An alcohol sector refresh has economic potential

Economic impact facts on the alcohol sector

A new report from the Ontario Chamber of Commerce (OCC) has been released.  The report, titled “Refreshing the Sale of Beverage Alcohol in Ontario”, examines the economic potential of the province’s alcohol sector and how the province could modernize the sale and distribution of beverage alcohol and responsibly promote growth across all four categories – wine, beer, spirits, and cider.

This issue is complex and transcends several ministries such as economic development, agriculture, tourism, taxation, and trade, to name a few.  The alcohol sector has also changed significantly in the past decades with the emergence of craft breweries, wineries, distilleries and cideries.  Now in communities just like ours we are seeing businesses work together to provide a full circle experience around their products.
“The power of the beverage alcohol sector to be a force for economic growth extends beyond just the expected industries. The production, distribution, and sale of alcohol has a ripple effect that benefits agriculture, tourism and hospitality, and retail,” stated Stuart Harrison, President & CEO, Peterborough Chamber of Commerce.

The OCC report includes a number of timely recommendations including:

• Modernizing the sale of beverage alcohol by allowing beverage alcohol producers to sell their products on e-commerce marketplaces and platforms using third parties to process payments.
• Alleviating tax burdens by reducing taxes on Ontario wines, aligning taxation levels for craft cider with those of craft beer, and applying a graduated tax to the current spirits basic tax.
• Cutting red tape by reducing the reporting Ontario wineries and cideries have to complete from a monthly to quarterly basis, allowing Ontario spirits and craft beer producers with a retail store to sell their products at farmers’ markets, and providing airports with an exemption to allow for the sale of alcohol 24-hours-a-day.
• Removing antiquated inter-provincial trade barriers by allowing consumers to purchase alcohol online from other provinces/territories and producers to deliver these products to the consumer’s home.

The recommendations are rooted in three guiding principles:

1. Despite their differences, there are many similarities between all four categories – wine, beer, cider, and spirits. For example, each category relies on local, agricultural inputs (e.g., barley, corn, grapes, etc.) grown in Ontario by Ontario farmers. These inputs are then transformed into products sold to consumers in the province, across Canada, and around the world. Thus, when referencing beverage alcohol, all four categories should be included in the Province’s policymaking process.
2. The Province has over time developed strategies and made investments to support certain categories of beverage alcohol over others, which has led to a patchwork of policies and regulations that cause inequity within the industry. The Province should therefore take a comprehensive, rather than piecemeal, approach when developing policies that pertain to the beverage alcohol industry.  Each category creates jobs and spurs economic activity for Ontarians and Ontario beyond the traditional supply chain.
3. Accordingly, the beverage alcohol industry impacts and supports a number of adjacent industries, including farming, tourism, and hospitality. The power of beverage alcohol to be a force for economic development – particularly rural economic development – should therefore be reflected in policymaking. 

The Peterborough Chamber of Commerce has presented solutions in this realm in the form of a request to government to level the tax playing field across the four alcohol disciplines.  This was suggested in response to the higher taxes on distilled products.  This resolution was part of the impetus for the OCC report as sale and taxation of distilled products continues to be a challenge.  Some of the recommendations that mirror the ones from the Peterborough Chamber are:

• The Government of Ontario should provide Ontario craft distillers with the opportunity to “cross-sell’ or sell products manufactured by other Ontario craft distillers at their own retail locations, thereby supporting the growth of this industry as a whole and eliminating unnecessary red tape.
• The Government of Ontario should apply a graduated rate to the current spirits basic tax, with a zero percent mark-up on the first 50,000 litres sold.

The Peterborough Chamber also participated in a red tape project driven by Peterborough & the Kawarthas Economic Development to determine if a more streamlined approach is possible in the opening of alcohol-based businesses.  The results of those sessions were presented to municipal and provincial governments.

The report also suggests that if the sale of alcohol is to be more widely available a proactive approach on its use is needed.

• In partnership with private sector stakeholders, the Government of Ontario should collect data to assess the potential impact of beverage alcohol sales reform and use this data to make evidence-based decisions on public health risk mitigation and/or further reform.
• The Government of Ontario should engage the beverage alcohol industry to increase public awareness and understanding of responsible consumption.

The report works it way to the conclusion that by getting the modernization process right, the government could unlock economic growth and generate greater tax revenue to fund the public services Ontarians rely on.

Read the full OCC Report