Barley Mowat 

Growler Mark-Ups and You

with 4 comments

Oh man. You guys aren’t going to like me very much after this post. Before we get into the hate, though, let’s talk about background. In BC, the BC Liquor Control and Licensing Board is essentially responsible for stopping us from drinking ourselves to death. They write lots of regulations and policies to back this up, and those documents are about as long, confusing and official-looking as you’d expect from a government body whose main reason for existing is to make it hard to have booze-related fun.

As part of all this, the LCLB tasks the Liquor Distribution Branch with charging a mark-up on all booze sold in BC because, well, they can. Actually, that’s not strictly true: they do it to stop booze from being too cheap, and also to generate revenue which they can use to figure out new and better ways to stop us from drinking too much.

And yet they allow shit like the “vented, wide mouth cans” because people just can’t pour awful beer down their NASCAR-watching face holes fast enough

The mark-up on beer made by breweries with less than 15,000hl annual production is currently $1.04 per litre for “Packaged Product” and $0.72 per litre for “Draught.” Let me take a second to stop here and stress that this is not a “tax,” despite what people are putting on petitions or enraged Tweets. The LCLB does not have the legislative mandate to set taxes. They do, however, have the ability to set mark-ups, which in the end is a whole lot better for the LCLB than taxes because they get the money directly instead of having it go through the rest of the government first. It’s just that when you want to yell publicly about something you don’t like, you should at least yell about the technically correct thing. This makes it much harder for the government to dismiss you as ill-informed knobs. But I digress; tax or mark-up, it’s a surcharge that is applied to beer.

“Packaged Product” is beer intended for consumption off-premises. This includes anything you take away from the place where you bought it and intend to drink. Why does “Packaged Product” have a much higher mark-up? I have no idea, but the existence of an effective restaurant lobby and this policy that makes it cheaper for restaurants to sell draught beer cannot be a coincidence. Either that or the government wants to steer us away from staying home, crying and drinking alone and instead force us to go to the bar where, presumably, we can depress other people with our woes.

Pictured: Better somehow

The uproar started when it was revealed by the ever-excellent Paddy from VanEast Beer Blog that the LDB was going to start charging the higher Packaged rate on growler refills instead of the lower Draught rate that was currently charged. Paddy reported this on his blog because, well, that’s exactly what the LDB told him when he asked.

The problem here, though, is that this simply isn’t always the case. Some breweries have been charging the lower draught rate while others had been instructed to charge the higher packaged rate. If you go read that Policy Manual I linked to up there, and specifically read Section 7.6.6*, it’s pretty clear that growlers are currently considered packaged product, refill or no. So this is obviously a massive misunderstanding. I mean, growlers are intended for off-site consumption and are therefore packaged product, right? No change in the mark-up; we’ve been stuck with the high rate all along and the LDB is just corrected a temporary oversight. Well, not quite.

The LDB is changing their mark-up on draft beer as of April 1st. They’re lowering it from $1.04 per litre to $0.97 per litre. So, uh, yay beer just got 7 cents cheaper per litre I guess? Except it’s not: sadly that same April 1st is also the same day we lose the 12% HST and replace it with the good ole 5% GST plus 10% Liquor Tax. Remember those guys? That $10 refill plus $1.20 of tax for 1.8 litres of tasty beer will now cost you $10 plus $1.50. I guess the brewery might pass on the 12.6 cents they saved under the new mark-up on that growler, but frankly it’s not worth the effort.

So yeah, there is a new, higher tax on growlers coming down the pipe next month, but it’s not the one you think. It’s the one you asked for. But wait, there’s more! I ain’t done yet.

All told, this whole “Growler Tax” hoopla is a poorly executed distraction. Oh noes, growlers are getting almost imperceptibly more expensive! Whatever should we do? How about some hard math? If you assume that a small nano brewery produces about 500hl/year, sells 50% of that as growlers, was charging the old rate of $0.72/l, is now charging the new rate of $0.97/l, and that they decide to eat the increase, then they’re looking at $6,250 per year increased costs. They can make that back with 1-2 extra brew days; that would be an issue if they couldn’t sell their product but in this market that ain’t happening.

Yes, I get it, it’s increased costs, and those are bad, but we’re fighting the wrong fight here. Instead of campaigning against minutia like this, how about we get organized and demand something a bit more proactive, like any or all of:

1/ Introducing a new brewery category with production below, say, 2,000hl with dramatically lower mark-ups. The impact on the LDB is negligible because of the tiny volumes, and the cushion to start-up nanos is huge. Wanna talk about boosting a cottage industry?

2/ Introduce a third category of sales, in addition to packaged and draught, again lower. Call it “on-site” or some such, and make it for product sold directly from the brewery. You can justify lower mark-ups because the product was physically never handled by the LDB. This encourages direct interaction with the community by breweries rather the the arms-length approach some take now.

