More Price Increases to Come for BC Craft Beer Drinkers?

Many in BC find themselves paying more for their beer this week than they did last week due to the BC Liberal Party's announcement of new minimum drink prices, which are now the highest in the country, but this may not be the last beer drinkers see for price hikes.

I have heard, though the grapevine, that the government is still planning on tying beer prices to alcohol content (ABV), in the name of public health and safety, because apparently us alcohol consumers just can't stop ourselves from over-consuming and we are all incapable of self-regulating.

Recommendation #18, in Parliamentary Secretary John Yap's BC Liquor Policy Review Final Report, submitted to Justice Minister and Attorney General, Suzanne Anton, states:

"LDB should consider tying minimum prices to the amount of alcohol (e.g., a beer with seven per cent alcohol would have a higher minimum price than a beer with four per cent alcohol)" 

When the new minimum price structure was announced last week, I thought maybe the Liberals were backing away from this recommendation, as I had heard from some reliable sources that Christy Clark and her crew were afraid of the public backlash related to increased liquor pricing, but that is obviously not true as the new minimum is taking its toll in those less affluent areas outside the Lower Mainland.

But if the info I received the other day is true, then those who enjoy some of the stronger beers out there on the market, which are usually craft beers, may be digging even deeper into their pockets to purchase those beers and not just in pubs and restaurants. If this recommendation is converted into policy, it will impact all beer, whether bought to be consumed in a licensed establishment or packaged product purchased to be consumed elsewhere,

It means growlers, which have escaped the new minimum drink price, will be impacted and depending on the policy and what it dictates some growler fills will increase.

Keep in mind this is 3rd-hand information and I have not had confirmed by the LCLB or LDB so this may not in fact be true. But if the government keeps caving to health advocates and anti-alcohol lobby groups, who are using scare tactics and meaningless statistics to try to get what they want, which is higher priced booze which is harder to access, I think this change to increase the price of stronger beers will become a reality.

No one knows exactly what is going to happen and when but after last Friday's happy-hour-minimum-price fiasco, I am very afraid of what what may coming down the pipe. The Liberals seem to like to pull these announcements out of a hat and the policies do not seem to be very well thought through in some cases, read booze in supermarkets.

CAMRA Vancouver has posted about beer-ABV issue and let their stance be known, which has shifted significantly sine the drink minimum announcement. Read what they have to say here.

I would recommend consumers get ahead of this. At the bottom of the CAMRA Vancouver post is all the contact information for government and the Liquor Control and Licensing Branch. If you want to let the Liberals know how pissed off you are with how they rolled out happy hour - and be clear that I am not against happy hour but with the minimum drink prices that were imposed - and want to head off any further price increases by letting them know enough is enough by e-mailing, tweeting.

If the beer consumers of BC do stand up and shout loudly, maybe we can make a difference.

One thing is clear, if we do not, we have no chance...

The Beer is out of the Garden Part II: Recommendation Misses for the BC Craft Beer Industry

Recently, citizens of BC were privileged to see the great reveal in regards to what direction the province is considering alcohol-wise as the Liberals released the BC Liquor Policy Review Final Report  outlining all 73 of John Yap's recommendations for modernizing BC liquor laws and policies.

While many of the recommendations look promising in regards to hauling our liquor policies into the 21st Century, it is important to remember that at this point they are nothing more than recommendations and the real test as to how modernizing these policy changes will be comes when the actual policies are drawn up and implemented by the bureaucrats working on behalf of our elected officials.

And have no illusions, it is not the politicians who are drafting these policies, as few of them have any idea what the issues really are and most depend heavily on the advice and direction given by their top dogs at the LDB and LCLB who the politicos trust. It is also the bureaucrats and their staff that implement, regulate and enforce the policies so without them on board, it is possible little could change.

Yap is probably the most learned politician in BC regarding to issues related to our current liquor laws and policies, after sitting down with the 66 stakeholder groups for their direct input and feedback, and the countless social media and on-line submissions from citizens of our province. Hell, why the BC Liberals do not give him the alcohol portfolio at this point is beyond me.

There is a chance that many policy changes will be very positive for our exploding craft beer industry (read here) but there are a few recommendations hidden away in the 59-page report that could have a negative impact and a few misses, recommendations that were not made, that, by their absence, failed to hit the mark in supporting BC craft beer.

The first one to come to mind is going to be very unpopular with both manufacturing and consumer sides of the craft beer community. Recommendation #18, in Yap's report, states:

"LDB should consider tying minimum prices to the amount of alcohol (e.g., a beer with seven per cent alcohol would have a higher minimum price than a beer with four per cent alcohol)" 

This is not surprising for many reasons and you can bet that the various health authorities, addictions-based stakeholders, all of whom are looking solely from the public safety and health perspective, and the big, national breweries, who churn out endless volumes of 5% swill, pushed Yap & Co. hard on this one.

The negative impacts are obvious I would think. Whether breweries are taxed at a higher rate for higher alcohol beers, or the minimum price is just increased once the beer is in the hands of the LDB, consumers will be paying more for these beers which could see a decrease in sales. It may also limit beers what brewers will be allowed to brew as brewery managers/owners may shy away from the higher alcohol beers if price increases start impacting sales numbers and the brewery's' bottom lines.

