The March issue of Alberta Venture magazine features an article from me about the proliferation of discount beer in Alberta. Most of you will remember the small kerfuffle last fall around revelations that Minhas Brewing was receiving Alberta’s “transitional” mark up rate. At the time, in this post here, I argued that the problem was not tax dollars subsidizing jobs in Wisconsin (where Minhas brews), but the overall incoherence of Alberta’s liquor tax policy.
That position caught the attention of Alberta Venture’s editors, and they asked me to write a piece trying to explain the whole “discount beer” situation. I gave it an honest go, and you can read the results by picking up a copy of the magazine, or read it online here. As a bonus, you can see the killer photo of Jim at Sherbrooke Liquor where it seems like the sun shines out of his, um, derriere!
In a nutshell, the piece argues that a matrix of factors has led to Alberta being more open to the production of cheap beer than other provinces. Yes, every province has a discount segment. But Alberta’s has experienced a particular boom in recent years, with Minhas and their various products heading the pack. Factors include Alberta’s generally high beer prices , the privatized network of retail stores, and the indiscriminate nature of the mark-up policy.
But for me the most interesting element of the story is the juxtaposition of Minhas’ approach to beer and that of local craft brewers. I interviewed Ravinder Minhas for the article, which was a fascinating experience. Minhas is very clear that he sees himself as a businessperson first. In fact he admonishes Alberta’s smaller brewers for not wanting to be successful. Fair enough. But it speaks volumes about why Minhas Brewing does what it does, while Alley Kat, Amber’s, Wild Rose and other do what they do.
The more I learn about Alberta’s system, the more it becomes clear to me that the Alberta government has no clue what it wants. I used to think it was an ideological aversion to “meddling in the market” in any way, but that is not the case. They are happy to meddle, they just do it with a stunning lack of purpose or coherence. There are good reasons to apply a lower mark-up rate to any brewer. But there are also good reasons to NOT give a lower mark-up to products not made in the province. We need a fuller debate about it.
By the way, the piece has been online for a couple of weeks now. I intentionally waited to post about it until I got my hands on a hard copy of the magazine. The reason is the online version cut one of the best parts of the story (in my opinion – clearly not shared by the editor), and I wanted to see if it made the cut in the print version. It didn’t. So allow me to offer it up here.
In my interview with Drummond Brewing, they indicated that they could easily set up shop in Montana, dramatically lower their production costs (due to lower labour, lower taxes and excise, etc.) and then ship it up to Alberta and get the same mark-up rate as they do now. To their credit, they say they don’t want to do that because they want to make beer in Alberta, despite the economic disadvantage. I found that revealing. Not all of that is due to provincial government policy – there is a whole host of reasons for lower costs in the States – but I find it illuminating to think about how Alberta government policy contributes to the problem.
Maybe some of you believe there is no problem here, and that I am whinging over nothing. Possibly. But my spidey-senses are tingling. Government policy, even the ones with the best of intentions, have unforeseen consequences. Facilitating cheap beer at the expense of local craft beer might very well be one of them.
As a final note, Alberta Venture also did up a podcast where I sample three of Alberta’s more well-known discount beer. You can listen to it here. And don’t ever say that I don’t sacrifice for my job!