BC craft beer makers welcome federal tax break

Craft brewers, wineries, and distilleries got some good news yesterday when the federal government announced it will extend relief on alcohol excise taxes, something the industry sees as a way to control some of its costs.

“For many of our members, this isn't just a policy change; it's the difference between struggling and stabilizing, between holding on and being able to invest in the future,” Thom Riley, chair of the BC Craft Brewers Guild, said at a gathering at Phillips Brewing and Malting Co. on Government Street.

The feds have extended the cap on yearly increases in alcohol excise taxes, meaning companies that produce beer, wine, and spirits will pay 2% instead of a higher rate in line with inflation.

Additionally, the excise duty rate on the first 15,000 hectolitres of beer brewed in Canada will remain cut by half. A hectolitre is equal to 100 litres and is how the beer industry measures volume.

The two measures are expected to provide more than $30 million in total relief through to 2028, the federal government said.

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Victoria MP Will Greaves, who was on hand at Phillips to make the announcement, said reducing the excise duty rate by 50% on the first 15,000 hectolitres will provide the typical craft brewery with up to $90,000 in tax relief.

“We know that small brewers are particularly exposed to trade-related swings and commodity prices, and they don't have the economies of scale that large industrial brewers enjoy that can allow them to weather some of the sharply increasing costs of basic commodities, including agricultural products,” he said.

Phillips Brewing president Jim Lister called that $90,000 "meaningful."

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“That's the difference in potentially hiring a certain role you might need to hire or not, to be able to buy equipment that’s much needed or not.”

Lister said, unlike in other sectors, the alcohol beverage industry doesn’t get the opportunity to pass along cost increases to the end consumer—and that can eat into profit margins.

“And then you have to start making decisions on what to cut, what not to invest in, and what to no longer do. And that's a problem.”

Riley said the moves, which came into effect April 1, provide meaningful and immediate relief to small independent brewers.

“The reality that a majority of small breweries are not yet profitable underscores just how important measures like these are,” Riley said.

Challenging times

Riley would know firsthand. He was the general manager of Vancouver Island Brewing, which closed its beer operations in August 2024 due to a rent increase and escalating production and operating expenses.

Riley estimates that between 20 and 30 craft brewers in BC have shuttered over the last three or four years. In January, Lighthouse Brewing wound down its Esquimalt brewery and tasting room and sold its core brands to Phillips.

According to the Canadian Craft Brewers Association, there are roughly 1,200 small and independent craft breweries, brewpubs, and suppliers across Canada. They employ up to 30,000 people and help to contribute $1.7 billion to the country’s gross domestic product, the federal government said in a release.

BC's craft beer industry has faced some challenges since the pandemic, following years of rapid expansion. Changing consumer habits, inflation, taxes, surprise tariffs, and the surging costs for ingredients and packaging—the prices of malt, aluminum, and cardboard have all climbed sharply—are all cited as significant challenges.

“This [announcement] is about taxes and finances, but it's really about trying to offer stability in deeply unstable and uncertain times,” said Greaves.

Lister agreed that taxes, especially outdated ones, are a major industry "impediment" to success.

“The government has acknowledged, ‘Hey, we don't maybe quite have it right, and we're going to do this while we investigate what we might do for a next-decade-or-two solution.’ So that's really what the help here is.”