3/ Grant breweries farm-gate eligibility. Farm-gate, for those that don’t know, allow vineyards and distilleries that make products from 100% BC-sourced ingredients to skip charging the tax for sales from their production facilities. Breweries need not apply currently, but why not? Barley would be the big ingredient that’s hard to come by locally, but this would single-handedly create demand for it. Boom, jobs.

So, let them have this tiny mark-up and ask for something bigger instead. That’s how politics works, baby.

* Yes, I know s7.6.6 is for brew pubs, and doesn’t technically apply to breweries, but it’s the ONLY reference to refillable containers I could find ANYWHERE in the LDB policy guides, and I gave up 3 hours and 15 IQ Points in that search. It would be logical for them to use a similar guideline for all license types (I hope).

Written by chuck

March 5th, 2013 at 12:46 pm

Posted in Beer and You

4 Responses to 'Growler Mark-Ups and You'

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  1. Chuck, given that you didn’t find anything in the policy guides on growlers that applies to breweries, it’s no surprise they are not uniformly charging the same markup. That is a problem.

    CAMRA BC’s mandate is to speak for and protect the rights of BC beer consumers. More than simply calling out the government on policy and regulations that impinge on our interests, we do aim to offer constructive, workable solutions. These do take time for us to research and develop, given that we are a volunteer organization. So even though we may be forced by circumstances to quickly implement a campaign, it doesn’t mean we aren’t looking at the bigger picture.

    Based on the information Paddy received from the LDB, CAMRA BC is naturally opposed to any increase in their charge on growler fills. What this issue has brought to light, now that it generated some community discussion, is precisely what you pointed out in #2 above.

    I also like what you propose in #1 & #3. However, those will take more time to achieve than simply trying to get the LDB to relent and charge a flat draught markup for the interim instead.


    Rick Green
    President, CAMRA BC


    5 Mar 13 at 13:44

  2. Nice post Chuck, and some good ideas. One small comment only, about PST reversion. You write: “…new, higher tax on growlers… It’s the one you asked for.” IMO, this is not strictly true – the government has, for its own purposes and so they can conveniently blame the voter – characterized the PST referendum as a demand to “reinstate the PST,” rather than what I believe most people desired which was a “repeal of the HST in its present form.” I for one think the HST makes a lot of sense in many ways, but it was the fact they also used it to INCREASE taxes to consumers, and to download taxes from large corporations onto consumers (despite their clearly incorrect assertion that prices would fall across the board – and they did not), that made the tax untenable.

    Which is to say, I, and I think most BCers, didn’t want to ask for a return to PST. It was just the unfortunate wording of the referendum. Really, we just wanted something that was tax-neutral to we individuals. Which was totally possible and which could have avoided the massive cost and trouble of all these tax switches!

    Carry on!


    5 Mar 13 at 18:33

  3. Great info Chuck. Thanks for pointing out it is a “mark-up” not a tax, which is why I never used the word tax in my post. In the end, it is a cash grab, all the same though…

    It was very clear to me, when researching for my post, no one in the LDB, including Kim Giesbrecht who is THE beer Portfolio Manager, had any idea about the whole growler mark-up situation and what was going on.

    The LDB would not give me any response to my queries about growler mark-ups for close to three weeks, other than to say, via the Communications Dept, “we cannot get anyone to sign off on the information”. It was only when I sent an email directly to KG asking about her talk in the US where she was going to pitch US breweries about selling opportunities in our market, that I got a response about the growlers stuff.

    And when they did send me the info, they told me that “currently” packaged rate mark-ups were applied to the first fill and draft for all refills, contrary to the info you found in your research.

    Even more confusing, is I had info Kim was calling breweries and telling them there was a change coming and only refill sku’s would be used and that refills would be packaged rate now. Those who received calls were not given dates of implementation or any specific info and nothing in writing.

    I had other breweries & brew pubs tell me they received this info over a year ago and they had been getting dinged at a higher rate all that time, not knowing others were getting charged at the much better draft rate.

    I am sure what has happened is that no one in the LDB really noticed or cared about growlers until they started to get popular recently and $$$s started to roll in. Yes, I feel they are trying to clean up their mess and charging the mark-up they should have all along, but in the end,it is going to mean more $$ out of my pocket.

    I don’t think this is prompted by any change from one tax to another…they are hiding the change in mark-up policy in the mess being made by the change back to PST/GST, hoping no one would notice. I think the decision to go to the higher rate for all fills is born more out of finding a way to maximize their gain from something that is becoming very popular with consumers.

    I agree that there should be some major changes made in the LDB system to support today’s growing craft beer and distillery industries. I like your ideas, but also do not think this increase in mark-up should go uncontested.


    Paddy Treavor

    7 Mar 13 at 14:11

  4. My understanding is that the difference in markup between packaged and draught product has to do with the plethora of costs associated with running a warehousing and distribution system to sell said packaged product. Overhead and labour are the ‘company’s’ biggest costs.

    If this is indeed the reason, then growlers (like draught product), which only pass through the LDB’s hands in an imaginary and metaphorical way should not be charged the same packaged markup.


    28 Mar 13 at 13:05

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