But let's be honest, the alcohol content listed on labels are, at times, closer to suggestions than actual fact as it is so this may have little impact. The enforcement of verifying the actual strength for all beers for every batch being sold is next to impossible and the LDB will have to depend on the good will of the breweries to tell them the truth.

One positive from this for fans of less boozy brews is that breweries might start looking at making more session beers than the high octane craft brews we see dominating the market at times.

I have always felt that the breweries were living on borrowed time, with the "mark-up" or tax being the same on beers up to 11.99%. I was just waiting for the government to realize that they could make a tax grab from breweries under the guise of promoting public health and safety. That time may have come and considering all the potential great changes for breweries and consumers, this may not be too hard to swallow, again depending on the actual breakdown and policy.

Another recommendation I believe many breweries will find annoying, especially those who have splashed out lots of money to create hip & happening tasting rooms, is the recommendation that would, "allow private and public retail liquor stores to sell growlers (refillable bottles) and operate refilling stations."

This could be construed as a negative because, for starters, giving liquors stores the ability to sell and refill growlers, be them private or government run, could potentially draw customers away from the above mentioned tasting rooms which could cut down on consumers, specifically beer tourists, buying other merchandise and products offered in the tasting room.

Secondly, growler fills are a unique way of connecting the consumer directly to the manufacturer and those who work directly for the breweries. By allowing liquor stores to sell and fill growlers, the beers being poured may not receive the same respect from the retail outlets and the staff pouring or selling the beers may or may not be knowledgeable about the products on the same level that brewery employees will be expected to be. Control of the product will be relinquished to a third party whose only interest in the beer could be to sell it to make a profit.

On the other side of the coin is the fact that by allowing liquor stores to sell and refill growlers, breweries will have more outlets to market and sell their products, but, if the listing process for government stores remains the same, the added opportunity will most likely be at the expense of another product which will have to be de-listed to make room for the growler sku on government liquor store shelves.

I also think that Yap missed a few opportunities to help support local breweries. The first one that comes to mind is recommending that the government appoint a special beer envoy, like the did for the wine industry last February, with the "with a mandate to work to complement existing efforts to open up domestic markets" for B.C. beers (see announcement here). I am not sure if this would benefit all craft breweries, as many are small scale and have trouble keeping up with local demand, but it would help those who are growing and looking to expand their markets and customer base outside the province.

Along those same lines, I do not know why the government is recommending to "work with other Canadian wine-producing jurisdictions to jointly develop thematic wine promotions in each jurisdiction’s liquor stores to promote Canadian wine," and not apply the same recommendation to craft beer to jointly promote Canadian craft beer as well especially considering that other craft beer jurisdictions across the country are starting to come into their own and flourish like ours has in BC.
  
I am sure there are a few more negatives among the 73 recommendations as far as the manufacturing side of things goes, but for me, those are the highlights, or maybe more appropriately, the low lights of the report. If there are more that are obvious that I have missed out on, I would love to hear from brewers, brewery owners, managers, etc to get their perspective.

Storm Back to Full Force After LCLB's Quick Action

Luckily this sign was only in place for about 48 hours as LCLB
worked quickly to do the right thing

Storm Brewing's owner, James Walton, breathed a sigh of relief this afternoon after he was given the go ahead from the Liquor Control and Licensing Branch (LCLB) to carry on with business as usual after receiving his on-site retail endorsement and passing the LCLB on-site inspection.

This brings to an end a mercifully short and very unpleasant chapter in Storm's history after Walton was contacted Monday by a LCLB liquor inspector and advised his sales of kegs and growlers to the public, which make up 50% of his business, were in contravention of his license therefore he had to cease these sales immediately or he would be completely shut down (read here for background detail).

The tone of the cease and desist command and the often slow response times of the LCLB scared Walton and had him believing his business of 19 years was in jeopardy.

The root of the problem was a memo Walton received in 2008 (see end of post) notifying him  the LCLB had taken over the responsibility for direct sales and on-site retail for breweries from the Liquor Distribution Branch (LDB) and that licensing requirements were changing.

"I should have read the memo (more closely) a long time ago," admits Walton who has never dodged the fact he is ultimately responsible for the mess he found himself in this week. "I just assumed that the liquor board (LCLB) would just carry on with what was in place."

"The heavy handedness (of how he was treated by liquor inspectors and LCLB initially) made me pissed off," says Walton who believes, like myself and many others, that this could have, and should have, been handled differently, without the unnecessary threats to his livelihood as it was an honest mistake and he was doing all he could to comply once he found out he was in contravention of his manufacturer's license.

This is a prime example as to why our BC liquor policies and the way the LCLB and LDB operate need to be reviewed and overhauled. It is obvious from this example, and trust me, there are many more, that the LCLB do not communicate very well with the LDB and where one says, go ahead and sell and make the province money, the other says stop selling, that is illegal.

It is also an example of how liquor inspectors have far too much power and can make decisions, acting as the enforcement, judge and jury with little accountability as licensees are terrified of being targeted. These decisions often have huge, far reaching impacts on people who have not necessarily been trying to contravene LCLB policies.

Walton had no idea he had been selling illegally, believing that because he had been selling kegs to the public since opening in 1994, without issue from the either the LDB or the LCLB, and had recently been giving a sku by the LDB allowing him to fill growlers and sell them directly from the brewery to the public, that he was doing everything by the book.

