Earlier this year, the provincial government announced its commitment to expanding Ontario’s alcohol marketplace. The phased expansion began in August, when up to 450 grocery stores that were licensed to sell beer, cider, and wine, were permitted to start selling ready-to-drink beverages.
After Oct. 31, all eligible grocery and big-box stores were allowed to sell beer, cider, wine, and ready-to-drink beverages, including in large pack sizes. While the changes have made it more convenient for Ontario residents to access and purchase alcohol, some local craft breweries are expressing concern about the long-term impacts on their businesses.
Blood Brothers Brewing, a craft beer microbrewery located at 165 Geary Ave., is one of the many businesses expressing skepticism about the provincial expansion.
The brewery was founded in 2015 by Dustin and Brayden Jones and serves up to 19 beers on tap along with southern comfort dishes in a renovated hundred-year-old horse stable.
The business expressed concerns about the government’s alcohol expansion to blogTO, noting that the new policies might be primarily benefiting foreign-owned companies versus local producers.
“The state of our business prior to the expansion of alcohol was a steady growth pattern year over year. The pandemic had our online sales breaking records, but the transition from online to in-person shopping had traded places,” the brewery said in a statement to blogTO.
“We were very skeptical of the benefits for small craft brewers. It is very apparent that foreign macro brewers are the ones benefiting from this expansion. One of our largest streams of revenue (our bottle shop) is now up for competition with every corner store in our area and, even though we would gladly sell these corner stores our products, they are not interested in selling craft beer.”
The business added that the provincial expansion has negatively affected their sales.
“Most breweries we speak to are experiencing the same decline in sales. It’s a bit concerning to see our government not support small businesses,” they stated.
“We pay the highest taxes for alcohol in the country making it extremely difficult to compete with large macro breweries. Due to this, you see much less craft beer consumption in Ontario compared to other provinces in the country.”
Co-founder of Left Field Brewery Mandie Murphy has also faced the challenges the expansion poses for local breweries.
Established in Toronto in 2013, Left Field Brewery brews a wide range of baseball-inspired beers, including IPAs, sours, dark ales, lagers, and hard seltzers at its two locations in Liberty Village and Leslieville.
While Murphy acknowledged the excitement about more retail options for craft beer in Ontario, she notes that increased taxes on local breweries are still a significant hurdle.
“Like most other Ontario craft brewers, business has become extremely challenging post-pandemic. We have come through a difficult few years, but the biggest threat to the future of craft breweries in Ontario is that we pay the highest craft beer tax rates in all of Canada,” Murphy told blogTO.
“Our rates are eight times higher than Alberta breweries and have risen three times higher compared to the large foreign-owned breweries, and over the last decade, have increased at three times the rate of the beer taxes paid by the foreign-owned breweries. This has been a long-standing issue, but the recently announced retail expansion has made lower craft beer taxes critical in deciding the future of the industry,” she added.
“The chance to get on more store shelves is a great opportunity, but the reality is that doing that means investing in more people, trucks and equipment.”
Murphy also stressed that the province’s promise of providing more choice for consumers is only achievable if the government lowers taxes for small breweries.
“The new convenience/grocery stores, coupled with the regulation to ensure 20 per cent of shelf space is dedicated to locally-owned craft breweries, has the potential to provide a lot more choice for consumers and help craft breweries like ours grow. But that won’t happen unless the province takes steps to ensure that craft brewers have the chance to succeed in these new sales channels,” she said.
“One month into the expansion, one thing is very clear — that unless government lowers craft beer taxes immediately — the new, expanded retail system will fail to actually deliver on the promise of real choice for beer drinkers.”
Murphy said that while Left Field Brewery has not seen a direct impact on customers visiting their beer stores, the business still recognizes that the market is changing and is taking steps to prepare for the future.
“The struggle is faced by nearly all small, Ontario craft brewers right now and that’s why we’re working together in an attempt to advocate for a tax system that is fair for craft breweries — one that gives us the ability to grow our brewery to compete in the new marketplace,” she told blogTO.
“Lower beer taxes will create thousands of jobs at local craft breweries across the province and will mean more choice for beer drinkers at convenience and grocery store shelves.”
The business urges those who want to ensure that local craft beer remains and survives on store shelves to visit Save Local Craft Beer, a website organized by the Ontario Craft Brewers that advocates for a fair, progressive tax system for local brewers to be able to grow and to compete with international companies.
