Okanagan Spirits family
Okanagan Spirits family, Jeremie, Melissa, Tyler, Patricia and Tony.
BC’s Minister of Agriculture says the provincial government is willing to look at changes to liquor laws to help grow the emerging craft spirits industry.
Lana Popham says she has already spoken to Craft Distilleries Guild president Tyler Dyck, and plans to meet with him soon to discuss specific changes to BC liquor laws.
“Tyler has sent me information around their ask already,” said Popham. “I know they want to be able to increase their production, and this would be tied to local sourcing and local production for all of their products.
“I’m willing to take a hard look at that because I’m quite interested to see how that could increase production around the province for different products that they need. For example, any of the grain that is needed in distilling, or in the various processing opportunities for neutral spirits.”
That is music to the ears of the Craft Distilleries Guild, which has been trying since 2013 to convince the BC government to raise their production limits.
Dyck explains that craft distillers won an important victory that year when the BC government agreed to eliminate the 167 per cent markup charged by the BC Liquor Distribution Branch for most alcohol products.
As is the case for wineries, the government no longer charges that markup for craft spirits that are locally sourced, locally produced, and that are not sold through BC Liquor Distribution channels.
Dyck decided to take a risk that the government would liberalize the regulations around craft spirits, and launched Okanagan Spirits; the first craft distillery in the province.
“Under the old model, if we sold a bottle for $40 the LDB would take off three-quarters of that, and Okanagan Spirits would get $9.44,” Dyck explained. “But the cost to make that bottle is actually about $20, so we would be losing money. There was no business model.
“Under the regulations passed in 2013 we could figure on making five or 10 dollars a bottle, and the model works.”
The only drawback? Unlike wineries, which can produce as much wine as they want, the craft distilleries can only produce 50,000 litres of finished product before they have to pay the higher markups, and the full markup kicks in at 100,000 litres.
“So, what that does is say, ‘you can never scale up your business’,” Dyck explains. “If those limits were applied to the BC wine industry, we wouldn’t have a BC wine industry. You wouldn’t have a Mission Hill, you wouldn’t have a Quail’s Gate or a Red Rooster, because 50,000 litres just isn’t enough to build a serious business.”
The CDG has been working without success to win a change to the regulations that Dyck sums up as “adding another 0 to the limits;” or, in other words, increasing the limit for non-taxed craft spirits to 500,000 litres of finished product.
“I mean, ideally, we’d like to be treated just like the wineries and not have any limits, but increasing that number by a factor of 10 would put us in a similar position to the craft breweries in BC, and that would be enough to build a profitable business that can scale,” Dyck says.
Craft breweries can produce 30 million litres of finished product, which equates to about 600,000 litres of pure alcohol.
The craft distilleries would like to produce at least 500,000 litres of finished product, which equates to roughly 180,000 litres of pure alcohol.
“Obviously we’d like more, but this would be at least workable,” Dyck says.
Dyck hopes he finds a more receptive ear with Popham, who in her non-political life is an organic grape grower on Vancouver Island.
And in fact, Popham says she is already making moves to change BC liquor laws, and is open to discussing higher production limits.
“We’ve been working hard already at trying to level the playing field for the breweries in this province, the meaderies and the distilleries as far as being able to process products on farms,” Popham says.
“So, we have a committee we are forming between myself and the Attorney General … about liquor policy. Normally this would be done under his ministry, but we know there are so many agricultural opportunities through changes to liquor laws, so we thought we’d have a lot more fun doing that together.”
“We will definitely be bringing Tyler Dyck in to speak with us about what their ask is for the Craft Distilleries Guild … and I am interested to hear their proposals for sure.”
Both Popham and Dyck agree the key incentive for reform will be the impact on agricultural production in BC.
Popham’s mandate as Minister is to create a larger domestic market for BC-grown products under the newly announced Grow BC program.
Dyck says that fits in with helping the craft spirits industry grow as well.
“Everything we make is produced using BC-grown products,” Dyck says. “That includes the grains we get from the Peace River Valley, and the fruits we get from the Okanagan.
“We used 1.2 million pounds of apples for our family reserve gin, and a half million pounds of berries and other fruits for other products. If the BC government helps us build this industry it will be very positive for BC’s agriculture industry and our tourism industry as well.”
In fact, the rapid growth of BC’s craft spirits industry after 2013 is already being felt, even though the producers are currently limited in the amount they can produce.
According to South Peace Grain Cleaning Co-Op assistant manager Jocelyn Shuman, sales to spirits manufacturers was close to zero in 2012, but is now closing in on 10 per cent of all sales.
“We only had five steady customers in this industry just two years ago,” Shuman says, “But we have about 20 customers now, and it’s growing very quickly, so all that effort has definitely paid off.”
Dyck says he’s hopeful the NDP will approve the higher production limits, as it will help both the agriculture and the tourism industries, and show voters the NDP is, in fact, supportive of business.
“I think this would be a great boost for them, because we tried and failed to get this done with the Liberals for years, and I could see the public would really see it as very positive that the NDP moved quickly to help a growing industry,” he said. “So, yes, we’re hopeful.” ■
