Since Premier Brad Wall decided to go public with his concerns about Alberta’s recent policy change (read here and here for background), and since the premiers are going to meet today to talk about this stuff, I thought I would offer up an overview of how the Saskatchewan beer system works.

This is based on research I have done over the last couple days (combined with my longer term knowledge of what is going on), so it is likely incomplete. Anyone who has a correction or addition, feel free to comment – this is a work in progress.

Beer regulations (in any province) are frustratingly complex – which is why I am certain I don’t have the full picture yet. However, I do have enough to put Premier Wall’s comments into perspective. I will try to put it together as clearly as I can.

These are the facts as I understand them:

Saskatchewan has a mostly public liquor retail system (for now). There are a handful of private stores that have the right to order product directly, but the bulk of beer sold in Saskatchewan is through the SLGA. Saskatchewan does not have an open border like Alberta’s. All applications to import beer into the province must be vetted through an SLGA buyer, who has the final decision on whether the beer will be approved for sale or not. The buyer has full discretion on whether to accept or reject the application. They are not required to inform the applicant of the reasons for their decision. Alberta breweries have over the years applied to enter the Saskatchewan market but have had their applications denied. No reason provided. If accepted, the SLGA takes control over the product. They determine which stores it goes into and have a complex set of pricing rules to which brewers must comply. Saskatchewan also has a Social Reference Price – a minimum price for retail – applied to all beer sold in the province. They also apply a “high alcohol surcharge” for beer over 9% alcohol. Saskatchewan does have a tiered mark-up system, oddly set up by packaging (draught has a lower rate than bottles/cans). The lowest rate is $.66/$.98 (keg/package) per litre. This ends at 5000HL. The middle rate is $1.313/$1.842 per litre. Above 200,000 HL the full rate of $1.463/1.993 per litre applies. This rate is applied to all beer sold in the province, regardless of origin. The SLGA currently lists 571 beer SKUs available in the province (keep in mind this includes various packaging options of the same beer). Alberta lists 4,591.

What to make of this? A few things jump out at me.

The biggest is that the flow of imports is strictly controlled by the SLGA, with no accountability or transparency. There is no guarantee of listing if you apply – in stark contrast to Alberta. Further, if we look at the respective SKU numbers, it is not an unreasonable conclusion that one of the criteria they use is to ensure not too many imports make it into the Saskatchewan market. In other words, they may try to ensure Saskatchewan is not flooded with imports which squeeze out local producers. That is, I will admit, conjecture as the SLGA does not report their decision making criteria, but it is a logical assertion.

That Alberta breweries have been denied entry speaks quite loudly to the system’s ability to create border controls over beer. Why deny an Alberta brewery access to your market unless you think they are a threat to a Saskatchewan brewery?

The Saskatchewan mark-up system is significantly harsher than Alberta’s – a complaint I have heard from Saskatchewan brewers for years. Their small brewer cut-off ends where Alberta’s former minimum production capacity began. And the amounts of the mark-up are not even comparable – Alberta is a relative steal in comparison. Alberta’s top rate is $1.25 per litre.

That fact may or may not be relevant to the debate at hand, but it is clear that Saskatchewan breweries can sell their beer at a lower mark-up in Alberta than they can in their home province. Even after the new policy announcement, Great Western gets a better deal in the province west to them than in their home. I suspect that influences business decisions, which might explain why some sources tell me more than half of Great Western’s production is sold in Alberta (a figure not confirmed by GWB).

This post is not intended to trash the Saskatchewan system. They make policy choices like any other province, which is perfectly legitimate. The issue is that Premier Brad Wall has publicly chastized Alberta for their policies, calling them protectionist, when his own province has erected much more serious barriers than Alberta has even contemplated. At least in my opinion. I base that, mostly, on the existence of a government gatekeeper that decides who gets in and who doesn’t. A level playing field only matters if both sides get to actually be on the field.

One province is fiddling with mark-up rates. Another province is restricting supply into its market through a government gatekeeper. Which approach is better? You decide. I am simply offering up some facts about Saskatchewan’s system.