I want to take the high road and say that the liquor inspectors involved and the LCLB expedited the process and fixed things for Walton in less than 48 hours because it was the right thing to do but rarely have I seen the LCLB respond so quickly or have I had politicians respond to social media the way they did in this case, which leads the cynic in me to think they realized this was a public relations nightmare.

The social media storm, public pressure and the attention from some major media outlets that occurred after the story got out certainly got the attention some high-ranking politicians and, no doubt, the LCLB brass who do not want this type of controversy during the current province-wide liquor policy review which has current LCLB policies and methods of operation under a microscope, along with everything else associated with alcohol policy in BC.

Yesterday, John Yap, the Parliamentary Secretary to the Justice Minister Suzanne Anton, reached out to me on Twitter to tweet, "I (Yap) understand that LCLB is expediting the process & expects the manufacturer will have the proper endorsement within 3 days," in response to my blog post and the social media support for Storm. Yap, is in charge of the liquor policy review and reports directly to Anton, who is ultimately in charge of both the LDB and LCLB.

Walton, despite his feelings that his treatment was heavy-handed, believes the LCLB acted in good faith but does acknowledge the public support played a role in holding the LCLB accountable for how they handled things.

"(The liquor inspector) said he would expedite the application and he did," states Walton. "The pressure from the public on social media was likely a factor but I've always had a good relationship with LCLB in Victoria. The guy that sent my receipt for the payment was downright friendly."

Before putting this to rest, I just want to clear up a few things.

Firstly, Walton did not approach me or ask me to write the original post. I was notified by someone in Powell River, where I live, who thought I might know what was going on because I have Walton for 15 years. My experience is that Walton is one not to seek the media spotlight. He is also one who owns his mistakes openly, as he has here. But this is a story with two sides and it is important that we, the public, hold politicians, and the bureaucrats who work under them accountable for their actions.

I will also say that the only voices of decent I had were from a people in the craft beer industry. Some thought I was making a mountain out of a mole hill and told me so. I was told "same law for all" by more than one person and my response is, yes, this is true, but when the interpretation and enforcement of those laws are arbitrary and inconsistent, as they often are with the LCLB, no one is safe, no matter how hard they are trying to comply with policy and regulations.

I'll be sure not to come on too strong with my support, r my efforts to mobilize support, for those who feel I was making a big deal about nothing when the liquor inspector knocks on their door and tells them black is white and up is down, jeopardizing their businesses and means of making a living.

On that note, on to more important things like cracking this growler of Brassneck white IPA that made its way up tot he Upper Sunshine Coast last weekend.

Memo from 2008

Storm of Bureaucratic Red Tape Threatens Iconic East Van Brewery

If you are headed done to Storm Brewing this week to fill your growler or to order a keg for your next party, you may want to call ahead.

Storm's owner-brewer, James Walton, was told Monday by a Liquor Control and Licensing Branch liquor inspector that he is to cease selling his beer to anyone but licensees, meaning pubs and restaurants, until he applies for and is approved by the LCLB for an in-store retail license.

That's right, no growlers to take away from the brewery for home consumption, no kegs for events or parties unless those buying are licensees in the eyes of the LCLB.

That's right, no Storm growlers or kegs for you says LCLB liquor inspectors, unless you are a licensee

Walton has been selling kegs for private parties and to event organizers for 19 years without issue. The Liquor Distribution Branch (LDB) has been well aware of Storm's sales to non-licensees and has been quite happy to give him sales skus for his products and take their cut from those sales, which make up about 50% of Storm's business.

The only thing that has changed in the past 19 years is that recently Storm jumped on the growler train and started doing fills at the brewery. Walton has been quite pleased with the results, having filled about 120 growlers last week. He thought he had done things properly by getting a cash register to record growler sales and applying for and getting a sku with the LDB for his growlers before commencing sales.

Enter the other bureaucratic arm of the BC liquor industry, the LCLB who appear to not be so enthralled  as the LDB are with Storm contributing to government coffers by harmlessly selling kegs and growlers from his iconic brewery.

This is a classic case of one bureaucratic branch of the government not talking to the other even though they both deal with alcohol sales in BC. One approves the sales by granting skus, processing the paperwork and collecting the government's cut while the other says that the sales are illegal and must stop until the proper approval is given.

Apparently, in 2008, control of brewery store fronts, tasting rooms and retail stores, were shifted from the LDB to the LCLB and this is where the confusion lies in regards to what Storm can and can't sell.  

"The LDB has known and never had a problem with Storm selling to individuals," stated Walton. "Bulk or counter sales are half of my business. I just assumed that the liquor board (LCLB) would just carry on with what was in place."

But last Wednesday, Oct 2nd, two liquor inspectors showed up, without warning, at the brewery and they right away noticed empty growlers. 

This caught the liquor inspectors' attention.

Walton, believing all his ducks were in a row and that he was in compliance with the law, proceeded to show the inspectors his cash register, LDB list of skus for his products and his LCLB license. Monday, Oct 7, Walton received a call from one of the inspectors who had popped into the brewery and was told that Storm was in contravention of their LCLB license and Walton was threatened with a total suspension of his license to sell beer if he did not cease selling to non-licensees immediately.

Walton has already sent in the paperwork to apply for the proper retail license he believed he already had, but is worried about the processing time. "The wait time for some of these things is six months," states Walton who believes his business, that has taken 19 years to build is, "facing extinction" if things don't get cleared up soon.

