B.C. Craft Distilleries Struggle with Markups that Keep Their Products Off Store Shelves

In British Columbia, craft liquor manufacturers are calling for changes to allow their products greater access to provincial liquor stores. This request comes amid a growing interest in locally produced alcohol, especially following U.S. tariffs that have affected the import of American-made spirits.

High Markups Create Unequal Competition

Many producers argue that the steep markups imposed by the province put them at a severe disadvantage compared to B.C. wineries. Tyler Dyck, the CEO of Okanagan Spirits Craft Distillery and president of the Craft Distillers Guild of B.C., points out that craft distilleries want access to the same benefits provided to wineries. "If it’s good for the goose, it’s good for the gander," Dyck states. He emphasizes that there shouldn't be discrimination between grape and grain products and advocates for fairness and parity.

As interest in local spirits increases due to the removal of U.S. alcohol products from provincial liquor stores, many craft distilleries find it challenging to compete because of the significant markup rates they face. For example, B.C. wineries participating in the Vintners Quality Alliance (VQA) program benefit from reduced wholesale rates, allowing them to sell products at competitive prices in liquor stores. In contrast, craft distilleries can see their profits drop significantly, receiving only $12 to $13 for a bottle priced at $45, primarily due to higher markups.

Distilleries at Risk of Closure

The economic challenges for craft distilleries have been compounded by recent developments. Alex Hamer, founder of Artisan Distillers Canada, notes that some distilleries might face closure due to increased costs and stagnant sales. He had to cancel the annual B.C. Distilled liquor festival as multiple distillery owners conveyed their financial struggles.

Hamer believes that if craft distilleries could be represented in B.C. Liquor Stores, they would gain access to a larger distribution network. Moreover, he suggests dedicating store sections to highlight local spirits, which would help in increasing their visibility.

Concerns Over Production Caps and Penalties

To qualify as a craft liquor manufacturer in B.C., producers must limit their annual output to 100,000 liters and source all their ingredients locally. Dyck insists that this production cap should be lifted, arguing that wineries are not subjected to such limits, which can stifle the growth potential of craft distilleries. "This cap holds back economic growth and job creation in B.C., which makes no sense," Dyck adds.

Responses from the B.C. Liquor Distribution Branch

The B.C. Liquor Distribution Branch has stated that all distilleries, regardless of size, are required to use their central distribution system to appear in B.C. Liquor Stores. They do offer craft distilleries the option to deliver directly to private liquor stores and bars without any markup, showing support for local manufacturers. However, they did not clarify whether the markup for distilleries is higher than that for wineries and how B.C. Liquor Stores' sales compare with private stores.

craft, liquor, B.C.