be sold $20 to $30 cheaper than a keg from Nova Scotia, at bars pubs and restaurants in this province because only Nova Scotia brewers must pay taxes and tariffs to the NSLC in the form of remittance fees, which are not charged on New Brunswick and PEI beer makers who also sell in Nova Scotia.

“I am well aware of there concerns. I met with them and heard those concerns. What we have done from the finance department, we reached out to the NSLC to see if we can get a resolution to this,” says Casey.

“It’s certainly my opinion and the opinion of our premier (is that the NSLC policy) is unfair to our brewers here in Nova Scotia,” Casey tells The Macdonald Notebook.

“We recognize it (as a problem) and we’re well on the way to looking for a resolution,” says the deputy premier.

An option is that brewing outfits from New Brunswick and PEI who sell product in Nova Scotia would have to pay the same remittance taxes and tariffs that Nova Scotia brewers have to pay the NSLC, said Casey.

“That would be one option. At the end of the day we need to make sure our Nova Scotia brewers are protected and that someone does not have an unfair advantage over them.”

Asked why the matter has been a year in the making, Casey says she got on top of the matter after she became Finance minister last spring, and can’t speak to the issue before that time period.

“I can’t speak to what happened before I took over the (finance) portfolio, but I know that since I came in and had an audience with them — but I can say it is an inequity. It is a priority and that we’re working towards a 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.

Casey says the McNeil government “values the craft brew industry very much. And we want to do what we can to support them and keep them on a level playing field, not only in Nova Scotia but across the border.”

She says her deputy minister has spoken to NSLC CEO Bret Mitchell about the issue.

“We value that (craft) industry very much. It is a growing industry, and its popular with consumers who are attracted to (craft beer) and we want to make sure it not only survives but thrives in our province,” she says.

There are 44 craft breweries in Nova Scotia, the majority of them located in rural Nova Scotia, where they employ folk, and act as a beacon to tourism.

“From a personal perspective I have a Tatamagouche brewery in my constituency. And, it has taken off like wildfire, and it has become part of a summer destination. You’re right, the industry employs a lot of people, and it adds to our tourism industry and gives consumers an option,” says Casey.

“I agree with you that the number of contract breweries in the province is probably a best kept secret that people do not realize.”

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