B.C. microbreweries can raise a glass when their taxes fall this summer.
With every litre of suds sold in the province, most microbreweries pay 55 cents to the province’s Liquor Distribution Branch, but that levy will drop to 40 cents as of July 3.
The 27% savings could add up to thousands of dollars a month for some brewers, according to Deep Cove Brewers and Distillers founder Shae de Jaray.
“It’s going to give the smaller guys a little more breathing room,” he said.
Most mid-size brewers ferment about 3,500 hectolitres (350,000 litres) of beer annually, according to de Jaray.
“You multiply that by a savings of 15 cents a litre, you’re going to come up with a pretty nice looking number,” he said.
While calling the move, “a plus for all of us,” Black Kettle president Bryan Lockhart said the extra money – which he guessed might add up to $25,000 a year – wouldn’t allow his brewery to make any new hires or drop prices.
“You have to keep your margin,” he explained from his Copping Street location. “There’s a constant increase in (the price of) raw goods.”
Black Kettle is one of 64 breweries to open its taps in B.C. since 2010. A reason for the rising tide of foam in the beginning may have been near parity with U.S. currency, Lockhart said.
But now, “even with that 27% helper, it doesn’t bring us back to where we were (before the Canadian dollar dropped),” he said. “We get killed on the dollar.”
Just about all the company’s raw goods, from hops to bottles, are bought in U.S. dollars, Lockhart said.
The change in provincial mark-ups could mean B.C.’s purveyors of craft pints have a better chance of capitalizing on rising demand, according to Joe Wiebe, the author of Craft Beer Revolution: The Insider’s Guide to B.C. Breweries.
The mark-up drop also repairs the damage breweries suffered when the province overhauled the wholesale pricing system in 2015, according to Wiebe.
“Despite the success of the industry and high growth, the profit margin … has been very, very slim,” he said.
While some onlookers expressed concerns big beer corporations might scoop up brew boutiques, Wiebe said he didn’t expect many young brewmeisters to cash out.
“This is the pinnacle of what they want to do,” he said.
The close ties of craft breweries to their communities also make them a poor fit for international corporations, according to Wiebe, referring to Bridge Brewing, which boasts offerings like Ambleside Pale Ale and Hopilano IPA.
The author noted that small brewers who have struggled to get their bottles into government shops have benefited from the burgeoning mix of public and private liquor stores in B.C.
The 27% mark-up reduction applies to breweries bottling less than 15,000 hectolitres (1.5 million litres) of booze annually. That includes 99 out of B.C.’s 118 small breweries, according to government spokesman Marc Wang.
Bigger craft breweries are in for a bigger break, with their mark-up dropping from $1.02 per litre to 46 cents, according to Wang.
All told, the reduction in taxes should create another $10 million for the craft beer industry, according to a release from the province.
Asked about a short-term loss of tax revenue, Wang said benefits to the industry mean everything should “come out in the wash.”
Craft breweries have gained ground on big companies in recent years.
While still B.C.’s biggest brewery, Molson Coors Canada saw business drop 8% from 2013 to 2014, down to $260 million in sales. Labatt breweries dipped a little more than 9% over the same span, according to a report from Business in Vancouver.
