Manitoba brewers swallowing cost of alcohol sales tax

Manitoba breweries and restaurants say a new tax on alcohol will be passed along to consumers. Jeff Keele explains.

It’s no April Fools’ Day joke: beer, wine and spirits are getting more expensive Wednesday as the federal government’s annual alcohol tax increase kicks in.

The 2 per cent hike is part of an automatic escalator tax tied to inflation and is expected to cost Canadians $41 million, according to the Manitoba Restaurant and Foodservices Association.

Colin Koop, owner of Devil May Care Brewery, says his operation is already being squeezed on multiple fronts.

“It sucks; it is expensive. Everything is more expensive for us to buy. We try not to pass that on to consumers,” he said.

With another increase now on the way, Koop says his bottom line will take another hit.

“Every time things like that go up, it’s more money out of our pocket.”

Industry associations are calling for relief, arguing the escalator tax piles on industries already operating on razor-thin margins.

Shaun Jeffrey of the Manitoba Restaurant and Foodservices Association says the impact is felt across the board.

“It just continues to increase the cost of doing business and the cost we have to pass on to the consumer, especially from a beverage standpoint.”

Jeffrey says rising alcohol prices are already changing consumer behaviour—and not in the industry’s favour.

“The recreational dollar that the average Manitoban has to go to a restaurant, they’re choosing to spend less in our restaurants, and you’re just seeing a lot of restaurants pivot away from alcohol.”

That trend is especially pronounced among younger people, who Jeffrey says are already drinking less.

Not everyone opposes the increase, however. The Canadian Partnership Against Cancer notes on its website that higher alcohol prices are strongly associated with reduced consumption and that pricing and taxation are effective tools for curbing alcohol-related harms, including cancer.

Back at the brewery, Koop says he’ll have to gulp down this latest increase rather than pass it along.

“Every time these things go up, we can’t really raise the prices too much, so it just kind of comes out of the bottom line.”

The federal alcohol escalator tax was first introduced in 2017. In 2023, it was capped at two percent amid a period of high inflation—the same ceiling that applies to Wednesday’s hike.

As for what younger consumers are reaching for instead of alcohol, the Manitoba Restaurant and Foodservices Association says cold coffee is now the most consumed beverage among young people.