An in-depth focus on Caribbean issues
IMPROVED CANADIAN MARKET ACCESS SOUGHT FOR RUM AND BEER
CARIBBEAN rum and beer producers are hopeful that they will gain improved access into the Canadian market as a result of the current negotiations on a new Trade and Development accord between the Canadian and CARICOM governments. Problems of access for Caribbean alcoholic beverages into the Canadian market, especially the Ontario market, were raised at a recent Canada-CARICOM Trade Development Forum when the Region’s private sector got an opportunity to provide an input into the negotiating positions of the CARICOM Office for Trade Negotiations (OTN).

QUOTE: In practice, Caribbean beer does not always get much visibility as it is not easily seen on entering the store and, in many cases; these products are at the back of the store. If the Caribbean product doesn’t sell, due to lack of visibility and availability, the product can be delisted.

While some of the barriers Caribbean rum producers faces, especially blending requirements, are well known, the hurdles which the three beer producers – Carib, Red Stripe and Banks – face in Ontario’s Beer Stores were ventilated at the recent forum.

Beer producers are required to pay a one-time listing fee of $2,725 and an additional $218 for each additional store in which they would like to sell their product up to 233 stores and then $51 per stores beyond the first 233.  The Beer Store (TBS) insists that the number of stores in which a brewer’s product can be sold “is fully in control of the brewer”. It costs approximately $50,000 if beer producers want to have their products available in at least 50 percent of TBS stores.

A TBS official advised me that no brand is discriminated against. “While the system may be owned by Labatt, Molson and Sleeman, it is completely open to any brewer in the world. Any brewer can list whatever brands they want in whatever stores they want.”

In practice, Caribbean beer does not always get much visibility as it is not easily seen on entering the store and, in many cases; these products are at the back of the store. If the Caribbean product doesn’t sell, due to lack of visibility and availability, the product can be delisted.

Recently, an Ontario restaurant was unable to get a particular brand of Caribbean beer from a TBS outlet. The Beer Company claims that supply issues are due to supply chain problems at the Liquor Control Board of Ontario (LCBO). “If the product is out of stock in the LCBO warehouse or the LCBO fails to deliver the products ordered then a stock-outs can occur.” The LCBO, on the other hand, says sometimes it is a supplier issue out of its control.
Some Caribbean breweries believe availability is sometimes linked to a trend by TBS to make supplies more available in areas where there is an ethnic population while the beer producers want to sell to the much wider and more profitable mainstream Canadian market.
The LCBO says its store managers “are free to choose products that they feel which have appeal in their local market”. A LCBO official told me that it is also important for suppliers to have their sales reps visit stores to help increase distribution. However, undertaking costly promotions only make financial sense if the LCBO then agrees to increase stocks of the Caribbean beer.
A study commissioned by the CARICOM Secretariat on the Canadian market for wines and spirits noted that Ontario and every other Province and Territory have monopolies on the introduction of all alcoholic beverages into their territories both from abroad and from other provinces.
The report also observed that distribution and warehousing services for importers are generally reserved for the provincial liquor boards. “This has been criticized as being a legally sanctioned price fixing mechanism to guarantee profits and discourage price competition, thus protecting established major producers.“
The study also pointed out that in a number of provinces, additional outlets – such as grocery stores or licensed retail stores – are available for sales of the domestically produced products or domestically bottled products “but these facilities do not cater for imported product.”
“The Canadian liquor market appears to be lucrative from the country’s pricing perspective; products can enter tariff free under CARIBCAN, however entry is subjected to quantitative restrictions and government controls,“ the study concluded.
The Caribbean Brewers Association (CBA) is fully behind proposals for new market access measures “that would better accommodate/facilitate trade, route to market and price competitiveness of brands from comparatively small Caribbean breweries in the Canadian market”.
As regards the Caribbean rum industry, one of the key CARICOM proposals calls for the elimination of blending requirements, which the West Indies Rum and Spirits Producers Association (WIRSPA) have been pressing for. Caribbean rum producers take issue with Canadian regulations that require rum bottled in Canada to be blended with Canadian alcohol by 1 to 1.5 percent by volume.
Caribbean rum exporters mostly export bottled rum. Production costs could be cut considerably if regional rum could be bottled in Canada without the blending requirements.
CARICOM  wants to have National Treatment (same as applies to Canadian producers) to be accorded to alcoholic beverage on issues such as listing, pricing, access to points of sale, distribution, merchandising, cost of service and fees.
Caribbean trade negotiators are also recommending that the listing of alcoholic beverages be transparent. They want to have reasons provided, within a specified period, if a listing is revoked. As well, they are calling for an appeals process.
For the purposes of labelling, Caribbean rum producers feel that Canada should not permit any spirit drink to be offered for sale as “Caribbean Rum”, unless certain requirements are met, especially that such products are made from sugar cane products fermented and distilled in a CARICOM or Commonwealth Caribbean country.
The CARICOM negotiators are seeking concessions similar to those granted to Costa Rica and that form part of the Canada-Costa Rica Free Trade Agreement (FTA).
Canadian international trade officials have indicated that Canada is prepared to “consider revisiting” Canadian requirements for Caribbean rum exports. This is a good sign.
CARICOM trade negotiators are expecting that commitments given by the Canadians at the Federal level and measures agreed to in a new accord will be enforceable at the provincial level.
(Sandra Ann Baptiste is a Business Consultant and Specialist in Caribbean Affairs)