We Applaud Ontario’s First Baby Steps on Road to Recognizing Value of Distilling Industry
Ontario Minister of Finance, The Honourable Charles Sousa announced support for micro distillers in his recent budget.
In a move as surprising as it is welcome, Ontario Minister of Finance, Charles Sousa recently announced that the province will be implementing new measures to help nurture Ontario’s growing artisanal distilling industry.
Digging deeper, we learn that these changes were long in the making and that much of the credit for raising government awareness of small distillers must go to Gary Huggins who has been labouring quietly behind the scenes since 2014. Formerly of Dillon’s distillery in Beamsville, Ontario, Huggins’ work with the Premier’s Advisory Council (PAC) helped government officials and politicians understand the benefits of a healthy micro-distilling sector.
This, along with his presence at the Alcohol and Gaming Commission of Ontario (AGCO) and the Liquor Control Board of Ontario (LCBO) laid the groundwork for these changes. We salute Huggins’ tireless efforts and quiet diplomacy.
According to the Ministry of Finance, “The government will allow craft distillers to deliver directly to bars and restaurants, replace the current markup/commission structure at on-site stores for all distillers with a consumer tax, provide craft distillers with improved margins at their on-site stores, and provide an exemption on a limited volume of spirits for promotional distribution at on-site stores. Acknowledging that spirits are subject to the highest markups of the three major categories, the government is not increasing spirits mark-ups at this time.”
The prestigious U.K.-based Icons of Whisky Awards recently named Toronto’s Still Waters distillery one of the best small distilleries in the world. Ontario distillers are making a name for themselves globally, and we applaud the government’s move to support them. It is a positive first step to a more profitable distilling industry. Still Waters is not the only Ontario distillery, small or large, crafting spirits worthy of global recognition. A boost from the government can only help a homegrown industry that is bringing favourable notice to the province.
The next logical step would be to equalize taxation on the three main beverage alcohol categories. The vast majority of what Ontario consumers pay for their favourite bottle of spirits is tax with most of that taken by the provincial government. Consumers currently pay four times as much provincial tax on spirits as they do on wine, and twice as much as they do on beer, even when they contain exactly the same amount of alcohol.
The Government of Ontario takes 15.1% of the price of a bottle of wine, 29.2% on beer and a whopping 59.4% of the price of a bottle of spirits.
Graph courtesy of Spirits Canada.
Asked to explain this discrepancy last year, a representative of the LCBO said the difference exists because the government does not want to encourage distilling. Minister Sousa’s initiative would seem to dispute this, and that is good news for the province. The Ontario Ministry of Agriculture and Food has declared that Ontario’s large distillers contribute about $1.5 billion to the economy and provide good, full-time jobs for some 6,000 Ontario families.
The locavore movement has raised consumer awareness of the value of purchasing local produce. Nothing could be more local than spirits purchased right at the distillery. Where possible, Ontario’s distillers strongly favour local grains, fruits and roots as the base for their spirits. When you drink Still Waters’ globally acclaimed spirits, you are drinking something two Toronto men made with their own hands.
Lost in our locavore euphoria though, is another reality. If you live in Toronto, Collingwood Whisky is 100-mile whisky. Similarly, in Toronto, Hamilton and Niagara, Forty Creek Whisky is 50-mile whisky. In Southwestern Ontario, nothing is more local than Canadian Club, Wiser’s, Gibson’s and half a dozen other whiskies made at the Hiram Walker distillery in Windsor. We tend to forget that the large distilleries have their own locales too and that their whiskies are made by skilled local people from grains grown by Ontario farmers. Their whiskies too, are every bit as well crafted as those made by the small distillers.
The government seems to be warming to the idea of supporting distilled spirits as an Ontario agricultural product. Unfortunately their retail arm, LCBO still has some catching up to do. In its three-year Strategic Plan released March 25, LCBO sets growth targets for VQA wines, “International Canadian Blends” which are wines made with up to 75% imported content, and Ontario craft beer. It pays meagre lip service to Minister Sousa’s reforms in a single non sequitur: “Promote the development of Ontario produced craft spirits.” It sets no growth targets for Ontario spirits of any kind.
LCBO has set growth targets for Ontario beer and wine sales while ignoring spirits, despite the potential to increase their already enormous contribution to Ontario’s economy.
From the LCBO three-year strategic plan, March 26, 2016.
Minister Sousa, thank you for taking this first step. Supporting artisanal distillers will go far to increase the selection of high-quality spirits available to Ontario consumers. Independent foreign experts have already declared our distillers, small and large, as world class.
Canadian whisky is poised to be the next big thing in the world of whisky, but it is not a sure thing. Adjusting the tax on spirits down, to give parity to all three major categories of beverage alcohol will provide all distillers more funds to invest in promoting their products abroad. Imagine, a Minister of Finance who by levelling taxes on competing categories at home, increases government revenues from abroad AND gives consumers a break. But don’t take my word for it; ask your people to crunch the numbers.
The Role of Symbolic Value in Canadian Whisky Industry
Brock University business professor, Maxim Voronov PhD invites Canadian whisky makers to participate in a study of how to endow your brand with symbolic value.
“I am contacting you to invite you to participate in an exciting research project entitled “The Role of Symbolic Value in Canadian Whisky Industry”. The purpose of this project is to investigate how distilleries can benefit from endowing their brands with symbolic value in the eyes of the consumers and opinion leaders. Research shows that consumers purchase whisky not only because of their objective features, like taste profile, but also for the symbolic characteristics of the whisky, such as compelling story that is tied to tradition, history and national identity and that resonates with consumers emotionally. However, little is known about how distilleries endow their brands with symbolic value. This research project seeks to shed light on that process.
The research team consists of business school professors at Brock University, University of Alberta and University of Victoria. The research will involve gathering insights from distilleries, retailers, and opinion-leaders (bartenders, sommeliers, restaurateurs, bloggers, etc.) – both in Canada and internationally. The findings are likely to generate important insights of relevance to Canadian whisky brands, especially as the distilleries are increasingly focused on enhancing the value of their existing brands and on launching more premium ones. Thus, I intend to share our findings with you, as the research progresses.”
Canadian whisky producers who are interested may reach Dr. Voronov by e-mail at MVoronov@brocku.ca.
More…
Canadian Whisky: The Portable Expert
The world’s first in-depth book about Canada’s national spirit.
WINNER, GOURMAND BOOK AWARDS
BEST SPIRITS BOOK CANADA 2012
WINNER, 2013 IACP BOOK AWARDS
WINE, BEER AND SIRITS
Canadian Whisky: The Portable Expert is published by McClelland & Stewart and distributed by Penguin Random House. It is available from most book shops and on-line book sellers.
