Agriculture Committee on April 16th, 2013

[Luke Harford]

There are also breweries that can sell at their own sites.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

At their brewery, right.

I would say probably most beer moves through The Beer Store or the LCBO, or I guess through restaurants as well.

[Luke Harford]

And restaurants, right.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

In terms of accessing the public through The Beer Store and the LCBO, does your organization have a position on that? Would you prefer to see greater access for the public to beer products, in other words through convenience stores? That's more of a provincial issue, but it's a question of interest. I would be interested in knowing.

[Luke Harford]

That's absolutely a provincial issue.

Obviously, I'm fascinated by the efficiencies of The Beer Store model. Although they may be accused of certain things, they really do list any brand for any brewer at any price that brewer wants, in any one of their stores. They do accommodate the beer category extremely well.

Their entire system is chilled, and microbrewers who are producing unpasteurized beers need that chilled system throughout. They wouldn't necessarily get that in a convenience store model. The Beer Store does great things for the beer category.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

In terms of the future of beer, you've mentioned a couple of things related to the supply chain, but I'm wondering if you can encapsulate where you predominantly see the future gains for beer. Do you see it being greater access for the Canadian consumer? Is it greater access to perhaps international markets? Is it science and innovation? You were talking about different malts. Or perhaps it's more innovativeness in terms of blends. When you look at the microbrewery, for example, lime was not added to beer ten years ago, but it's there now, and I think it's a top seller. So maybe its innovation in terms of product offerings.

I don't want you to quantitatively rank them and say, “This is our number one priority” but could you group them into high and medium priorities for the beer sector, in terms of how the sector is going to grow and strengthen into the future?

[Luke Harford]

I certainly think you're going to see the pace of product development or innovation within the category get a lot quicker.

Molson Coors came out with Coors Light Iced T last year, which is a new line. There was the lime; that is a new and creative category.

I think the beer category as a whole is really on the cusp of being identified as a product that matches incredibly well with food. I think it's underappreciated in that area. It has great recognition for its sociability; you have great conversations over a nice cold beer. However, I think with foods, the fact that you can combine beer with more tastes than you can with wine or with spirits, once people in the brewing community begin to identify that—certainly the craft beer industry is big on that, and the large companies recognize that as well and are making lots of investment in that area—it's going to be an area where the category is going to see a lot of growth.

[The Chair, Conservative, Merv Tweed]

Good. Thank you.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

I just want to follow up on a question Malcolm asked. He mentioned buying from a local brewery, a microbrewery, a kind of beer that might have something different in it—I don't know what—which may not meet the definition of beer, I thought I heard him say. And yet he is able to buy it at a local pub on tap. Are you saying that the problem is because of the definition, that while he may be able to buy that on tap, and locally, and probably consider it beer, you can't move it from province to province because of the definition? There's no all-embracing definition of beer that would recognize it as beer. What's the problem here?

[Luke Harford]

Well, the food and drug regulations start to apply once that product does cross a provincial boundary or for product coming into the country. In Ontario, you could have a definition for beer that fits with Ontario's Liquor Licence Act, and you can distribute it as beer within the province. But once it crosses that boundary it has to fit within the compositional standard set out under the food and drug regulations, and the food and drug regulations stipulate all the ingredients Health Canada has approved for use in a product that you label as beer.

[Frank Valeriote, Liberal, Guelph, ON]

Right. So what you're asking, then, is for the government to meet with the provinces and talk about this definition and broaden the definition so that more products that are produced locally as beer are recognized nationally as beer.

[Luke Harford]

It would make it much simpler for all brewers.

[Frank Valeriote, Liberal, Guelph, ON]

That's understood.

Going back to the hops problem, that until the nineties, when pests, pricing, and consolidation made hop farming in Canada unviable.... What of those three are the predominant factors for our no longer producing hops? Do you see our ever getting back into that market?

[Luke Harford]

These hop farms are very, very intensive from a capital expenditure standpoint. You need lots of land, but also these trellises, or whatever they put up with the wiring. They grow really tall, and then they have special tractors that come and cut the vines down. To get back into it is going to be a massive expense for a commercial-sized hop producer to undertake.

But to answer the first part of your question on what did it in, I would say probably pricing was the thing. It's such a competitive global marketplace that this probably had an impact on Canada as a smaller hop-producing country, on influencing its current position.

[Frank Valeriote, Liberal, Guelph, ON]

Okay.

You mentioned something about the maximum residue limits, and I guess there's some kind of protocol that says there's a maximum residue that's limited on the hops coming in. Ours is different from the States, where we predominantly get our hops, and we have to harmonize this. Is that what you're saying?

[Luke Harford]

Yes. We have fewer of those MRLs established. Our list of MRLs doesn't marry up well with the United States. The approach we're taking is to say we're going to focus on domestic registrations. So if you had hop producers here in Canada, you would be going through that domestic registration process. If you say you're going to make it a priority to establish import MRLs, so you don't have to go through the whole domestic registration process to certify or qualify a particular pest management product for use here in Canada, you just need to establish it for products that are coming in.

[Frank Valeriote, Liberal, Guelph, ON]

I gather that MRLs are established for other crops, I'm told perhaps like tropical fruits—

[Luke Harford]

Oh, for sure.

[Frank Valeriote, Liberal, Guelph, ON]

—that are not produced in Canada. Could the Pest Management Regulatory Agency have the same process for hops? Is every single product different?

[Luke Harford]

I would imagine the way it works is when they're establishing import MRLs for a fruit or a vegetable, or something like that, they'll look to see if there are any other uses or applications where this applies, where the hop producers could come in and ask to have hops included in their analysis.

[Frank Valeriote, Liberal, Guelph, ON]

Okay.

A final question. Microbreweries really fit into a movement I think that's been afoot in Canada for a while, and that is the produced local, buy local.... People have a sentimental attachment to their local brewery. I know in Guelph there are a lot of microbreweries. It's a flourishing industry.

Do you represent the microbreweries as well?

[Luke Harford]

Yes, we do. We've got all the majors, and then we've got 21 either regional or smaller craft brewers from across the country.

[Frank Valeriote, Liberal, Guelph, ON]

Do the same issues apply to the microbrewers as apply to the larger brewers, or are there any different issues?

[Luke Harford]

Sure. They're importing hops as well. They're not all buying locally grown hops, as the market is just not big enough, so they would be buying and importing it just like the larger players.

[Frank Valeriote, Liberal, Guelph, ON]

Would they be less concerned with the issue of the labelling of beer because they can label it as they wish, or do they want that fixed, too, so microbreweries can start selling beyond their borders?