Walton pleaded to be allowed to carry doing as he has done since opening his doors in 1994, while things are being processed, but to no avail. He is not disputing the ruling made by the liquor inspector, or the fact that he may have made a mistake in not reading the fine print of a memo sent in 2008, and is trying to cooperate, but is worried that 50% of his business is now not accessible to him for an undetermined amount of time due to some bureaucratic red tape and an honest mistake.

"I just don't like that they won't let me continue even though I was very polite and agreed to do everything they wanted," says Walton. 

This is a prime example of how the LCLB  and their inspectors seemingly make what is legal one day illegal the next. It is also a prime example of how the LCLB are punitive when they don't have to be and why licensees fear them as their livelihoods are in the hands of liquor inspectors who have way too much power. Walton was doing what he has always been allowed to do, but suddenly his business is threatened and his livelihood threatened because of an oversight. And it is just as much an oversight on the side of the government bureaucracies as it is Walton. 

Why have they let him operate as he has for the past 19 years only to now be told it is wrong? Why have the LDB given him the go ahead to sell kegs and growlers, taking their cut, without telling Walton he has the wrong license to do so?

This is the exact kind of bureaucratic nightmare that John Yap and his liquor policy review need to eliminate. 

How is potentially crippling Walton's business due to a technicality suddenly in the interest of public safety?  

Shame on the LCLB and LDB for allowing someone to build up a business by operating a certain way for 19 years only to suddenly pull the rug out from under their feet?

Let's hope the LCLB inspector does the right thing and either expedites the application process so that Walton can get back to running his business,  paying his bills and selling beer, or allows Storm to carry on selling kegs to non-licensees, while his application for the proper license is being processed.

Get this sorted before you lose a one of the iconic businesses in the city, one that has helped spark a vibrant and thriving craft beer community in Vancouver!

This is an established business whose very existence is being threatened because it is conducting business as it has been allowed to do for almost 20 years by the same government bureaucracies that are now threatening to close them down.

VEBB Post & CAMRA Vancouver Campaign Prompts NDP Promise to Scrap Growler Mark-up Increase

Yesterday the Campaign for Real Ale (CAMRA) BC - Vancouver Branch  scored what could become a major victory for BC craft beer consumers and craft breweries when NDP liquor critic Maurine Karagianis announced that if elected the NDP would scrap the increased mark-up for growlers being implemented by the BC Liquor Distribution Branch (LDB) as a result of them reclassifying the 1.8 litre, refillable jugs as "packaged" product.

Classifying growlers as draught would help
support small local breweries like Townsite
in Powell River

Growlers are, as mentioned, refillable jugs, used by consumers to buy fresh, draft beer directly from the brewery to be taken away for consumption elsewhere. Growlers date back to pre-Prohibition and have made a huge comeback in recent months with the opening of numerous small, craft breweries around the province. Growlers are unique in that consumers travel to the actual brewery to buy beer directly from the brewer and are usually cheaper than six-packs which are of comparable volume. The growlers are reusable, therefore great for the environment and cut down on a brewery's carbon footprint as the beer does not need to be transported to liquor stores, bars or restaurants to be sold.

The story of the reclassification and impending mark-up increase was first broken here on the VanEast Beer Blog and on the same day CAMRA Vancouver President Adam Chatburn launched the "Save the Growler Campaign" aimed at stopping the increase which will either result in less profits for breweries selling growlers or increased consumer prices, depending on whether the breweries decided to eat the increase or pass it on to their customers. 

The campaign quickly gained momentum as mainstream media picked up the story. CAMRA's "Save the Growler" petition has over 1900 signatures as of today, gathered in four weeks since the launch of their campaign. March 11th saw CAMRA BC President Rick Green and CAMRA Vancouver President Adam Chatburn travel to Victoria to join up with CAMRA BC VP Maureen Blaseckie, who had arranged for the three to meet with several NDP MLAs, including Karagianis, at the BC Legislature with the growler issue being front and centre of the issues they discussed. 

"This is unfair tax on small business and a sustainable industry has to go," stated Karagianis in a media release. "When it comes to liquor policy, this government (BC Liberals) just doesn't get it. Just weeks after a long-awaited announcement of a handful of liquor law changes, they are at it again, slipping through a tax that will make life harder for the growing (craft beer) industry."

To give a little back ground, breweries must pay a mark-up per litre of beer to the LDB and the amount they pay depends on their brewery's annual production levels and whether the product is sold as "packaged" product, which according to the LDB are "products that are packaged for customer consumption off-site," or "draught", which is product consumed at the point of purchase. 

Mark-ups as of April 1/13 (HL is 100 litres)

Breweries (>160,000 HL)

Packaged  - $1.63 

Draught - $1.12 

Breweries (>15,000 ≤ 160,000 HL)

Packaged - $1.08 

Draught -    $0.75 

Breweries (≤ 15,000 HL)

Packaged - $0.97 

Draught - $0.67 

For the most part, breweries that sell growlers are in the 15,000 HL or less category of production so the increase from draught to packaged is going to rise from $.67 to $.97 per litre. That may not sound much, but if you have a brewery that sells mainly growlers, which many new nano-breweries are planning to do, then this $.30 increase becomes thousands of dollars more being paid to the LDB each year, a number that can really impede small breweries operating on a tight budgets.

