Group of U.S. distillers complains N.S. and other provinces favouring local alcohol

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HALIFAX — A group of U.S. alcohol producers claims Canadian retailers are giving unfair advantage to local spirits, including what it calls “discriminatory” markups in Nova Scotia and other provinces.

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The Distilled Spirits Council of the United States has sent a 77-page submission to the office of U.S. Trade Representative Jamieson Greer outlining obstacles the American sector is facing around the globe. That includes six pages on Canada, where all but two provinces have mostly taken American alcohol off the shelves in response to U.S. President Donald Trump’s tariffs.

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Among other complaints, the distillers take issue with the preferential markup the Nova Scotia Liquor Corp. offers to local spirits. They say Nova Scotian rum, whisky and other liquors are marked up between 50-80 per cent depending on how they’re bottled, while all imported products are marked up by 160 per cent.

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The U.S. distillers claim the markups are inconsistent with World Trade Organization rules as well as the United States-Mexico-Canada free-trade agreement.

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“It provides protection to local products and discriminates against imported spirits,” says the document, which also claims Alberta, Saskatchewan, New Brunswick, P.E.I. and Newfoundland and Labrador provide similar benefits to local companies.

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The council is asking Greer, who Trump appointed in February, to urge Canada and those provinces to end the NSLC’s “discriminatory distilled spirits markup.”

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NSLC communications director Allison Himmelman said the provincial government is best positioned to address trade policies.

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“However, I will share that our shoppers tell us that local products matter to them. Historically, we’ve offered preferred markups on local products as part of our support of Nova Scotia’s alcohol beverage industry and to ensure a level playing field for local producers,” Himmelman wrote in an email.

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Nova Scotia trade officials could not immediately be reached.

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The NSLC removed about $14 million worth of U.S. alcohol from its shelves in February when the trade war began. It started selling off its existing inventory of U.S. booze in December, pledging to give $4 million of the proceeds to local food banks. Sales of local products were up 13.4 per cent to $44.1 million in the provincial distributor’s most recent quarter.

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Most provinces removed U.S. alcohol earlier this year, with Alberta and Saskatchewan putting it back on shelves over the summer. U.S. producers say their Canadian sales fell by 68 per cent in April and dropped by 85 per cent in the second quarter to less than US$10 million. They’re asking for Greer’s backing on ending the provincial sales bans.

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The American distillers are also taking aim at the Liquor Control Board of Ontario, including a policy that requires producers to ship their products directly from their distillery to the board. “As a result of the policy, companies may not utilize central distribution hubs in the U.S. or elsewhere to ship their brands to the LCBO,” says the document.