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Some Info on the Saskatchewan Beer Regime

sask flagSince Premier Brad Wall decided to go public with his concerns about Alberta’s recent policy change (read here and here for background), and since the premiers are going to meet today to talk about this stuff, I thought I would offer up an overview of how the Saskatchewan beer system works.

This is based on research I have done over the last couple days (combined with my longer term knowledge of what is going on), so it is likely incomplete. Anyone who has a correction or addition, feel free to comment – this is a work in progress.

Beer regulations (in any province) are frustratingly complex – which is why I am certain I don’t have the full picture yet. However, I do have enough to put Premier Wall’s comments into perspective. I will try to put it together as clearly as I can.

These are the facts as I understand them:

  1. Saskatchewan has a mostly public liquor retail system (for now). There are a handful of private stores that have the right to order product directly, but the bulk of beer sold in Saskatchewan is through the SLGA.
  2. Saskatchewan does not have an open border like Alberta’s. All applications to import beer into the province must be vetted through an SLGA buyer, who has the final decision on whether the beer will be approved for sale or not. The buyer has full discretion on whether to accept or reject the application. They are not required to inform the applicant of the reasons for their decision.
  3. Alberta breweries have over the years applied to enter the Saskatchewan market but have had their applications denied. No reason provided.
  4. If accepted, the SLGA takes control over the product. They determine which stores it goes into and have a complex set of pricing rules to which brewers must comply. Saskatchewan also has a Social Reference Price – a minimum price for retail – applied to all beer sold in the province. They also apply a “high alcohol surcharge” for beer over 9% alcohol.
  5. Saskatchewan does have a tiered mark-up system, oddly set up by packaging (draught has a lower rate than bottles/cans). The lowest rate is $.66/$.98 (keg/package) per litre. This ends at 5000HL. The middle rate is $1.313/$1.842 per litre. Above 200,000 HL the full rate of $1.463/1.993 per litre applies. This rate is applied to all beer sold in the province, regardless of origin.
  6. The SLGA currently lists 571 beer SKUs available in the province (keep in mind this includes various packaging options of the same beer). Alberta lists 4,591.

What to make of this? A few things jump out at me.

The biggest is that the flow of imports is strictly controlled by the SLGA, with no accountability or transparency. There is no guarantee of listing if you apply – in stark contrast to Alberta. Further, if we look at the respective SKU numbers, it is not an unreasonable conclusion that one of the criteria they use is to ensure not too many imports make it into the Saskatchewan market. In other words, they may try to ensure Saskatchewan is not flooded with imports which squeeze out local producers. That is, I will admit, conjecture as the SLGA does not report their decision making criteria, but it is a logical assertion.

That Alberta breweries have been denied entry speaks quite loudly to the system’s ability to create border controls over beer. Why deny an Alberta brewery access to your market unless you think they are a threat to a Saskatchewan brewery?

The Saskatchewan mark-up system is significantly harsher than Alberta’s – a complaint I have heard from Saskatchewan brewers for years. Their small brewer cut-off ends where Alberta’s former minimum production capacity began. And the amounts of the mark-up are not even comparable – Alberta is a relative steal in comparison. Alberta’s top rate is $1.25 per litre.

bradwall2That fact may or may not be relevant to the debate at hand, but it is clear that Saskatchewan breweries can sell their beer at a lower mark-up in Alberta than they can in their home province. Even after the new policy announcement, Great Western gets a better deal in the province west to them than in their home. I suspect that influences business decisions, which might explain why some sources tell me more than half of Great Western’s production is sold in Alberta (a figure not confirmed by GWB).

This post is not intended to trash the Saskatchewan system. They make policy choices like any other province, which is perfectly legitimate. The issue is that Premier Brad Wall has publicly chastized Alberta for their policies, calling them protectionist, when his own province has erected much more serious barriers than Alberta has even contemplated. At least in my opinion. I base that, mostly, on the existence of a government gatekeeper that decides who gets in and who doesn’t. A level playing field only matters if both sides get to actually be on the field.

One province is fiddling with mark-up rates. Another province is restricting supply into its market through a government gatekeeper.  Which approach is better? You decide. I am simply offering up some facts about Saskatchewan’s system.

 

24 comments to Some Info on the Saskatchewan Beer Regime

  • Thanks for getting some facts out there to allow people to have a more informed understanding of the issues behind the headlines.

  • Patricia

    I agree with what Owen says. I’m glad to have some facts about what is going on.

  • Craig

    Notley could dye her hair and some Conservatives would get all frothy about it.

    Agreed, Ontario and Manitoba ought to go under the scrutinous eye of the beer guy too.

    Craig

    • David Rudge

      Yes, Please do a comparison of the Manitoba system, as we’ve worked with the government to help lower mark-ups for ALL craft brewers.

      The MBLL, since April 1/2016, use a sliding scale markup based on volume production that our local breweries, as well as craft breweries from around the country can enjoy.

      We’ve also worked with the MBLL to continue the job of championing Canadian craft beer over needless imports of junk/dumped beer. This has resulted in unique promotions that make multiple buys per year of fresh one-offs direct from Canadian craft breweries and the ability for a small brewery to prove its worth in the market WITHOUT having to hire local reps. This in turn has resulted in many of those breweries sticking around on the shelves, full time.

