Open Letter To The Minister of Service Alberta & Red Tape Reduction
March 7, 2024
Honourable Dale Nally
Minister of Service Alberta & Red Tape Reduction
Government of Alberta
I am writing this letter on behalf of the board of the Alberta Hospitality Association and the 700+ Alberta restaurateurs who are members of our Association. We are deeply concerned about the announced changes to the markup of beer and spirits and the ad valorem tax added to wine, announced on February 27, 2025. We are asking our government to be fiscally responsible and govern in a way that considers the ripple effects of programs and policy decisions on small businesses.
The Alberta Small Brewers and Craft Distillers Association, have already outlined the impact of liquor markup changes on their industries which will ultimately impact restaurant owners, liquor distributors and consumers alike. In addition, the ad valorem markup will result in an increase to every category of a restaurant’s drink menu.
64% of the Alberta wine market will be exposed to at least a 10% to 15% increase.
Wine prices at $25 dollars or more represent the largest share of the Alberta wine market. These will see a 15% increase.
As an example: A $26 wholesale wine will become $29.90 which translates on a restaurant menu to an increase from $85 to $100 at stand restaurant markup.
All of these added costs to liquor will trickle down to restaurant owners and operators, once again adding strain to an industry that has seen the cost of doing business skyrocket over the last two years. To note, our industry has experienced, on average, a 25% increase in food, an 18% increase in labour costs and a 22% increase in additional operating costs. Over the same period, average menu costs have risen approximately 17%. Restaurant operators cannot pass these increases on to their customers and expect to remain competitive or to be an affordable option for consumers. The continued pressure on restaurant margins will ultimately lead to job losses, and for some small independent businesses, this may be the proverbial straw that breaks the camel’s back, causing them to close their doors.
These changes come at a time when consumer confidence and small business optimism have fallen to levels similar to those during the pandemic era. We are entering an unstable economic period with US trade wars that will negatively impact the financial situation of both restaurants and consumers. In addition, this directly contradicts the premier’s recent quote that “we will just have to drink more Canadian wine and beer” as we are now making our boutique, locally made products unaffordable in comparison to our commercial competitors.
Wine prices are already the most expensive in Alberta's history. Part of this is due to higher production costs since COVID-19. Still, prices are also driven by a weak Canadian dollar (lowest in 22 years), the highest shipping costs recorded, and the highest recorded storage fees at Connect Logistics. Finally, the changes related to liquor markup are the antithesis of policies that support local, small, independent businesses and the entrepreneurial spirit of our province. The competitive advantage of being a privatized market has essentially been lost due to these price increases. We are now on par with the most expensive wine markets in the country, namely Ontario and British Columbia. If we truly want to encourage supporting local industries, we need to make it affordable for Canadians.
We add our voice to the Alberta Small Brewers and the Alberta Craft Distillers Associations in their call for rescinding the February 28 announcement.
Sincerely:
Mona Pinder
Executive Director, Alberta Hospitality Association
cc:
Premier Smith
Minister Horner
Minister Neudorf
Minister Dreeshen
Minster Elllis
Minister Jones
Minister Schow
Minister Sawhey