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Industry News Moosehead worried of bootlegging increase if beer import rules change

CFO Patrick Oland says existing tariffs and regulations across the country do limit profits, but he’s concerned what would happen if they were struck down.

The chief financial officer for Moosehead Breweries says he has no problem with New Brunswickers going to Quebec to buy lower priced beer for their personal use, but worries that removing current import restrictions could result in bootleggers bringing truckloads of beer into New Brunswick for illegal distribution.

"As brewers we have a responsibility to ensure our product is distributed in a socially responsible manner," said Patrick Oland Friday.

Oland testified in Campbellton, N.B., where Gerard Comeau is charged with illegally importing 14 cases of beer and three bottles of liquor from a Quebec border town in October 2012.

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He was one of 17 people stopped during a two-day police sting operation. His liquor was seized and he was given a fine of $292.50.

The New Brunswick Liquor Control Act prohibits anyone in the province from having more than 12 pints of beer that wasn't purchased through an NB Liquor outlet.

Comeau's defence lawyers argue that's unconstitutional because Section 121 of the Constitution Act says anything produced in one province shall be admitted free into each of the other provinces.

Oland was called by the Crown to explain the patchwork of different tariffs and regulations in place across the country.

"Every province has unique regulations, usually designed to favour or encourage local producers," he said.

"Moosehead is considered a local brewer by the Province of Ontario because we own a brewery in Brampton. But in Quebec, where we don't own a brewery, we are forced to pay a tariff of $8.56 on every case of beer we ship there from our brewery in Saint John."

Moosehead has licensed a Quebec-based brewery to brew and distribute their beer in the province.

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In the Maritimes, brewers benefit from the so-called Maritime Beer Accord, an unwritten agreement allowing breweries in the region to freely ship their product between the three provinces.

In Quebec, local brewers sell directly to convenience stores without a government mark-up.

Earlier this week, Richard Smith, senior vice-president of the New Brunswick Liquor Corp., said in New Brunswick where the sale of liquor must be through NB Liquor outlets, the corporation adds a mark-up of as much as 89.8 per cent to the price it pays the breweries.

Smith said the Crown corporation makes about $165 million in profits each year for the provincial government.

As a result, the price of beer in Quebec is roughly half the retail price charged in New Brunswick.

Oland said the existing tariffs and regulations across the country do limit profits, but he worries what would happen if they were struck down.

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"Any changes to the regulatory regime nationally have to be well thought out to ensure there's a level playing field and we get a fair situation," he said.

Oland said while Moosehead is Canada's oldest and largest independent brewery, it is small compared to other major players in Canada.

He said Molson/Coors is about 50 times the size of Moosehead, while Anheuser-Busch InBev — which owns Labatt — may be 300 times the size of Moosehead.

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