      This is because raising the bar for ALL craft brewers is more important than trying to raise your own flag by simultaneously ripping others down.

      Quite frankly, I don’t envy the task Alberta (or any other province for that matter) has in trying to keep everyone happy. I can guarantee one thing though: the big guys see this infighting as beneficial to their bottom line, and while we’re busy fighting each other, you can surely bet they’re making moves by lobbying each province for the next way to fuck craft breweries.

      I will repeat the call for a national level Canadian Craft Brewers Association, which if it existed, would give craft brewers nationwide insight into the regulations each face and how they could be improved for everyone’s benefit.

      • Well said, Dave. This is not the time to set up false conflicts between craft brewers.

        Maybe Jason will start a regular policy-wonk feature where he assesses the market access issues in each province and how they affect small brewers.

        Example – Alberta

        Pros – $50.00 and a 2 page form gets you in the door.
        You pay the same markup as local producers do.

        Cons for Out of Jurisdiction beer – You don’t get tax breaks from the local government that the locals do.

        Cons for all small brewers -You compete with 4600 other beers, many of them world renowned and sought after.
        -you need a sales force to market the beer to every point of sale that will carry it
        -private retailers like liquor depot with huge buying power and distribution have a lot of bargaining power vs small brewers.

        That is off the top of my head regarding the jurisdiction I am most familiar with.

  • Mark

    I have been saying this for years, but it mostly falls on deaf ears. Despite me explaining the problems to many journalists, you are the first to finally document the challenges with the SK system.

  • Chris

    My understanding is that currently there are only 2 Alberta Breweries approved to sell their beer in Saskatchewan. Lets see what things would look like if Brad Wall did the right thing and opened up the borders. Of course he would never do that, it’s okay for him to be protectionist but not us. Typical hypocrite!

  • Cody Backman

    Thanks for stating the facts!

  • Barry

    Any subsidies paid to Saskatchewan breweries like the one in the works for Alberta brewers?

    • beerguy

      Barry. i have not had time to research that question. I have been told GWB received a grant not that long ago, but have not been able to confirm it. I can say there is no regularized program of grants like Ontario has.

  • Tallia

    Private stores and franchise stores can order any specialty beer a customer wants without going through the SLGA listing process and often carry a much wider selection of products and way more SKUs than SLGA carries in the warehouse or in their government run stores.

    • beerguy

      Tallia. That is true. But that makes up a tiny fraction of the beer sold in the province, and it is not a sustainable model for a brewery interested in selling beer in the province. It is fine for one-offs and small volume sales, but not for building a market. In contrast, Saskatchewan breweries get automatic access to every store in Alberta if they can persuade them to carry it. It is a very apples-oranges comparison.

      • Mark

        I remember working with Sierra Nevada to bring a single keg of their beer into SK. It took 6 months. The folks at the brewery couldnt believe such a terrible, inefficient system existed.

  • C

    I wonder if you could do a review of the BC system? I’ve had quick look at their markups, but you might have some insight as well. From what I can remember, the BC government (or it might have been the city) helped Central City fund their new brewery. Perhaps there are grants/funds in place for BC breweries to access for capital projects.

    Thanks for looking into SK, it gives perspective to see how it works in the other direction.

  • Eric Strikwerda

    An excellent post, Jason! Thanks for clarifying a complex issue (that has been watered down and made even more confusing by Post Media!).

  • J

    I though Saskatchewan has a Trade Agreement with Alberta to provide a free flow products? Or does this only work for friends of the government!

    Great analysis.

  • Bob

    Here is a report done by Beer Canada last November that shines a lot of light on some of these questions:

    http://www.beercanada.com/sites/default/files/151125_interprovincial_trade_barriers_report_final.pdf

    Above my pay grade to make that a link, but cut and paste away…

  • […] to Alberta’s system would be for his province, here’s a look into how Saskatchewan’s system isn’t all that open either. But hey, a deal on wine was reached between Ontario, BC and Quebec, so that’s progress, […]

  • McMorris signalled at least some appetite for retaliation should Notley s government keep its current course — opening the door to potentially re-examining markups on Alberta beer and other liquor products sold in Saskatchewan — but cautioned it is still early in the process.

    • The idea of Sask “retaliating” is the most ridiculous thing I’ve heard in a long time. How would this work? Not list Alberta SKUs at SLGA stores (which would also prove that SK Gov’t has more protectionist controls than Alberta)? How much would banning the handful of Alberta beers we let in hurt those brewers? My bet is that Sask is a rounding error on their books.

      Or would we retaliate in another industry? No matter the retaliation contemplated, Wall’s got to be doing contortions to square it with his constant assertion that protectionism is a bad thing (see: years of Oil Sands/Pipelines/etc interviews).

      FTR: I agree that protectionism is a bad thing. New West Partnership, no matter how BC/AB/SK spun it, was protectionism… just on a regional scale, rather than provincial. Every jurisdiction provides incentives for their businesses (auto sector in Ontario; aerospace in QC; oil/gas in AB & SK; etc), Alberta’s just done it in a clever way.

      Fact is, if the AB liquor system was as protectionist as any other province, this mark-up/grant to local brewers issue would be moot, because there’d be relatively little interest in entering the AB market.

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