Alcohol importers decry Alberta stock held hostage

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Jon Watson has about 16,000 cases of wine sitting in an Alberta warehouse.

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He’s unable to sell that wine, worth about $5 million, as it’s now caught in the middle of the escalating trade war between Canada and the United States.

“I can’t sell it to anybody. I can’t send it back to supplier. I can’t transfer it to another province,” said Watson.

In response to U.S. President Donald Trump’s tariffs on Canadian goods, Alberta, along with other provinces across the country, imposed restrictions on the sale of American alcohol. In Ontario, the government-run liquor stores pulled American alcohol from shelves. In British Columbia, the NDP government initially pulled only alcohol from Republican states off shelves, but this week opted to pull American alcohol entirely, although the province’s private liquor stores are still able to sell American alcohol.

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While Alberta hasn’t barred the sale of American liquor products outright, Danielle Smith’s United Conservative government announced last week a ban on their import or sale onwards towards retailers, such as bars, restaurants and liquor stores.

This has left importers stuck with alcohol they’ve paid for — sometimes having arrived in the province weeks, months or even years ago — now locked up in an Alberta, Gaming, Liquor and Cannabis (AGLC) warehouse in St. Albert, an Edmonton bedroom community.

The Import Vintners & Spirits Association, a trade group that advocates for alcohol importers in western Canada, wrote to Smith’s office last week, in a note obtained by National Post, estimating that 19 per cent of all wine and 10 per cent of all spirits sold in the province come from the United States.

“Alberta agents are currently holding between $13 million and $40 million in sales revenue that they cannot recoup,” the association wrote. “This is not simply a policy issue — it is an economic emergency affecting Alberta businesses, jobs, and tax revenue.”

Unlike other Canadian provinces, Alberta has a fully private liquor market. When imports are brought into the province, they’re purchased by private import agents. In comparison, in Ontario, the Liquor Control Board of Ontario is the purchaser, and import agents receive a fee for their services. In Alberta, alcohol is purchased privately, then stored in the AGLC warehouse, and those imports are sold to retailers by the AGLC, which then passes along a consignment fee to importers.

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B.C. has a similar system. While Alberta is not allowing existing alcohol stock held in storage to be sold to retailers, B.C. is. Private liquor stores, restaurants and bars are still able to buy existing American imports to stock their shelves.

You can ban the import, but just let us sell what we already have, generate that cash

Robert Chalifoux, who operates Drinks Inc., told National Post that he has 86 cases of alcohol in storage. That’s less than normal — when trade tensions began to ramp up, he was cautious and avoided putting in a purchase order to American suppliers, unsure that he’d be able to sell the product in Canada.

“I saw it coming. Not everybody did that,” Chalifoux said.

Mark Kuspira, with Crush Imports, primarily imports wine from the United States. He has $200,000 worth of product tied up in the stoppage — enough to begin worrying about making payroll and paying suppliers.

“It’s getting difficult to do so,” Kuspira said.

Since the United States is so close, importers can get product in a matter of weeks. To look to other markets, overseas perhaps, importers would be looking at six months or longer to receive stock.

“Our ability to create more cash flow from other markets, it’s a way longer timeframe,” Kuspira said. “This is a cash-intensive … industry that relies on churning and burning of inventory.”

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Compounding matters, Watson said importers are paying storage fees, while they’re unable to do anything with the product that they own. Most importers work with very little operating capital, he said. They might borrow from banks to finance an inventory purchase or a trade loan from the supplier, then pay back the money within a few months after they’ve sold the inventory.

But with that supply paid for but locked up, not everyone has the cash on hand to pay what’s owed without selling their cases of alcohol.

“So most agents, really, they can’t survive for more than a month or two without having to take some some serious financial maneuvers, which would be laying off employees or even shutting off their business for a while,” said Watson. “This is kind of COVID-but-worse for a lot of these agents.”

Watson said his company, Renaissance Wine Merchants, is a larger player in the province — and the other three western provinces — so he figures they could maybe go three months before needing to start cutting costs.

“The smaller guys, they probably can’t even last half that long without, again, having to draw on an operating line or lay people off or do something to survive,” said Watson.

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The liquor-import industry is looking for some answers, some relief, from the Alberta government.

“I’m patriotic, so I feel like it’s the right call, and I’m willing to suffer my part of it … to do our part to show the White House that we won’t be bullied,” said Chalifoux.

Still, he would like to see storage fees waived.

Kuspira, who said he launched his business 22 years ago with an American winery, said he’s got friends in the industry on either side of the border.

“I understand the sentiment behind it. You know, this is also hurting, really, farmers,” Kuspira said.

The trade association has asked the government to allow the sale of existing inventory and to permit the receipt of shipments that have already been paid for and are in transit from the United States. Or, the Alberta government could purchase inventory to improve cash flow for import businesses.

The association has also launched a fundraiser for a legal fund to fight the Alberta rules.

“Obviously, ideally — would just be to let the market decide what they want to buy and from who. So, just tariff new product that comes in, and let us sell it at that higher price,” said Watson.

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But, he said, given the politics at play, Watson figures a more “pragmatic” request would be to simply allow the sale of product that’s already in Alberta.

“You can ban the import, but just let us sell what we already have, generate that cash. Let us pay down our debts and ride this one out for as long as it’s going to be,” Watson said.

“They need to release the goods for sale,” Kuspira agreed.

However, there’s no indication the Alberta government is willing to change the rules.

“This situation is evolving rapidly, and developments are occurring daily. We will share further details as they become available,” wrote Brandon Aboultaif, press secretary to Dale Nally, minister of Service Alberta and red tape reduction.

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