Micro-distilleries petition provincial government to lift local spirits

An industrial part of LaSalle, known for its history of alcohol production, has become the new home of a micro-distillery pushing the provincial government for historic change.

1769 Distillery, along with other local small-batch spirit producers, have launched a petition calling on the Quebec National Assembly to loosen Prohibition-era laws that tax and regulate high-proof spirits differently from fermented alcoholic drinks.

Unlike wine, cider and beer makers, craft distillers have to pay the government a 52% surtax on any bottle sold and they can't sell directly to bars or restaurants.

"We're asking the government to look at us as a new industry and to help us reinvest money back into our companies so we can grow," said Maureen David, president of 1769 Distillery.

David says her family-run business wants to hire more workers and to expand its offerings to include mixology classes, but that the company's profit margin is restricted.

"We need to be able to keep our margins for sales on-site, to sell directly to restaurants, and to sell at fairs and events, like other alcohol producers who hold artisanal permits," she said.

While craft distillers in Quebec make spirit alcohol in relatively small quantities, often in single batches, they're classified under the same permit as large companies that engage in a continuous distilling process.

"There are two types of permits: an artisanal one for fermented products that don't go over 23% alcohol by volume, so they're low proof, and an industrial one for high-proof spirits," said David.

She says the industrial permit puts micro-distilleries at an unfair disadvantage, especially when it comes to cultivating relationships with other businesses that could be their most profitable outlets.

Almost all spirit sales go through the SAQ, and those made on-site have to sell for the same rate.

That means distillers can't offer the kinds of direct discounts to bars and restaurants that would help them thrive.

"We are the best marketing tool for distilleries. Most of the budget of alcohol companies goes into bars and restaurants, because that's how a consumer first buys a product before they buy it on the retail level," said Toby Lyle, co-owner of the Burgundy Lion Group that manages a number of Montreal pubs.

In the Mile End, Bishop & Bagg features the largest collection of gins in the city, with over half a dozen labels made in Quebec.

"A lot of people are starting to buy more local, and they're definitely coming and asking to try Quebec gins," said Megan Turcotte, the pub's general manager.

In fact, Quebec's consumption and production of gin is outpacing any other province or territory in the country, according to a recent SAQ annual report.

The industry has grown from a handful of local distillers four years ago, to over 65 this year.

"We're helping the economy and creating jobs. Someone has to look at the province's archaic regulations and figure out how we can work together to make sure microdistilleries flourish and become profitable," said David.

The SAQ confirmed by e-mail that it will continue to promote local distillers on store shelves and that producers are right to petition the government if they want change, since their status is governed by legislation.

Meanwhile, the office of Economy Minister Pierre Fitzgibbon wrote in a statement to CJAD 800 that permit changes are limited by trade agreements, but that it will start to review requests from microdistilleries this month.