There has been mass confusion lately about how mark-ups regarding growlers are implemented, with some breweries being charged the lower draught rate per litre and some the higher packaged rate for growler refills creating an uneven playing field in the marketplace. Some brewery representatives were shocked when they found out they had been paying the LDB 30% more of a mark-up than some of their competitors, all at the direction of LDB officials.

It was obvious that the LDB had no handle on what was going on with breweries selling growlers. 

When I found out about this reclassification and put in a media request to the LDB for information about growler mark-up policy, I was told repeatedly for three weeks that no one from the LDB could supply me with an explanation as to how growlers were marked up, information that should be very easy to access and explain. 

When I finally did get an explanation in an email Feb 28/13, I was told, "currently, the packaged mark-up rate is applied to the first Growler fill and the draught mark-up rate is applied to refills," but that, "it was determined that Growlers, both the first fill and all refills, should be subject to the packaged beer mark-up rate because they are packaged for customer consumption off-site."  

In another email forwarded from LDB General Manager Blaine Lawson March 26/13, it was explained that, 

"Growlers were subject to the packaged beer mark-up rate for over a decade, until January 2012 when an error was made that created a distinction between the first fill and subsequent refills.  We recently reviewed the application of mark-up on Growlers and reaffirmed that the packaged rate is the correct rate that should be applied.  The packaged mark-up rate is applied to products that are packaged for customer consumption off-site. Growlers clearly fall within this category.  The Liquor Distribution Branch has a responsibility to apply mark-up equitably within product categories and the correction of this error was done for that purpose."

It seems that if the NDP are elected, all this will be a moot point as they have committed to lower the growler rate back to the draught rate in order to help support small businesses in one of BC's fastest growing industries and help promote the sale of these ecologically friendly jugs. But it is pre-election, so promises will be coming from all political sides at a fast and furious rate and we all know how many times these pre-election promises get forgotten about post-election.

If the promise is kept and the roll-back implemented, it will be the first major campaign victory for CAMRA here in BC and hopefully the beginning of CAMRA being included in any future consultations in regards to reviewing and reforming liquor laws. It may also help CAMRA get some support in regards to their other existing campaigns like FUSS and BYOCB, both of which the NDP have shown interest in  over the past year, or any future issues they see fit to tackle on behalf of the province's craft beer consumers.

CAMRA BC Launches Save the Growler Campaign

CAMRA BC has launched a new campaign entitled "Save the Growler"  aimed at trying to stop the upcoming increased LDB mark-up on growler sales.

The announcement of the new campaign came literally minutes after I posted  about the subject based on information I had received from some brewery representatives and the LDB. CAMRA BC President, Rick Green wrote in a statement Thursday, Feb 28, "CAMRA BC is strongly opposed to the LDB's misguided interpretation of growlers and has begun to campaign for the rescinding of this tax increase."

 CAMRA Vancouver President Adam Chatburn put all the call for members to sign a petition and to spread the word that consumers must be vocal in rejecting what he called a "tax grab" and wrote an increased mark-up on growlers by the LDB is, "deliberately punishing smaller BC breweries and putting the brakes on the growth of the industry, by increasing the markup on Growler fills."

Green also pointed out that the classification of growlers as packaged product, which means the breweries pay a higher rate of mark-up by the government, is a "bureaucratic attempt to fit a square peg in a round hole," and that "the LDB only seems to be able to treat beer as either draught or packaged," ignoring the unique nature of the growler and its history.

The campaign may also put into the spotlight that the LDB and Provincial Government seem to have created a great amount of confusion as to how growlers should be mark-up and sales should be reported which you can read about here.

Let us hope that this attention put on this issue will help prompt an even larger review of how the LDB and Liquor Control and Licensing Branch are structured and operate.

More on Growlers & Mark-ups: Industry Confusion a Sign of LDB Dysfunction & Need for Review/Reform

It seems that the post I wrote regarding increases to the way growlers are marked up by the Liquor Distribution Branch needs some clarification.

There is confusion, most of which falls on the industry side of things and I find that disturbing as there seems to have been no consistent policy communicated or direction given to licensees on the sale of growlers by the people who are in charge of regulating sales and collecting dollars.

If I am to believe what brewery and brewpub representatives are telling me, and I have absolutely no reason not to, then different people are being advised different things at different times by the LDB.

When I was contacted about the potential increased mark-up, I took it upon myself to ask the LDB what the current mark-up policy was on growlers and if that policy was about to change resulting in an increase in cost to breweries. It took well over two weeks to get any responses to these simple queries and the LDB were being more mysterious and secretive than the Illuminati. No one seemed to have this information, or, if they did, they were unwilling to release it.

But eventually, after making further inquiries about growlers and another issue which I will be posting on the next few days, here is what I received:

• Currently, the packaged mark-up rate is applied to the first Growler fill and the draught mark-up rate is applied to refills
• The LDB recently reviewed the application of mark-up on Growlers.
• It was determined that Growlers, both the first fill and all refills, should be subject to the packaged beer mark-up rate because they are packaged for customer consumption off-site.
• The LDB previously applied a packaged beer mark-up rate on all Growler fills and will resume applying that rate in April.
• The collection of a deposit is no longer necessary.

That is a direct communication from the LDB. Notice on the first bullet it says "currently" and goes on to outline the mark-up as I described it in my first post: first fill is packaged mark-up rate and mark-up on refills is charged at draught rate. It then says that the LDB "previously applied a packaged mark-up rate....and will resume applying that rate in April". 

