In 1620, the Mayflower landed at Plymouth Rock, New England.

The ship's log explains the decision to land was because of dwindling supplies, "especially our beer."

In 1786, John Molson set up his first brewery in Montreal. In 1829, Alexander Keith founded his brewery in Halifax. In 1847, John Labatt started his brewery in London, Ontario. In 1867, the Oland family opened their first brewery in Dartmouth, NS and in 1928, George B. Oland acquired the James Ready Brewery in Saint John, NB, known today as Moosehead Breweries.

In 1971, Labatt purchased Oland & Sons Ltd. in Halifax (who by then owned the Alexander Keith Brewery). In 1991, Belgian owned Interbrew purchased Labatt. In 2004, Interbrew joined with Brazilian brewer AmBev to form one of the largest brewers in the world with an estimated 14% of the global beer market.

In 2005, Molson merged with Coors Brewing Co. in Golden, Colorado to form the Molson Coors Brewing Company. Today, Moosehead is the only Canadian owned, national brewery in Canada.

In November 2004, Molson announced that it would build a $35 million brewery in Moncton. It’s a small brewery by industry standards with capacity of only 250,000 hectolitres. That compares with some of the mega breweries in Montreal that would have a million or two hectolitre capacities.

The expectation was that Molson would operate with “local brewer” status in the Maritimes and be exempt from inter-provincial tariffs on beer sold in to Nova Scotia and PEI. At the time of the announcement, the deal was criticized by Moosehead Brewery executives on the grounds that the Lord Government had promised Molson a forgivable loan of $3.5 million and “local brewer” access to the NB Liquor Commission’s distribution system.

Moosehead President, Derek Oland suggested at the time that the package would have a value of close to $6 million and represented unfair competition to his Saint John brewery. That matter was subsequently mitigated by provincial government investments in expansion of the Moosehead brewery in Saint John.

Prior to construction of Molson’s Moncton brewery, Molson brewed its Maritime-distributed products at Moosehead’s Saint John brewery and distributed its products in Nova Scotia, tariff-free. On Valentines Day 2007, the Government of Nova Scotia announced that it would not recognize Molson as a local brewer and as a result would slap a tariff on Molson products distributed in Nova Scotia.

The tariff would be disguised as a $1.32 handling fee on each case of beer Molson distributed in the Province.

Alexander Keith, Schooner and Labatt Blue are all brewed at Labatt-owned Oland Breweries.

They have not paid handling fees on products distributed in New Brunswick since 1992.

Moosehead products have enjoyed the same tariff-free access to Nova Scotia. In 2000, Ontario brewer Sleeman acquired the brewing assets of the Maritime Brewing Company in Dartmouth, NS and later acquired “local brewer” status to also exempt its beers from Maritime tariffs.

In Quebec the handling fee is $8.52 for beers imported into that province. To avoid the premium, Moosehead joined with McAusian in Montreal to build a new brewery to gain tariff-free access to the Quebec market.

Premier Rodney MacDonald defends the Nova Scotia tariffs by saying he’s looking out for the interests of Labatt and Nova Scotia’s microbreweries (read Sleeman). All of this is set against the “Atlantica” backdrop of free-trade discussion among the Atlantic Provinces and the New England States.

Premier Graham promises to fight for Molson, insisting that a 1992 “handshake” deal between the provinces assured tariff-free access to markets by local brewers. MacDonald refuses to recognize Molson as a local brewer and claims the 1992 “handshake” agreement applies only to breweries in existence at the time. Dah!

How did Sleeman get into the picture?

80% of Canada’s beer industry is owned by the two major brewers Labatt and Molson with their U.S. brands Budweiser and Coors. Neither one is controlled by Canadians yet they dominate trade practices in this Country. Canadian owned Moosehead and an assortment of microbreweries such as the Pumphouse in Moncton and offshore imports make up the balance of the Canadian industry.

Every province in Canada has some form of protective barrier for its brewing industry. In Ontario, Labatt and Molson control 95% of beer sales through their wholly owned “Beer Store” network. In Beer Stores, product cannot be picked spontaneously from the floor. Everything is ordered over the counter from a displayed list of products.

Small brewers like Moosehead have to rely on heavy advertising to build their brands and create demand for their products in the Stores. In Alberta, Moosehead has to sell through liquor stores while Labatt, Molson and Alberta brewers can sell through local grocers.

In principle, there should be no trade borders between provinces.

How can we expect national and international companies to locate in this region if we set up local barriers to trade?

The beer side of that argument is that further consolidation in the industry would eliminate the need for local breweries in places like Moncton and Saint John. Bottlers in Scoudouc would go out of business. Packaging companies like Maritime Paper and Master Packaging would be seriously damaged. Hundreds of jobs would be lost.

Moosehead Breweries is a national brewery. It markets its products across Canada and internationally in the United States, Europe and Mexico and does so with great skill and expertise. It deserves our support but not our charity.

In my view, it was wrong to subsidize the startup of Molson in New Brunswick but to the extent Molson’s subsidization has been mitigated by investment in Moosehead, that story is old news.

Here’s my bottom line; preferential pricing, to the extent that it exists should exist only in favour of Canadian owned breweries.
If Nova Scotia insists on penalizing Molson with its $1.32 head tax, New Brunswick should respond in kind against Labatt.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com