Canada: Breweries want reduced government charges

The Beverage Alcohol System Review suggests reducing the rate of government charges faced by smaller producers of beer, wine and spirits on the products they ship, Canadian Press posted on July 19.

However, those suggestions were tied to a system that called for a "restructured" alcohol distribution system that included the Liquor Control Board of Ontario's sale - a recommendation Finance Minister Greg Sorbara has outright rejected.

Many Ontario beverage manufacturers didn't want the recommended "auction" process that would open up LCBO and Beer Store competition to grocery stores and other players. They say the current distribution is cost-efficient and supportive of Ontario beverage makers.

But they hope the Liberals review details of the report that were overshadowed by the call for the LCBO's privatization. "Premier McGuinty came out in the beginning of this (review) process and said one of the key terms of reference will be promoting Ontario products and the Ontario wine industry," said Norm Beal, president of Peninsula Ridge Estates Winery in Beamsville, Ont., and chairman of the Wine Council of Ontario.

"Now that the report's been shelved, we don't know . . . where he wants to go with it. So we're a bit concerned."

Microbrewers already pay reduced fees on beer shipped from their manufacturing plants if they produce less than 150,000 hectolitres annually. The report suggested charges could be dropped even further for smaller players and extended to wineries and distilleries.

Smaller breweries also want reduced government charges. Beermakers big and small pay "cost of service" fees that larger companies can easily afford but "are a little outrageous for some smaller players," said Jim Brickman, founder and president of Waterloo-based Brick Brewing Co.

Sorbara was not available to comment Tuesday, but spokesman Sean Hamilton said the minister plans to review all aspects of the report that might help the industry. Conservative Leader John Tory said the government should "take a serious look" at recommendations to help small breweries and wineries.

Tory suggested establishing "test markets" in at least three Ontario cites where LCBO locations could be auctioned off as called for in the review. "There's a way in which you can introduce that competition for a five-year period, to see what the effect is," he said. "If it's negative than we don't pursue it any further, if it's positive, we can decide what to do after that."

Beal said his wine council members don't want the LCBO privatized. He said the LCBO has committed to helping grow the market share of Ontario wineries to 50 per cent over the next five years, from about 43 per cent in 2003.

Brickman said retail competition envisioned by the review wouldn't give Brick any more shelf space versus Molson or Labatt than a tiny soft-drink maker gets next to Pepsi and Coke in a grocer's aisle. And he said beer prices might increase under such a system that would involve a "middle man" distributing product to retailers. Under the current system, small brewers can deliver directly to LCBO locations.

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