Seems simple doesn't it?

I have received information from brewery representatives, either directly or forwarded, "clarifying" how the system works and, as I mentioned, all are not being told or doing the same thing and there is no universal, clear policy in place it seems in regards to growler sales and mark-ups. 

I had a few people tell me they were told, by telephone over the past month or so by the LDB, that all growler sales would be classified as refills and that refills would now be charged at the packaged rate but when that change was taking place was not made clear to some. 

I have other information that growlers have been considered "packaged" therefore the higher rate has always been applied and this has been happening for about a year or so. These breweries have been getting charged $.32 more per litre for growler refills compared to some other breweries for some reason and probably did not realize it as they were doing what they were told to do. 

What is clear to me is that this is clear as mud and maybe why the LDB did not want to answer my questions, because they had no clear answer. 

In short, I stand by what I wrote. 

What is also clear to me is that those who were not getting screwed $.32/litre on refills will soon be feeling the pinch of the LDB and will have to make the decision between eating some of their profit to not piss off customers or raise their prices. 

But again it is not even totally clear how much the mark-up will be as it seems there are new mark-up rates coming out in April, but this I have not confirmed. I was notified by one brewery owner who "stumbled" across a document, in the vendor area of the LDB website, outlining the "new" rates, which will be applied in April. No one else, including the LDB, mentioned these mark-up changes so I am not sure what is going on there. I might assume it has something to do with the change back to the PST/GST tax system from our current HST but who knows.

So, there you have it. I do not usually write posts like this defending what I write because I do my research and am careful about what information I put out there. But in this case, some were hinting I was talking out of my ass, but I can assure you, the reason I did not post three weeks ago when I was first contacted about this potential mark-up change was because I was waiting for some confirmation from the LDB. When I received it and the info I had was confirmed, I posted.

So the confusion does not lie with me, it lies firmly with the LDB who quite clearly have not had a handle on how breweries should report their growler sales or who had not clearly defined for breweries how to do so. It is the LDB that approve skus which have prices attached to them and it is the LDB who collect the $$$s so someone there should have known what was going on. How there can be some much confusion about how a product should be marked-up and how sales should be reported is beyond me. It appears the LDB have now come to realize there is disparity and are in the process of making some changes and the changes are not ones that are going to favour some breweries and some consumers.

It is a definite sign of how convoluted, complicated and dysfunctional the current system is. There is need for review and reform. I am not saying scrap the whole system, but there is a need to simplify and streamline and look at what works and what does not.

In regards to growlers, mark-ups and potential cost increases, I guess we will have to wait and see what happens...in the meantime, I am going to shift my focus on growlers from the bureaucracy side of things to what should be important - the wonderful craft beer that is inside.

LDB Review on Growlers May Increase Consumer Costs

Arguably hottest trend in the local craft beer scene is the growler and a change in the way the BC Liquor Distribution Board classifies them may soon mean the consumer pays more at the cash register to take home their favourite, draught brews.

The way the LDB marks up the cost of beer is complicated to say the least. Currently, breweries pay the LDB a per-litre mark-up which is added onto what the brewery is charging for their beer and passed on to the consumer, and the price mark-up changes depending on the level of production of the brewery and whether the beer is sold as "draught", meaning on tap, or "packaged", usually meaning bottled or in cans.

The breakdown of basic mark-ups, according to a LDB document obtained by VEBB, goes as such (1 Hectolitre = 100 litres):

Breweries (>160,000 Hectolitres)

B.C. Packaged  - $1.75/L

Other Packaged  - $1.75/L 

Draught - $1.20/L

Breweries (>15,000 ≤ 160,000 Hectolitres)

B.C. Packaged  - $1.16 /L

Other Packaged  - $1.16/L 

Draught - $0.81/L

Breweries (≤ 15,000 Hectolitres)

B.C. Packaged  - $1.04/L 

Other Packaged  - $1.04/L 

Draught - $0.72/L

For those who don't know, growlers are refillable jugs which hold 1.8 litres, 64oz in old money, of liquid and are used by breweries and brewpubs to sell draught beer directly to consumers to take home. Currently, according to the LDB, when you make your first growler purchase, the brewery pays the LDB the packaged cost per-litre markup. Every fill thereafter is considered as draught and the brewery pays the LDB the lower draught rate. Remember that on the original fill, you also buy the actual growler as well, usually $4-$5, which you then own.

Confused yet?

For most craft breweries in BC, who fall in the 15,000HL and less category, the first growler fill, is currently marked up $1.04/L (packaged), which totals $1.87 per growler ($1.04/L x 1.8). Subsequent fills, are then marked up at $.72/L (draught) totaling $1.30 ($0.72/L x 1.8), $0.57 less than the original purchase. You can figure out the differences for the larger production category by looking at the difference between the packaged and draught rates.

There is also a $.20 deposit thrown in there on the first purchase which makes no sense because who is going to return a decorated glass bottle they just purchased for $4-5 to get a $.20 deposit?

But I digress...

Under the new rules, which come into effect April/13, all growler sales will be marked up at the higher, packaged price, no matter if it is the first sale or the 100th refill. That means smaller breweries, under 15,000HL, will be charged the extra $0.57 on refills, a 30% markup increase, and a cost that will most certainly be passed on to consumers, especially by the smaller production capacity breweries who operate on a tight budget and constantly walk the razor's edge of pricing their beer low enough to be competitive in the marketplace but high enough to make a reasonable profit. With some breweries averaging close to 1,000 growler sales some months, this increase quickly begins to add up to big dollar amounts. 

