B.C.'s craft distillers say industry set to boom, but red tape getting in the way
'You can’t grow past a Ma and Pa operation,' says head of Craft Distillers Guild of B.C.
Dave Brimacombe is living his dream of distilling and selling his own made-in-B.C. gin, thanks to changes to provincial liquor laws brought in by the current government in 2013.
But he says, that same government is unnecessarily dampening the potential explosion of the craft distilling industry, which he feels is poised to ignite faster than a flaming cocktail.
A few years ago, Brimacombe was looking ahead to the end of his career in the military and was making plans to "live out his golden years" by making booze.
Then in 2013, new rules were brought in that exempted craft distilleries from the more than 160 per cent markup the province applies to all other B.C. spirit makers — as long as they produce less than 50,000 litres of alcohol per year and ferment their own base alcohol.
That incentive was enough to convince Brimacombe to jump in with both feet.
Realizing that the change meant he could make full profit off a product if he fermented his own alcohol, he left the military and started a distillery, crafting clear spirits from B.C. honey.
"There is huge opportunities in this industry," said Brimacombe, 35, who founded Wayward Distillation House with his wife Andrea on Vancouver Island.
Need for higher caps
Brimacombe lauds the B.C. government for incubating the niche spirits industry.
But despite his enthusiasm, he feels craft distillers now need more leeway in order to grow the industry and the interest in their products.
He said even amazing restaurants still aren't serving local spirits, "because the customers haven't started demanding it yet. It's going to come. There's going to be that shift."
Brimacombe points to the booming craft beer industry: craft beer sales now make up 40 per cent of the $1-billion industry in B.C.
And craft breweries can produce up to 30 million litres before they must add the markup, compared to the 50,000-litre limit on distillers.
Even when you compare the two by pure alcohol content, craft breweries still come out way ahead.
That markup is added on top of federal excise tax.
B.C. Premier Christy Clark has said the province is reviewing the young industry, promising to examine product markups and consider the desire of distilleries to be "treated more like wineries."
A spokesperson for the Ministry of Small Business and Red Tape Reduction, which is responsible for the Liquor Distribution Branch, said since 2013, the volume of craft spirits produced in B.C. has grown by nearly 400 per cent, which he added is "clear evidence the B.C. model is working."
Still, small distillers remain frustrated.
"Right now we are in this battle," said Tyler Dyck, the CEO of Okanagan Spirits and the head of the Craft Distillers Guild of B.C.
He called a recent offer by the province to up the cap by 25,000-litres mere "crumbs."
"It was very disheartening," said Dyck.
Dyck says he started B.C.'s first distillery, cashing in on excess Okanagan fruits.
But recently he's had to pull back and cancel orders to keep his operation under the 50,000-litre limit.
"What is does, is it says you can't grow past a Ma and Pa operation," he said, adding the stifling of the industry is ridiculous.
"Look at how much people have benefited from the wine industry being able to grow."
Industry rift: craft vs commercial
The other complication comes via the split between "craft" and "commercial."
In B.C., commercial distilleries — those that produce more than the 50,000-litre limit or that do not ferment their own alcohol — must add the full 160 per cent markup to their products, and some believe that puts them at a disadvantage.
The 19 commercial distilleries in the province hope B.C. moves toward a model closer to the one adopted by Nova Scotia, where the industry is booming.
Two years ago, markups there were reduced from 160 per cent to between 60 and 80 per cent, with an extra 10 per cent discount if distillers use Nova Scotia agricultural products.
Charles Tremewen of Long Table Distillery says B.C.'s markup policies have driven a wedge into the industry.
"The current system gives one group of micro-distillers 100 per cent markup free, yet forces the rest of the province's micro-distillers, who are all of similar size and bound by similar production limits, to pay the same markups as major multinational producers — 161%," said Tremewen.
Tremewen is also the president of the confusingly named B.C. Craft Distilling Association — despite the fact it represents the distillers that are technically commercial.
His group has worked hard to lobby Coralee Oakes, the minister responsible, for change.
"We are pending some positive outcomes in the next short while on some very specific changes we have proposed that are aimed at levelling the playing field," said Tremewen.
But Brimacombe — whose business falls under the craft category — doesn't agree the current system is unfair.
"They are commercial and they are misrepresenting themselves as craft," said Brimacombe
"You hear a lot of poo-pooing from the commercial distillers that the government is bad, but they could go craft at any time. If you want to be markup-exempt then ferment your own [product]," he said.
BC now has:
- 125 craft breweries, with 20 new ones pending.
- 320 wineries.
- 35 craft distilleries.
- 19 commercial distilleries.