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Provincial grants a boost for craft distillers

A new provincial grant program to help out Alberta’s infant craft distilling industry is being met with big cheers by local distillers who say it will create new jobs and drive investment.

A new provincial grant program to help out Alberta’s infant craft distilling industry is being met with big cheers by local distillers who say it will create new jobs and drive investment.

Details of the grant program announced in last week’s provincial budget have yet to be released, but the NDP government says the new program for craft distillers will be modeled on the current craft brewing program introduced last year.

Distillery owners of Park in Banff and Wild Life in Canmore say the grant program is great news for the emerging craft distilling industry, helping with very high startup costs.

“We’re definitely stoked,” said Matt Widmer, co-founder of Canmore’s Wild Life Distillery. “We’re extremely excited to hear what the numbers will look like.”

Wild Life is currently producing vodka, but Widmer said the grant program means an opportunity for quicker growth and the ability to make whisky sooner.

“There’s a huge market in whisky and this will mean a quicker turnaround to start producing whisky,” he said, noting the three-year minimum barrel-aging requirement is an inhibitor for startups that don’t see a return on investment for three years.

“We’ll be able to employ more people and support our local work force. There’s just so much hands on labour in our process versus the big companies that can do everything with the push of a button.”

In 2013, the law changed in Alberta with the elimination of minimum production capacity requirements for manufacturers, which opened the door for small micro distilleries to open up.

There are now eight active distilleries in Alberta, an additional seven gearing up to open in the next six months and more than a dozen in the planning phase – and the industry continues to grow throughout Canada and the United States.

“It goes to confirm consumers’ desires for local quality products and local economies,” said Stavros Karlos, co-owner of Park in Banff and secretary of the Alberta Craft Distillery Association.

Many other jurisdictions in North America have successfully lobbied governments to reduce taxes or get rebates or grants for small craft distilleries. In Alberta, there’s a $10.76 markup/tax on every bottle sold.

The idea behind the new grant program for Alberta’s craft distillers, to be modeled on the existing brewery grant program, is to help grow the craft distilling industry.

Under the brewery program, brewers who produce less than 300,000 hectolitres of Alberta-made beer per year get money on a sliding scale based on their sales. The number of breweries has gone from about 14 to an expected 70 by the end of this year.

Alberta’s existing craft brewery grant program, however, is tied up in court over allegations from two out-of-province brewing companies that the program goes against the constitution and creates barriers for craft brewers outside Alberta.

There’s currently a court injunction in place and a hearing is set for May.

Karlos said, despite the court injunction on the craft brewing program, he’s glad the province is pushing ahead with the grant program announcement for small distillers.

He said craft distillation is an opportunity to diversify and create jobs in manufacturing, tourism and agriculture, noting Alberta is a world class producer of wheat, barley and rye, the primary raw materials used in the spirits industry.

He also noted Park – the third craft distillery to open in Alberta – employs 15 people in a mix of high and low skilled jobs in the production of spirits, while more than 100 people are now employed in craft distilleries throughout Alberta.

“Those jobs never existed five years ago,” said Karlos. “In Banff, we’ve created this whole new professional job branch within the hospitality industry which didn’t exist before.”

Karlos said the new grant program will ease the financial burden on startups, saying new distillers will be able to buy additional equipment, noting craft distillers have up front capital costs that are significantly higher than small brewers.

“We came into this with our eyes wide open,” he said. “But a lot of the small distillers are not able to open up in a location on Banff Avenue with a streetfront location, with millions of people walking by your front door.

“Most people are opening up in rural locations and industrial parks and it’s a little bit of a struggle for them and the capital costs are expensive.”

Karlos said small craft distillers can’t produce cheap booze and, not withstanding high labour costs, Park, for example, uses 100 per cent organic grains so it’s even more expensive. They’ve partnered with a farmer in Vulcan.

“All those things just lead to increased costs,” he said, noting Park can produce about 20,000 to 30,000 litres of spirits compared to a larger company like Alberta Distillers Ltd (ADL), which makes in the 20 million litre range.

“We can’t make it cheaper than the big guys, not even close. Even if they drop taxes, our costs of production are still higher.”

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