For example, on a growler that is $10.00 per refill, before tax, the actual increase of the markup on the total cost is 5.7%. That $10.00 growler now costs the consumer $11.20 after the dreaded tax man takes his pound of flesh under the current HST tax system. If breweries raise their retail price to compensate for this increased cost, the final consumer tally would be $10.57 + HST equaling $11.84, a $0.64 increase per refill. Not much in the grand scheme of things, but considering we already pay way too much for craft beer in this province, any consumer increase is too much in my opinion, especially when that increased cost is going straight into the government's coffers and not to the brewery.

And just for the record, the ridiculous $.20 deposit fee will no longer be charged at any time.

The LDB's explanation to VEBB, in an email, as to why the mark-up change is happening is that, "it was determined that Growlers, both the first fill and all refills, should be subject to the packaged beer mark-up rate because they are packaged for customer consumption off-site."

It took me over two weeks and close to 10 emails, to get this information. No one at the LDB  seemed willing to "sign off" on a simple request to get clarified how growlers are currently supposed to be marked-up and if it was true the changes were happening. Only when I emailed the LDB Beer Portfolio Manager, Kim Giesbrecht directly did I get a response from the Communications Department less than 24 hours later.

I have spoken to a few representatives from breweries that do growler sales and some did not know for certain if they would increase their growler price or absorb the financial hit in order to not alienate their customers while others immediately stated the cost would have to be passed on to the paying customer. Many had not even heard about this change in the way growlers were being marked up and were surprised by the information.

I cannot see how some of the nano-breweries, who rely on growler sales as part of their business plan, would have any choice but to raise their retail prices eventually. This increased markup, which really only impacts craft breweries (how many growlers of Molson Canadian do you see out there), shows once again that the government is not being very supportive of the craft beer industry as they continue to make it difficult for these smaller breweries to operate, be profitable and grow.  

There is also a lot of confusion about this increase and how growlers are supposed to be marked up at present. While trying to research this post, I spoke to several breweries and there were many different ways they were currently being marked up from being marked up the higher packaged rate on all fills and refills, to being marked up at the lower draught rate on all fills and refills to the system I described at the top of this blog. It is my suspicion that the LDB really had no handle on what growlers really were and how they should be marked up, so it slipped under the radar until recently when growler sales spiked significantly.

The only thing that is clear is that consumers, who already pay through the nose for craft beer in BC, will be paying a little more for their growler fills in the future so that the LDB can add even more onto their 900 million-plus profit margin they now enjoy. I find it convenient that this increase is possibly being implemented just when growler sales are spiking and when the laws have just been changed to allow for more on-site sales and consumption, meaning more small breweries with tasting rooms and the capacity to fill growlers will be opening.

A coincidence....I say no.

Hidden tax grab negatively impacting the craft beer industry and consumer...I don`t think it is hard to figure out.

How A Craft Brewery Inspired a Small Town

Sometimes those of us who live in the Greater Vancouver and South Vancouver Island areas take it for granted we can get craft beer almost everywhere these days. I am more often than not pleasantly surprised to find at least one or two good beers on offer as a result of the craft beer craze. It seems that most licensees in these areas have finally clued in that craft beer drinkers have money, will spend it and will specifically seek out and support licensees that offer good beer.

But for the majority of BC beer drinkers the reality is that fizzy, almost-tasteless, macro-brewery lagers, not to be confused with small-batch, craft lagers, still rule the roost and despite the fact that domestic craft beer sales are increasing constantly in the province and now have approximately 15% of the market share, the majority of those craft beer sales are concentrated in the Greater Vancouver and Victoria areas. The boundaries of the craft beer-friendly areas are expanding slowly but most rural and isolated areas are still devoid of good beer and when I head out of town I still carry my small vial of hop oil with me just in case I find myself in a craft-beer-free zone.

A few years back, good friends of mine, Bernie and Debbie, moved to one such community where commercially produced craft beer was virtually non-existent. Powell River, due to its geography, is a difficult place for small craft breweries to distribute to therefore few, if any, had attempted to break into the market in the area known as the Upper Sunshine Coast. The big breweries were uncontested except for a few craft beer offerings in the liquor stores.

To give you a little bit of a back story, Bernie and Debbie are from from England and Bernie, an early supporter and member of CAMRA UK in the 1970's, is an avid real ale lover and has been drinking real ale for, well, lets just says decades. When Bernie first moved from England to Squamish seven years ago, he baffled the realtor when he said he wanted pubfront property, not oceanfront or lakefront property like everyone else. He made the same request and got the same baffled expression from the realtor when moving to scenic Powell River a few years ago but he and Debbie managed to find a beautiful home just down the road from a wee neighbourhood pub called the Red Lion.

Unfortunately, this pub, like all pubs in Powell River at that time, had no real ale or craft beer. To help make the beer that was on offer palatable, Bernie used to have a small whisk on a lanyard which he took to the pub and he would vigorously whisk his fizzy lager to get rid of some of the unnecessary carbonation, much to the amusement of the pub staff and other patrons. The practice, which Bernie started when he could not find craft beer options in Squamish, caught on with some as they found Bernie's small trick actually helped make the beer more drinkable.  

