By Gary Symons
Tyler Dyck
Tyler Dyck, head of the Craft Distillers of BC, at his Okanagan Spirits distillery in Kelowna.
Go back in time just five years, and BC was a very different place when it came to craft distilleries. A few isolated pioneers struggled to make a go of it, but were hampered by liquor regulations and high markups.
Today, after wholesale changes to BC liquor regulations, BC has the hottest craft spirit industry in Canada. In fact, there are more craft distilleries in the Okanagan Valley than in all of Ontario, and BC in total has 46 thriving distilleries in operation today, with many more on the way.
So, what was the secret to BC’s success?
Alex Hamer, founder at the craft distilling festival, BC Distilled, says the biggest driver was the regulatory changes made by the BC government in 2013-14.
“The province brought in a lot of changes and among those was a craft designation for the spirits industry,” Hamer explains. “The underlying philosophy is that craft distillers must use 100 per cent BC inputs in their product and must ferment and distill completely onsite in BC.
“But, if you meet those criteria you get significant breaks on the taxes and markups that apply to the industry in general.”
The greatest of these, says Hamer, is the provincial markup, which amounts to about 55 per cent of the total cost of a bottle of spirits. That markup made it very difficult for small volume producers to make a living, and kept the industry to a few die-hard operators.
Now, craft distillers do not pay that markup for product sold onsite, and also face generally lower taxes overall when selling to the trades, such as restaurants and liquor stores.
Combined with a Farm to Glass program through the BC government that allowed the sale of craft spirits at Farmers’ Markets, the craft liquor industry took off with remarkable speed.
Hamer says it was also due to a growing ‘cocktail culture’ in Vancouver and other large cities in BC.
“The cocktail culture in BC, and especially Vancouver, is in my opinion a couple of years ahead of the rest of the country,” says Hamer. “There’s a higher demand here for unique, local products, and people are willing to pay a premium for excellence.”
The first craft distiller in BC, Okanagan Spirits, went through the hard times and the relatively good times.
Their president Tyler Dyck says the changes in 2013 have helped, and are largely responsible for the sudden growth in BC’s craft spirits industry.
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Proudly grown in the Okanagan
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Hardwork in every bottle
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Vernon grown corn
Corn being harvested near Vernon for Okanagan Spirits’ craft Bourbon.
But he also says the changes haven’t gone nearly far enough.
Dyck is also head of the Craft Distillers Guild of BC, which originally lobbied for the changes to BC liquor laws.
“The change in regulations is positive, but it only allows us to produce up to 50,000 litres before the higher markups kick in,” Dyck explains. “By contrast, a craft beer distillery can produce 30 million litres. Even with the difference in alcohol content, that would be the equivalent of about 450,000 litres or so.
“The fact is, we can’t grow this industry if we’re restricted to only 50,000 litres, so we are asking the new government to increase this to 500,000 litres.”
Dyck says the benefits will be felt by BC farmers, particularly those producing grains and fruit products.
“Everything we make is produced using BC-grown products,” Dyck says. “That includes the grains we get from the Peace River Valley, and the fruits we get from the Okanagan.
“We used 1.2 million pounds of apples for our family reserve gin, and a half million pounds of berries and other fruits for other products. If the BC government helps us build this industry it will be very positive for BC’s agriculture industry and our tourism industry as well.”
In fact, this phenomenal growth is already having a positive and growing impact on farmers across the province, particularly on grain farmers in the Peace River Valley. Spirits producers use various fruits, berries and herbs in their products, but the main ingredients for most are grains.
The South Peace Grain Cleaning Co-Op took an early gamble on this nascent industry, and that bet has paid off, says Assistant Manager Jocelyn Shuman.
“When we started working with the craft distillers it was really a pet niche project,” recalls Shuman. “It was definitely the smallest part of our business, but it was also our favourite because, well, it’s just very cool!”
When South Peace started working with craft breweries the demand for grain comprised less than two per cent of their total business, but that has grown to more than eight per cent of their sales in just four years. This past year the company shipped roughly 175 tons of rolled wheat alone for use in craft spirits.
“We only had five steady customers in this industry just two years ago,” Shuman says, “ but we have about 20 customers now, and it’s growing very quickly, so all that effort has definitely paid off.
Gin Bourbon and Vodka
“Best of all, I now have great places to go when I travel on business or holiday, where I can drop in and try things that are made with our grain. That’s a really great feeling, and our farmers just love knowing their products are going into these really high quality spirits that are all made here in BC.”
That growth, says Hamer, is bound to continue at the same blistering pace, if not even faster.
“I personally know of 15 companies planning to open a craft distillery in BC over the next year or so, and I suspect there is probably double that number that I don’t know about,” Hamer says. “A lot of the early growth was in the bigger centres like Vancouver, Victoria and Kelowna, but now I’m seeing craft distilleries opening in smaller towns as well.”
But future growth will depend on increasing production quotas for the craft distilleries.
“We were the first craft distillery in the province, and we know how difficult it is to build a business under this 50,000 litre limit,” says Dyck. “The new guys coming in are just learning this, and while we have seen a lot of growth since 2013, I think that growth will stall unless we have regulations in place that allow people to grow their business.”