Saskatchewan sets gradual markups for brewers

The system of provincial markups applied on beer sold in Saskatchewan is about to change, so beer from expanding local-level breweries won’t be charged the same rate as major players.

Starting Tuesday (Nov. 1), the wholesale markup on beers distributed by the Saskatchewan Liquor and Gaming Authority (SLGA) will be set at one of seven levels depending on a brewer’s global production, up from just two levels today.

“This significant reduction in markup rates will assist manufacturers as they plan for the future and allow them to make necessary investments to increase their production volumes and create jobs in a growing industry,” Jeremy Harrison, minister responsible for SLGA, said in a release Thursday.

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Today, beer from producers with 5,000 hectolitres or fewer (one HL equals 100 litres) of global production is charged a wholesale markup of 46.6 cents per litre. However, beer from producers whose output runs from 5,001 to 200,000 HL is charged a rate of $1.415 per litre.

“This markup structure has served as a disincentive for growth because small brewers that increase production beyond 5,000 HL lose access to a preferential markup rate, and instead pay the same rate as regional breweries,” the province said.

Instead, the new markups will see producers with 2,500 or fewer HL of global production charged 40 cents a litre; 2,501 to 5,000, 50 cents; 5,001 to 7,500, 60 cents; 7,501 to 10,000, 65 cents; 10,001 to 20,000, 70 cents; 20,001 to 200,000, 75 cents; and over 200,000, $1.565.

Effective Nov. 1, the province will also set up a new scale of production levies, charged to Saskatchewan craft breweries that sell directly to consumers, retailers or commercial permit holders.

The current levy, 17.15 cents per litre, is applied to brewers with up to 5,000 HL of production, which is “lower than the markup that would apply if the products were distributed by SLGA,” the province said.

The 17.15-cent per litre rate will still apply on production under 5,000 HL, but new production levies of 21 cents per litre will be paid to SLGA on production between 5,001 and 10,000 HL; 25 cents per litre on 10,001 to 15,000 HL; and 34 cents per litre on production between 15,001 and 20,000 HL. It won’t apply on production above 20,000 HL.

Saskatchewan’s new markup structure follows a move to a single markup rate in neighbouring Alberta, which since Aug. 5 has charged $1.25 per litre to all beer, regardless of the brewer’s size, location or level of production, and a new grant system of incentives for smaller Alberta-based producers.

Saskatchewan protested Alberta’s move at the time, saying it would “significantly increase the mark-up rate” in Alberta for Saskatoon-based Great Western Brewing and other, smaller Saskatchewan producers.

Saskatchewan’s new markup structure, the province said Thursday, will apply “to any brewery that qualifies based on global production, not just those based in Saskatchewan.”

Saskatchewan today has 38 licensed microbreweries and brew pubs, including 14 in Regina, 15 in Saskatoon, three in Swift Current and one each in Prince Albert, Moose Jaw, Yorkton, Estevan, Nokomis and Unity. — AGCanada.com Network

 

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