Last year, Bernie and other craft beer lovers who live in the Powell River area were able to put their whisks away when Townsite Brewing opened their doors and began supplying the area with a locally- brewed, craft beer alternatives to mainstream lagers. Townsite made their first keg deliveries in March, 2012 and in less than a year they have changed the local beer scene. Townsite beer is virtually everywhere. Locals like Bernie and his friends have embraced the craft beer option with open arms.

One story that is told in the Red Lion Pub that illustrates how much some of the locals have taken to craft beer is that one evening when Bernie and his friends were having a few jars the keg of Townsite beer blew. The pub owner told them they would have no more Townsite on tap until delivery the next day. Whiskless and in horror that they might have to switch to a less desirable macro-lager, Bernie's pal Don took matters into his own hands, phoned up the brewery to see if they could help out and about 10 minutes later a keg of Townsite Suncoast arrived prompting Bernie and Don to get on their hands and knees to bow down and worship the arriving keg as it was wheeled into the pub.

This immediate acceptance of craft beer in Powell River has even surprised Townsite owner Karen Skadsheim who had some idea that craft beer was well overdue on the Upper Sunshine Coast, but who admittedly may have under-estimated just how much locals desired options in regards to beer.

"I have to confess that I was surprised at how quickly people around here took to it," wrote Skadsheim in an email to VEBB.  "I knew there were craft beer lovers in Powell River, but I fully expected a learning curve for most folks and sure, lots of people didn't know what craft beer was but as soon as you explained it and gave them a taste, they were converted. We got a lot of people, often, it must be said, women, who said 'I don't like beer, but I like this'."

I saw first-hand how excited locals are about having access to good beer when I went up to Powell River a few weekends ago to visit Bernie, Debbie and attend the Craft Beer Tap Takeover at the Red Lion. The event was sold out as local craft beer lovers paid $10 a ticket to get in to sample beers from Driftwood, Howe Sound, Parallel 49, Tofino Brewing and of course Townsite. It was a great event and most of the kegs were drained that night by the enthusiastic crowd who were ready to party. There were many who had never heard of the out-of-town breweries and a few who didn't find the craft beers to their liking, prompting them to switch to mainstream lagers, but I can say that I have seen that here in craft-beer crazy Vancouver at the Railway Club where, during a CAMRA Vancouver Harvestfest,  I saw a few Railway regulars ignore the cask beers on offer and go straight to their usual bottles of mainstream swill.

There is no accounting for good taste, or lack thereof, I guess.

Even more impressive than the sold out Tap Takeover was the fact that the next night the Invitational Brewers' Dinner, a food-beer pairing event featuring some of the same breweries, sold 54 tickets, at $50 a pop, exceeding their capacity of 50 people. I know this is commonplace here in Vancouver but you have to remember that there was virtually no craft beer, if any, in Powell River only one year ago and events such as the tap takeovers and beer-food pairing dinners are definitely not the norm and how they would be accepted was an unknown to organizers.

According to the Sunshine Coast-Powell River NDP MLA Nicholas Simons, Townsite Brewing has done more than just offer great beer to locals. While we were guests chatting about craft beer and liquor laws on CJMP FM Community Radio's "Every Day is Like Sunday" radio show, Simons told me off-air that the brewery's success has been "an inspiration" to many in the Powell River business community and has shown others that a small, unique business can succeed, flourish and grow in area. He stated residents are "proud" of the brewery and how they have been able to become an integral member of the community while putting Powell River on the craft beer map.

One way Townsite have endeared themselves to locals has been their practice of donating $1 for every growler sold to different charitable organizations in the area.

"Because growlers are such a local thing, we decided to keep some of that money helping the community," wrote Skadsheim.  "I am very proud to say that in just eight months of growler sales, we've given more than $6000 to help groups like The Powell River Food Security Project, The ORCA Bus, Skookum Food Cooperative, CJMP Community Radio, The Bruce Denniston Bone Marrow Society and many others," wrote Skadsheim.  

The success of the growler sales and the amount of money Townsite has been able to donate to charities is also a bit of a shock to Skadsheim.

"As with craft beer in general, I thought growlers would be a learning curve and sure, not many knew what  they were before we opened our doors but as soon as we explained growlers, everyone said 'What a great idea!  I'll take two'," she said. Luckily for her she had read an article by Joe Wiebe which mentioned the success of the Tofino Brewery's growler sales so she doubled her order of growlers before starting sales.   

All of this community pride and acceptance of craft beer warms my heart as I am looking to locate my family up in Powell River sooner than later. Knowing that I will not have to take a supply of hop oil with me, or not have to purchase a small whisk, makes the decision to head to a small town that much more easier. 

And knowing there are a growing number of craft beer enthusiasts and characters like Bernie up there means I will not have to look far to find like-minded people and stay wired into the BC craft beer community. I think the community of Powell River is ready to expand to craft beers from other breweries as the local beer lovers are obviously showing a desire to branch out and deserve access to more of the great beers brewed here in BC. Townsite has blazed the trail and established themselves as the local favourites, who the locals will support loyally, now it is ready for others to follow. Who knows, you may even see a CAMRA Powell River branch pop up before the end of the year with yours truly in the mix if my family does indeed relocate there.

You know I won't be able to resist...