Note: 

Canadian Whisky News has been on hiatus for some months now. A new edition of my Canadian whisky book is coming this fall and I want to start fresh with a different format. However, the recent federal budget is just screaming for attention so I am posting an open letter to the MPs and Senators who must approve it. 

Just because my newsletter has been quiet does not mean I haven’t been busy. So busy, in fact that I have asked my writing partner, Blair Phillips to take over the Canadian editor role at Whisky Magazine. I am still writing regularly for the magazine, but Blair is the point man now for Canada. And he has started off on a high note with a profile of Wayne Gretzky’s wonderful new distillery and whiskies.

And finally, this is Canada’s150th year as a nation – Canada150 and the whisky industry has stepped up with some marvellous new releases. Almost every day in 2017 I am featuring a different Canadian whisky on my Twitter and Instagram feeds. Check them out daily @davindek.

Open letter to legislators regarding automatic alcohol tax increases

The Honourable William F. Morneau, Minister of Finance and MP for Toronto Centre

Recent reports that Minister Morneau’s 2017 budget has generated significant debate in the Senate are very encouraging, as I strongly oppose the escalator clause in his proposed new approach to taxing beverage alcohol. For a start, tying tax rates to inflation strikes me as wrong-headed given the Minister’s responsibility to manage inflation itself.

I have joined the Cork the Tax movement because I think this new tax approach seriously threatens a very lucrative industry that contributes greatly to Canada’s economy. Although my primary interest is in Canada’s spirits industry (I make my living writing about it), I am heartened to see that for the first time in my recollection, opposition to this tax scheme has brought normally competitive beer, wine and spirits producers, and restaurateurs together in a common cause.

Distilling spirits is still profitable in Canada, but considerably less so than it is in other major producing countries such as the U.S. and Scotland.  With multi-national ownerships, it is becoming more and more difficult for industry decision makers to justify investment in Canada when the same dollars invested in distilleries abroad return greater profits.

Now we see a new tax, one that the Minister tells us adds just 7 cents to the price of a bottle of spirits. But this is a misleading number because the provinces tax the federal taxes so Minister Morneau’s 7 cents translate into about 20 cents a bottle in Ottawa, where I live.  We know that most spirits buyers are price sensitive. An increase of twenty cents will mean fewer bottles purchased.  And this comes as we prepare to legalize marijuana (I don’t smoke, but I don’t disapprove), an alternative recreational lubricant that is very easy to grow at home, thus providing a less expensive and tax-free alternative.

Spirits are already under pressure, and now Minister Morneau proposes to increase the prices every year with no discussion in Parliament.  This will reduce revenues in bars and restaurants as people either buy one drink fewer, or reduce the size of their tips.  This in turn hurts not just middle class consumers, like me, but also the servers who often are at the bottom end of the pay scales. The alternative is for restaurant and bar owners to absorb the tax in order to keep custom, but this is going to squeeze them in an already tight industry.  The restaurant business is already in steep decline in the U.S. and we know that trend will soon arrive here in Canada.

The insidious element of this tax increase though, is the escalating clause.  This means that the prices of spirits will go up and up forever.  People have short memories and when they see three price increases in a two-year period, they will look elsewhere for their spirits.

We know that bootlegging is already a problem in Canada and we know that rising prices are a barrier to legal sales.  Let’s not inadvertently create a new prohibition mentality, because illegal sources and distribution networks are already in place.

The last time beverage alcohol excise duties were indexed (1981 through 1986), 11 distilleries closed across Canada and the industry shifted its focus away from international markets. This in turn led to a global decline with Canadian whisky sales  falling from second place to fourth. Despite promising recent gains, we are still now in recovery mode.

The Minister minimizes the impact of this new tax rate to 7 cents per bottle, but the immediate effects are at least three times that in Ontario and the long-term effects could well be a decline in legal spirits sales and revenues, including taxes. I greatly appreciate your role as Senators and Members of Parliament in making sure Canadians are taxed fairly and that each change in tax rate is subject to debate. That the Minister believes he must increase spirits taxes is one matter, but each time he does so, you should have an opportunity to vote on it. Canadians deserve no less.

Blair Phillips: Canada’s voice at Whisky Magazine

Lina & Blair Phillips, Wayne Gretzky and me at Gretzky’s distillery recently

Something had to give. Five years ago, writing about Canadian whisky could be a lonely job. However, the past year or two have seen so much interest that I just could not keep up. A few years ago, shortly after I took on the Contributing Editor role at Whisky Magazine, Blair Phillips and I began working as writing partners on the magazine. He’d interviewed me for a web-based piece he was writing for Zane Lamprey’s Drinking Made Easy, the U.S. television show. Sometime just after Christmas Blair agreed to take over the Canadian Contributing Editor position, and wow, what a kick-off. His first assignment? the new Wayne Gretzky distillery near Niagara-on-the-Lake. We toured the distillery together, and spent the better part of an afternoon in the maturation warehouses sampling works in progress and experimental spirits. Then Blair was off to write. Check out his story in the upcoming issue 144 of Whisky Magazine.

As I said, I am still active with the magazine and a number of others too, so please, p.r. people, let’s stay in touch. At the same time, you may want to add Blair to your list of key spirits writers. He’s based in Toronto and is looking for story ideas.

Canadian Whisky Second Edition:

The New Portable Expert

So much has changed in the world of Canadian Whisky that the time has come to update my book. Many thanks to Appetite by Random House for supporting a new edition. Here is how they describe it:

This fully updated and revised edition of the award-winning Canadian Whisky invites you on a journey across Canada and back through time to discover the story of this unique spirit. 

Independent whisky expert Davin de Kergommeaux weaves a compelling narrative, beginning with the substance of Canadian whisky – grains, water, and wood – and details the process of how it’s made and how to taste it. He traces the fascinating history of the country’s major distilleries and key visionaries, and introduces the present-day players, big and small, who are shaping the industry through both tradition and innovation.

     Newly designed, and now including a map of Canada’s whisky distilleries, over 100 up-to-date tasting notes, and a handy tasting checklist, Canadian Whisky reflects the latest research on flavour development and the science of taste. At once authoritative and captivating, this is a must-have resource for beginners, enthusiasts, and aficionados alike.

The new edition will be in stores on October 3 and is available now for pre-order on Amazon.   I would be grateful for opportunities to meet whisky fans and sign books for clubs, shows and community events across the fall and winter.