Monday, 23 May 2011

Regulatory earthquakes

In yesterday's post, I lamented the state of Manitoba's craft brewing scene compared to Christchurch. A town about two-thirds Winnipeg's size has more craft breweries making fantastic beer even after two really huge earthquakes than Winnipeg has after zero earthquakes.

Well, let's compare the regulations. The typical path for folks in Christchurch is starting out as a home beer brewer, then upgrading the kit a bit and selling at farmer's markets, then getting kegs into some of the bars in town that care about craft beer (Pomeroy's in particular), then getting into some of the New World supermarkets where the liquor manager cares about good beer (New World Parklands is great; South City isn't bad either). Regional Wines and Beer Store are great online shops that also help get craft beer to market. So long as the brewer is paying his alcohol excise tax, things are pretty easy. Cassels supplied the market using brew facilities in their garage 'till they found demand justified upgrading; they're finishing up a brew pub now in Woolston.

Here are the MLCC regs for Manitoba. Of particular note:
  • Can only distribute beer to licensees within a designated geographic area. MLCC must approve the geographic area in writing and any changes to the area must be agreed upon between the MLCC and the microbrewery.
    • No chance of testing the market at craft sales or farmer's markets to see if your beer is really as good as you think it is. You've got to start big.
  • Authorization by the Federal Government of Canada

  • Manufacturing process including labelling in compliance with Canadian Food and Drugs Act and Regulations as directed by CFIA or Health Canada

  • Approval from provincial and municipal health authorities

  • The manufacturer must sell to the MLCC and buy from the MLCC all product that is to be resold in Manitoba
    • Best I understand things, this means a BrewPub has to sell its product to MLCC before buying it back to sell to customers.
  • Exported (this includes to other provinces) product subject to conditions imposed by the federal government and the jurisdiction receiving the product.
  • Only one type of manufacturer (Brewery, microbrewery, or brewpub) can be licensed at a single location unless otherwise authorized
    • I think this rules out the increasingly common NZ startup brewery that brews its product in another brewer's facilities: Number 8 Wired, Yeastie Boys - they're out.
  • Maintain the same high standards for cleanliness and hygiene in their facility that all food production plants or restaurants must. Subject to inspection, ongoing testing at accredited labs.
    • This means stainless steel kit throughout and pretty much rules out using your garage as a startup venue. Brewers have to be high hygiene to avoid infection of the brew; the regs are going to be superfluous for beer quality but really increase production costs.
And, if the microbrewer wants to sell his product on-site, he needs a retail licence. The MLCC regulates selling prices. Here's what the brochure for prospective manufacturers has to say:
On the first business day of the week, manufacturers holding a retail licence must pay the MLCC for the amount of liquor they sold during the preceding week. They should:
  • Make a payment equal to the MLCC's markup on each litre sold....
I think, but am not sure, that the MLCC markup is in addition to excise - that it's compensation to MLCC for the sale lost by MLCC rather than excise payment; the excise would have been paid on the manufacturing side rather than the retail side.

I'm seeking clarification from MLCC on a couple of these. But if that's how things run, it's no particular puzzle why there's no craft beer scene in Manitoba.

Let's hope the prospective changes to MLCC regs will fix things. As things stands, regulations do more harm to craft brewing in Manitoba than two earthquakes did to craft brewing in Christchurch.


  1. Eric - tell those Manitoba farmers to increase their grain supply - my latest sack of malt just went up 25%. Then I might have some sympathy and send them some IPA.

  2. Malt? All the cool guys are using smoked peat!

    Rise isn't out of line with overall barley commodity price increases.

    Malt premium would have to rise a fair bit when ag prices are strong. Growing malting barley, at least where I grew up, was always a crap shoot. Luck out on the protein count and you do well. Otherwise, you get the feed barley price (very low relative to other things the farmer could have seeded). Why muck about with malting barley if wheat's paying north of $8/bushel?