The summer season is the busiest time of the year for Flying Boats Brewing owner Marc Melanson and now he has another thing to worry about.
NB Liquor is making changes to the mark-up structure for local craft alcohol producers in the province, meaning a can of Melanson's beer will jump in price from $4.85 to $5.19.
The planned implementation for producers is meant to help the industry, but it’s leaving some frustrated.
“This increase at NB Liquor is going to only stay with NB Liquor. So, we don't keep any of that price increase to help our margins. So, it's solely a price increase, a tax increase let's call it,” said Melanson. "We're going to get a lot of customers complaining about the price increase that we didn't implement but was implemented by the monopoly NB Liquor.”
Melanson said it’s hard enough to be a microbrewer without having to deal with the new mark-up structure.
“It's a very tough battle because with all the supply chain issues we've had and all the price increases throughout the components we use in our beer, in our products, now we're being hit with a very substantial tax mark-up of which we keep nothing of. It's just solely going to increase their profit margins,” said Melanson.
Doug Williams, vice president of Craft Alcohol NB, said beer, cider, wine, mead and spirits producers received a letter from the crown corporation a little over two weeks ago saying the mark-ups were changing from a volume model to a percentage one.
He said that change means the increase would be 20 per cent in some cases for some producers.
“It's going to have a huge impact on the industry. This is the single biggest change in the markup structure at ANBL in 25 years, in the 25 years craft products have really been around,” said Williams.
In some cases, the cost of a 473-millilitre can of beer will be pushed over the $5 price-point.
"For a lot of producers, there's a fear that once it goes over $5 [a can] that they're going to lose a lot of market share because it's sort of a psychological price-point for a lot of consumers,” said Williams.
Craft alcohol producers have told Williams the change has shocked and angered them and he fears it could close some businesses.
NB Liquor spokesperson Emilie Dow said as the local beverage industry matures, the goal of the new markup strategy is to ensure the long-term sustainability of the industry.
“While we understand their concern, local producers are given the choice whether they maintain their current case costs, and pass the adjustment on to the customer, or hold the retail prices and adjust their case costs,” said Dow in an email to CTV News.
Dow said NB Liquor takes a significantly lower margin for craft alcohol products made in the province, which means they pay local producers more for their products than they do for the much larger national ones.
“We ensure these products are in our stores and make them available for resale to agents, licensees and grocery because they are products our customers want and because we believe in supporting our local suppliers,” said Dow.
Jeff Grandy, owner and president of Holy Whale Brewing, doesn't even have his products on the shelves at NB Liquor, but feels compelled to speak out against the change on behalf of the industry.
He sees it as a targeted or hidden tax on anyone who consumes craft alcohol.
“This tax will definitely eliminate some of us. That's 100 per cent for sure,” said Grandy.
Grandy believes everyone has a certain price of what they're going to spend on a tall boy of beer.
“At a certain point, we can't raise the prices to $6 a beer, $7 a beer,” said Grandy. “Some of us are just going to die. The consumers just can't accept it and won't be able to pay that.”
The planned implementation date is July 17.
