Distillers argue NB Liquor's markups are like 'paying the mob'

New Brunswick distillery owners say the amount NB Liquor charges for selling their vodka on their own property is killing their businesses.

Nova Scotia mark ups are much lower, allowing local distillers to make higher profits

Devon Strang of Blue Roof Vodka says his business may not survive on the contract he signed with NB Liquor because of very high mark ups that are applied to his alcohol even if it’s being sold at his distillery and not at NB Liquor stores. (Catherine Harrop/CBC)

New Brunswick distillery owners say the amount NB Liquor charges for selling their vodka on their own property is killing their businesses.

Devon Strang thought he'd found the perfect solution for his family farm's smaller potatoes: making vodka. Two years ago he started Blue Roof Vodka, which became Canada's first farm-to-bottle distillery using whole potatoes.

But Strang now says he may not survive on the contract he signed with NB Liquor because of what the Crown corporation takes as its share of the sale, even if it's being sold at his distillery in eastern New Brunswick and not at Alcool NB Liquor, stores.

"They have us so suppressed," he said.

"We can't afford to grow, can't afford to hire new staff, can't afford to entertain new marketing opportunities."

Devon Strang thought he'd found the perfect solution for his family farm's smaller potatoes: making vodka.

He said this makes him want to move to Nova Scotia, which in 2014, slashed the amount it takes from distilleries on the products they sell themselves. Since then, the number of distilleries in Nova Scotia has grown from six to 20. 

It's a convoluted formula in both provinces that determines the liquor commission's take of the sale. 

But to show the difference, consider the impact on a bottle that retails for $33.34.

If it is produced with New Brunswick-grown produce and sold on-site at a distillery, NB Liquor will take $10.81 from that sale.

If it is produced in Nova Scotia, regardless of what products are used, the Nova Scotia Liquor Commission will take 55 cents.

That means, if a company produces and sells on-site, a Nova Scotia distillery pockets $10.26 more per bottle compared with what a New Brunswick company can keep.

The disparity doesn't leave a lot of options for Strang.

"It's either shut down here or move to Nova Scotia," he said.

"We could move 20 minutes away to Amherst, and build our distillery, but it's not easy to pick up my farm and move it, which is the reason we haven't done that up to this point, or it would already have been done."

Blue Roof Distillery was founded two years ago. (Catherine Harrp/CBC)

Jeremiah Clark of Moonshine Creek Distillery in Waterville, N.B., is blunt in describing the monthly cheques he submits to NB Liquor for his in-store sales.

"It's like paying the mob," Clark said.

"We look at this markup as another form of taxation, especially when it's happening in our own onsite stores, and that taxation we can't afford to survive and keep a business we're passionate about, to keep it afloat."

The distillers say that discussion has been going on a long time. But if the next provincial budget doesn't reflect change to the policies, they may withhold what they pay NB Liquor on their on-site sales.

Jeremiah Clark of Moonshine Creek Distillery (Ed Hunter/CBC)

"We have talked about not remitting our numbers and not remitting our markups from our storefronts, until we are met with government and ANBL in a manner we deem is appropriate," Strang said.

Neither distiller objects to the amount NB Liquor takes when their products are sold in the liquor store. 

Mark Barbour, a spokesman for NB Liquor, said the commission doesn't pay attention to what other provinces do, because the Crown corporation only operates within New Brunswick's borders.

But, he said, it is willing to listen to distillers' concerns.

"The policies were created back in 2012 and have evolved from 2014 until today, and I can say and commit that they're not written in stone, and we can discuss changes that will help both sides," he said.

Devon Strang is co-founder and manager of Blue Roof Distillers. 8:08

With files from Catherine Harrop