aglc-logoThis morning the Alberta Gaming and Liquor Commission (AGLC) released the long-awaited results of its comprehensive policy review. The review, first launched last fall, sparked much debate among liquor stakeholders, in particular around the issue of liquor mark-up rates (for background on the review read here and here). The report contains 39 recommendations covering a wide scope of liquor policy in Alberta. For the wonkish among you, the report can be found on the AGLC website. For the rest of you with better things to do with your time, I will distill some of the highlights.

A large chunk of the recommendations focus on wine and spirits, and a good number tackle matters more significant for industry insiders, such as information flows between stakeholders, a regular policy review schedule, flexible form submission and increased information support for start-ups. However, the report does touch upon a few matters relevant to beer consumers in the province. These include:

  • Elimination of the minimum production capacity requirement for breweries.
  • Elimination of the separate “Brew Pub” license, which would remove restrictions on sales to other licensees.
  • Small breweries (and cottage wineries) should be allowed to own restaurants/bars. Manufacturers under 25,000 hL would be allowed to own restaurants/pubs. The restaurant must be sold if the manufacturer exceeds 100,000 hL
  • Permitting a brewery’s retail store (off-sales) to be in any location of their choosing (i.e., off-site off-sales locations).
  • Elimination of separate brewery, winery, distiller licenses, thereby allowing production of any alcohol permitted by federal government at any manufacturer.
  • Continued use of a single monopoly warehouse operator.
  • No change to inducement policy or enforcement practices.
  • Explore the possibility of allowing beer to be sold at Farmer’s Markets.

Some of the recommendations, including the elimination of minimum capacities and the removal of product-specific licenses have already been implemented. Others require regulatory changes and have been forwarded to the government for consideration.

More Taps May Be On Tap

You will note there is not a peep about liquor mark-ups. That is because the report is silent on the matter. One recommendation, dealing with wine and spirit mark-ups, suggests they have delayed a decision on it. Recommendation 11 says AGLC “will be providing feedback received from manufacturers to the government as part of a comprehensive package”. In other words, “we aren’t touching this hot potato and are passing it up to politicians to handle”.

So what are we to make of the report? I have not yet spoken with anybody in the industry, and so this is entirely my own first reaction. There are definitely some positive steps in the report, the biggest being the elimination of minimum production limits. This opens up the possibility of nano-breweries and significantly lowers start-up costs for new breweries. Allowing breweries to retail their beer at an off-site location is a small but useful step. Many breweries are tucked into light industrial parks and are not particularly customer-friendly. Allowing them to potentially set up their off-sales store at a more convenient location seems like a good idea.

My initial reaction to the possibility of allowing small breweries to own restaurants/pubs is positive, as is the removal of sales restrictions for brew pubs. I imagine these two recommendations are a trade-off; allowing brewpubs to sell at other locations needs to be balanced by allowing a brewery to run its own pub. That they have a strict size limit is what makes this palatable – I certainly don’t want a chain of Labatt or Molson Pubs around the province (since de facto we already have that). However, I kind of like the prospect of an Alley Kat Pub or an expanded Wild Rose Tap Room or a Hog’s Head Tavern. I think it could be an excellent vehicle to increase breweries’ profile.

The increased flexibility for manufacturers also seems like a good thing. Under previous rules, a brewery couldn’t produce mead, for example. Now they can if they wish. It also would eliminate the need for a separate license if a brewery wanted to start distilling as well. At least that is my reading of the recommendation – I could be neglecting Federal Excise rules.

However, on balance, the report feels like a big case of missed opportunities. It seems like it side-stepped most of the bigger issues facing beer in the province. There is no resolution to the heated mark-up debate and no change to the dysfunctional inducements policy and its lacklustre enforcement. The review gives Connect Logistics a free pass. And the report does nothing to address the competitive disadvantage Alberta’s open borders create for local producers, aside from a willowy promise to “advocate on behalf of the liquor industry in Alberta when consulted on proposed liquor policy changes in other jurisdictions”.

To be fair, many of the issues raised during the review are difficult for the AGLC to address, and the report does seem to want to improve relations between the AGLC and industry stakeholders. It just feels that after extensive consultations and more than a year of deliberations, the recommendations could have been more sweeping. What was a “comprehensive” review turned into a report of details and baby steps.

Still, the steps they are making are mostly positive in my eyes. I guess I was just hoping for a few bigger strides. But, overall, beer consumers are better off today than they were yesterday.