Calgary-based Big Rock Brewery, which operates a Vancouver brew pub on West 4th Avenue, has announced what it calls “significant cost-cutting measures,” including “personnel reductions,” but did not immediately reveal to Business in Vancouver whether there could be any change to the company’s B.C. operations.
That leaves the door open to potential layoffs in Vancouver even though the main cause for the layoffs is losses related to Alberta’s beer-tax regime.
The lion’s share of the company’s (TSX:BR) operations are in Alberta, although it sells its craft beers and cider in five provinces and two territories, and does not reveal exact sales figures for each region.
The brewery lost more than $1.7 million in the quarter that ended March 31.
“This process can be painful,” said Big Rock’s president Wayne Arsenault. “We recognize that personnel reductions are difficult for our employees, their families and the community.”
Alberta’s tax policies for brewers bounced around during the former NDP government run by Rachel Notley, and are responsible for Big Rock’s cuts, according to the company.
She inherited a system where there were graduated markup levels, or tax thresholds, that saw brewers in the province taxed on their size, whereby larger brewers paid more tax per litre.
Notley first changed the rules in an attempt to get brewers that were based outside of the provinces that are part of the New West Partnership Trade Agreement – B.C., Alberta or Saskatchewan – to pay more tax.
Complaints ensued that this was an unfair barrier to interprovincial trade, so in 2017, the Notley government changed the rules again, with the new regime placing a flat $1.25-per-litre markup on all beer sold in the province.
Her government introduced a new grant program with the intent to help small brewers, and Big Rock qualified for grants. The Notley government then removed the grant system and replaced it with a new graduated-markup system, which was intended to help small brewers.
Big Rock, however, is large enough that it does not qualify for lower mark-ups on its products, and corporate filings show that the Alberta government’s most recent change to its beer-tax regime slapped Big Rock with a 104% increase in beer taxes.
“Our ultimate goal is to allocate our resources in a manner that will ensure the success of the future business and maximizes shareholder value,” Arsenault said. “We are creating a sustainable business model by accessing new ways to grow revenues, reduce expenses and improve margins, despite the current tax regime and regulatory environment for beer in Alberta.”