Some N.S. craft brewers say they're being punished due to success

According to the co-owner of Nine Locks Brewing Company, his craft brewery is being punished due to its success.

"Very much so," said Danny O'Hearn. co-owner of Nine Locks Brewing Company. "When we started Nine Locks, we never thought we would ever hit this point."

In Nova Scotia, when a craft brewery generates a high level of revenue or produces a high volume of beer, the Nova Scotia Liquor Corporation (NSLC) will then raise the price markup in its stores.

"Nine Locks is the first of several to go over the ledge and jump to an 84.5 percent markup," said Craft Brewers of Nova Scotia President, Brian Titus.

Which is more than double the previous price markup.

"We will have brands that we sell in liquor stores that will not be profitable for Nine Locks Brewery," said O'Hearn.

Titus said the increase came at a time when Nova Scotia craft brewers were already paying the highest in-store price markup of any province in Canada.

"If we were in B.C., we would be paying 10 per cent," said Titus. "If we were in Quebec or New Brunswick, we would be under 20 per cent."

NSLC rules are firm and clear. The company's beer production triggered the markup increase this week. It will last only for the remainder of the fiscal year.

"With this new policy that we implemented, they just pay the new markup until the fiscal year, April 1," said NSLC Communications Specialist Beverley Ware.

Microbreweries will then go back to paying the smaller price markup until the increase kicks in again, next fiscal year based on beer sales.

Dan Shaw, from the Dalhousie University Rowe School of Business, says small breweries like Nine Locks have served notice that they are now major performers on the brewing stage.

"They certainly eroded the market share of these big players over the last number of years," said Shaw. "At some point though, you are big enough that you have to play with the big boys."

Both Titus and O'Hearn said they hope to meet with the province to urge them to reconsider these price markups that they says are impacting profit margins.