Group of U.S. distillers complains LCBO, other provinces favouring local alcohol

Ont. Premier Doug Ford says he won’t hesitate to remove more booze from LCBO shelves to ‘send a signal’ to companies shutting down Canadian manufacturing.

A group of U.S. alcohol producers claims Canadian retailers are giving unfair advantage to local spirits, including what it calls “discriminatory” markups in Nova Scotia and other provinces.

The Distilled Spirits Council of the United States has sent a 77-page submission to the office of U.S. Trade Representative Jamieson Greer outlining obstacles the American sector is facing around the globe. That includes six pages on Canada, where all but two provinces have mostly taken American alcohol off the shelves in response to U.S. President Donald Trump’s tariffs.

Among other complaints, the distillers take issue with the preferential markup the Nova Scotia Liquor Corp. offers to local spirits. They say Nova Scotian rum, whisky and other liquors are marked up between 50-80 per cent depending on how they’re bottled, while all imported products are marked up by 160 per cent.

The U.S. distillers claim the markups are inconsistent with World Trade Organization rules as well as the United States-Mexico-Canada free-trade agreement.

“It provides protection to local products and discriminates against imported spirits,” says the document, which also claims Alberta, Saskatchewan, New Brunswick, P.E.I. and Newfoundland and Labrador provide similar benefits to local companies.

The council is asking Greer, who Trump appointed in February, to urge Canada and those provinces to end the NSLC’s “discriminatory distilled spirits markup.”

NSLC communications director Allison Himmelman said the provincial government is best positioned to address trade policies.

“However, I will share that our shoppers tell us that local products matter to them. Historically, we’ve offered preferred markups on local products as part of our support of Nova Scotia’s alcohol beverage industry and to ensure a level playing field for local producers,” Himmelman wrote in an email.

Nova Scotia trade officials could not immediately be reached.

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The NSLC removed about $14 million worth of U.S. alcohol from its shelves in February when the trade war began. It started selling off its existing inventory of U.S. booze in December, pledging to give $4 million of the proceeds to local food banks. Sales of local products were up 13.4 per cent to $44.1 million in the provincial distributor’s most recent quarter.

Most provinces removed U.S. alcohol earlier this year, with Alberta and Saskatchewan putting it back on shelves over the summer. U.S. producers say their Canadian sales fell by 68 per cent in April and dropped by 85 per cent in the second quarter to less than US$10 million. They’re asking for Greer’s backing on ending the provincial sales bans.

The American distillers are also taking aim at the Liquor Control Board of Ontario, including a policy that requires producers to ship their products directly from their distillery to the board. “As a result of the policy, companies may not utilize central distribution hubs in the U.S. or elsewhere to ship their brands to the LCBO,” says the document.

The distillers note the LCBO is pursuing millions of dollars in penalties on suppliers who do not offer it the lowest price in Canada, retroactive to 2023. It says the penalties could force some U.S. producers out of Canada’s largest alcohol market. Several prominent producers, including Canadian companies, have mounted legal challenges of the policy.

In Quebec, the distillers have issues with the pricing regime of the Société des alcools du Québec, which limits the number of times per year producers can raise their prices. While the distillers acknowledge the situation has improved, they claim, “SAQ’s pricing policy may still not fully align with modern, dynamic retail environments” noting the LCBO allows more frequent changes. The council wants its members to be able to adjust prices monthly or 13 times per year.

The distillers don’t like SAQ’s 2023 ban on “overpackaging,” which they say is overly broad and creates uncertainty for its members.

In B.C. and Saskatchewan, the distillers say wholesale liquor markups are pretty transparent, but retail markups are “arbitrary and non-transparent … they are not published and can vary by … product,” contrary to trade agreements.

They also complain that a 100 per cent exemption of federal excise tax on ciders made entirely from Canadian-grown apples and honey “exacerbates the uneven playing field that exists in the Canadian market for beverage alcohol products.”

The U.S. distillers say the industry is worth more than US$200 billion and the number of American distillers has grown from less than 100 in 2005 to more than 3,100, an expansion fuelled by international trade. Exports more than doubled in the last 20 years to US$2.4 billion in 2024.

Several prominent U.S. producers have cited the trade war and Canadian boycotts for at least part of their financial difficulties. Bourbon maker Jim Beam recently announced it was closing its flagship Kentucky distillery for at least a year because of drooping sales.

“Increasing exports and opening new markets, not tariffs on imports, represent the most viable path to returning to growth and global competitiveness,” say the distillers.

“Accordingly, we urge the administration to secure a permanent return to zero-for-zero tariffs with our key trading partners and prioritize new market access opportunities in ongoing trade negotiations.”

This report by The Canadian Press was first published Dec. 25, 2025.

The Canadian Press, Devin Stevens