Overview: The Canadian province of New Brunswick is home to a growing number of craft distilleries that are struggling with high markups imposed by N.B. Liquor. Despite an increase in demand for local spirits due to U.S.-made liquor being removed from shelves, many distilleries face significant challenges in expanding their businesses and achieving profitability.
The Full Story
Blue Roof Distillers, a prominent craft distillery based in Malden, New Brunswick, has seen sales increase by nearly 60% since the removal of U.S.-made liquor from shelves. However, co-owner Devon Strang notes that high markups imposed by N.B. Liquor make it difficult to expand production facilities and meet growing demand for their products.
Strang attributes the issue to a combination of factors, including low profit margins and high costs associated with producing spirits in New Brunswick. He emphasizes that distilleries face higher markups compared to beer producers, which can be as much as 40% lower than those imposed on spirit producers.
The situation has prompted the formation of the New Brunswick Distillers Alliance, a coalition of local distillery owners who are lobbying for lower markups and more favorable policies. The alliance’s goal is to create an environment that encourages growth and investment in the industry, rather than hindering it with high costs.
Production & Profile
The production process at Blue Roof Distillers involves a combination of traditional techniques and modern equipment. Their spirits are crafted using locally sourced ingredients, which is reflected in their unique flavor profiles. The distillery’s vodka soda, for example, sells to N.B. Liquor for $3.15 per can but is marked up to $4.99.
Strang notes that if markups on ready-to-drink beverages were aligned with those of beer producers, his profit margins could increase significantly. He estimates that a 40% markup reduction would allow him to achieve profitability and invest in expanding production facilities.
Brand & Industry History
The craft distillery industry has experienced significant growth in recent years, driven by consumer demand for local products and the removal of U.S.-made liquor from shelves. However, New Brunswick’s high markups have hindered this growth, limiting the ability of distilleries to expand and invest in their businesses.
Local producers face unique challenges due to the province’s policies on markups. N.B. Liquor imposes a markup rate of 125-135% on ready-to-drink products, regardless of where they are produced. This has led to concerns that local distilleries may struggle to compete with larger producers and breweries.
What This Means
The high markups imposed by N.B. Liquor have significant implications for the industry as a whole. By limiting growth and profitability, these policies can stifle innovation and investment in the craft distillery sector. The New Brunswick Distillers Alliance’s efforts to lobby for change are crucial in addressing this issue.
The success of local distilleries is closely tied to consumer demand for their products. As consumers increasingly seek out locally produced spirits, it becomes essential that policies support these businesses and enable them to grow and thrive.
Consumer Takeaway
Craft distillery enthusiasts in New Brunswick can expect continued growth and innovation from local producers if the high markups imposed by N.B. Liquor are addressed. By supporting local spirits, consumers play a crucial role in driving demand for these products and advocating for policies that benefit the industry.
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