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The 'beer war' that was brewing between Canada and the U.S. in 1992

With a possible cross-border beer war on tap, there was little for Canadian brewers to cheer about.

'The stage is set ... for a beer war. It's just a matter of time, perhaps a matter of hours'

In April 1992, the stage was set for a potential "beer war" involving Canada and the U.S. 2:37

With a possible cross-border beer war on tap, there was little for Canadian brewers to cheer about.

"U.S.-Canada trade relations were already tense, but they may be about to get a lot more tense," Peter Mansbridge told viewers at the start of The National on April 23, 1992.

"The stage is set tonight for a beer war. It's just a matter of time, perhaps a matter of hours."

Washington was threatening to impose duties on Canadian beer as retaliation for what it saw as a lack of fair access to the Canadian market for U.S. brewers.

It was left to the CBC's Terry Milewski to explain the trouble that had been brewing between the beer makers down south and their Canadian competitors — as well as their respective governments.

A $200M target

"New American duties could wipe out the profits on $200-million worth of Canadian beer that is exported each year to the U.S.," said Milewski, citing a figure that would be more than $320 million today, with inflation factored in.

It was up to the CBC's Terry Milewski to explain the trouble that had been brewing. (The National/CBC Archives)

Milewski said a U.S. trade representative was expected to announce that talks had failed and tariffs of up to $4 per case of Canadian beer were coming.

Ed McNally of Calgary's Big Rock Brewery said such tariffs would drain away any profits on the beer his company was sending south.

"We'll probably have to sell the beer that we've got contracted at a loss," McNally told The National.

On the other side of the border, the Detroit-based Stroh's Beer supported the tariff action.

"This could well come into a beer war," said Bill Outman, a lawyer who was representing Stroh's in its push to expand its sales in Canada.

As Milewski explained to viewers, Stroh's and other U.S. brewers felt Canada was not working quickly enough to eliminate various provincial barriers to the sale of foreign beer.

"Ottawa has agreed to phase out those barriers, but too slowly for Washington's liking,' said Milewski. "A final offer to do it over two years was rejected by U.S. brewers who claim that Canada won't budge."

A halt to hostilities

Changes to the cross-border beer trade could mean job cuts in the Canadian beer industry. 2:35

Fortunately, that tough talk about tariffs didn't turn out to come true.

"The great beer war is over for now, but that doesn't mean the pressure for change in the industry is about to let up," Mansbridge updated viewers on The National, four days after the prior report on the pending beer war.

The U.S. elected not to proceed with the tariffs after an agreement was reached for Canada to open up its domestic market.

"What the agreement does is eliminate the differences so that American beer will enjoy the same Canadian taxes and provincial pricing policies as Canadian brew," the CBC's Patricia Chew reported on The National on April 27, 1992.

Risks and opportunities

Industry insiders believed that would spur Canadian operators to make changes to be more competitive. Some feared that could mean job losses for some.

"It's not going to be very nice," said Gary Foran, a representative of a brewery workers' union. "It could be up to about 25 per cent of the workforce across Canada."

Peter Clark, an adviser to the Brewers Association of Canada, said Canadian brewers had a lot of opportunity in the American market. (The National/CBC Archives)

But some saw opportunity for the Canadian brewers in selling suds south of the border, even with an existing trade surplus working in their favour.

"Canada already sells six times more beer to the U.S. than Americans sell in Canada," reported Chew.

Peter Clark, an adviser to the Brewers Association of Canada, said the beer companies had more to gain by being in the United States than not.

"One point of market share in the United States is equal to about 10 points of the Canadian market, so, we think anything we might lose here, we'll pick up there," Clark told The National.

There was also the possibility of what industry analyst Michael Palmer described as "slightly cheaper beer, probably somewhere down the road."