Moosehead benefited from special treatment, NB Liquor document says

A former chief executive officerof NB Liquor says Moosehead Breweries has lobbied hard for special treatment from the corporation, including measures that may have limited beer choices for customers and cost taxpayers money.

Daniel Allain was commenting on an internal NB Liquor document from 2013, obtained by CBC News, that lists 22 ways the publicly-owned corporation favoured Moosehead over competitors Molson, Coors and Labatt.

The document describes 13 of the measures as "anticompetitive," including a limit on store displays for non-Moosehead products,a price increase on some non-Moosehead beersand the cancellation of a Budweiser promotion "due to Moosehead concerns."

It says the cost to NB Liquor was $7.1 million.

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Andrew Oland, thechief executiveofficer of Moosehead Breweries,disputed the cost estimate in an interview with CBC News, but defended his company'spursuit of favourable treatment from NB Liquor.

"We aggressively fight tooth and nail for everything we can get from NB Liquor, the same as we do with every other customer," he said.

My team is doing exactly what they should be doing in terms of fighting to sell more and moreMooseheadbeer.- AndrewOland, Moosehead CEO

"So my team is doing exactly what they should be doing in terms of fighting to sell more and more Moosehead beer. I'm very proud of them for doing thatand I can assure you my competitors are doing the exact same thing."

Beer policy is a hot topic in New Brunswick this spring because of an Aprilcourt ruling that said restrictions on how much alcohol people can buy in Quebec and bring home violate free-trade guarantees in the 1867 Constitution.

The ruling acquitted Grald Comeau, of Tracadie, who was charged after bringing 14 cases of beer and three bottles of liquor back from Quebec.

'Moosehead concessions'

The 2013 cabinet document, labelled "Moosehead concessions," was leaked anonymously to CBC News. Allain confirmed it is authentic.

"I definitely recognize it," he said. Oland also said he remembers seeing the three-page document.

Allain wouldn't identify who at NB Liquor prepared the list, which is labelled "advice to minister."

He said it was "an opinion of an employee that [NB Liquor] favours Moosehead."

Oland said, "I'm not aware of any situation where NB Liquor is giving a big advantage to Moosehead over any supplier."

He confirmed that Moosehead gets 25 cents per 24-pack more than other brewers, however, and receives a better price on discount beer than competitors because of its low-profit margins.

The document also lists examples of NB Liquor restricting some beer pack sizes because Moosehead's plant in Saint John wasn't equipped to produce them.

Oland said that "perhaps" Moosehead asked the corporation to restrict some pack sizes.

"Or, [we were] questioning NB Liquor: 'Why do you need those formats? What's the real advantage to you or your customers with those formats?'"

Daniel Allain on beer pricing

8 years ago

Duration 3:14

Former NB Liquor CEO Daniel Allain examines a document that discusses "Moosehead concessions"

NB Liquor won't comment on document

NB Liquor won't comment on the 2013 document, saying it's out of date because it's from beforeBrian Harriman,the current chief executiveofficer, took over with a mandate to run the Crown corporation like a private business.

Mark Barbour, a spokesperson for the corporation,said no special measures are in place now to favour Moosehead.

"We create a fair playing field for all suppliers," he said.

"All suppliers are treated equally in terms of opportunities to compete for our customers' business."

From my perspective, it's got to be a level playing field within the province of New Brunswick, how NB Liquor deals with suppliers.- Roger Melanson, Finance minister

He pointed to a "Mix & Match" promotion that lets customers buy two 15-packs of beer from among Moosehead, Molson, and Labatt choices for $49.99. That shows the three companies are treated equally, he said.

The corporation supplies all breweries with a marketing guide twice a year that lists what promotions they can do with NB Liquor.

The same guidelines apply to all of them, Barbour said.

Finance Minister Roger Melanson, to whom NB Liquor reports, said late Wednesday he would get a briefing on the past practices, but told reporters he was happy they have ended.

"There have been corrections since the new senior management of NB Liquor came in. From my perspective, it's got to be a level playing field within the province of New Brunswick, how NB Liquor deals with suppliers."

But a spokesmanfor Molson Coors says "a pricing advantage" remains in place for Moosehead.

Since MolsonCoors' brewery is in Moncton, "we have asked for pricing that is equal to Moosehead," said spokesman Franois Lefebvre in an email.

"We have been working with ANBL to level the playing field amongst competitors. We are awaiting the decision on how to rectify the current imbalance that exists," he said in an email.

He said he did not have information on the 22 measures listed in the 2013 document.

Asked if it was a consideration at NB Liquor to protect jobs at Moosehead, Allain said "it's human nature that when you work for a corporation in New Brunswick, you want to take care of our own."

Oland says the push for special measures from NB Liquor was due in part by a 10-year decline in beer sales in New Brunswick, which he attributed to an aging population and "the challenge of beer coming in from the province of Quebec."

"It's a very, very competitive market so all brewers are very aggressive in terms of talking to the folks at NB Liquor."

Changes proposed and rejected in 2011

Comeau's beer-import trial heard that NB Liquor and other provincial alcohol corporations and regulators agreed in 2011 to raise the personal exemption for people buying alcohol in another province and bringing it home.

Allain saidthe NB Liquor board approved the change but then-Financeminister Blaine Higgsthe minister responsible for NB Liquor at timefailed to persuade the ProgressiveConservative caucus to agree to it.

"Unfortunately, there was a disconnect that happened thereand I truly believe it was a missed opportunity. We see the result today," he said.

But provincial court Judge RonaldLeBlanc's ruling says it was the Department of Public Safety, which oversees the Liquor Control Act, that "did not actively pursue" legislation to loosen the restrictions.

Allain saidthe Comeau case might not have happened if the change had happened.

Higgs turned down an interview request, but said through a spokesperson that the exemptions in the 2011 proposal wouldn't have affected the Comeau case because "the accused had far more liquor" than the proposed changes would have allowed.

Moosehead ready to compete

Andrew Oland defends strategy

8 years ago

Duration 2:13

Moosehead Breweries CEO Andrew Oland said he isn't aware of any situation where his company is given over any other supplier

Oland saidthe real problem with people buying beer in Quebec is that they bring home large amounts to resell, which is illegal.

"I've sat outside liquor stores [in Quebec] and I've seen people put 40 or 50 flats of beer in a truck and bring them across the border, so how big an exemption do you need?"

Oland saidMoosehead favours getting rid of all trade barriers, including taxes. He saidprovincial tax on a dozen beer is $9.70 in New Brunswick and only $2.50 in Quebec.

"New Brunswick beer is not competitive with Quebec beer from a tax perspective, and until that's solved, this problem is not going to be solved," he said.

"You can't blame the consumer, and I don't blame the consumer in this."

He estimates Moosehead lost $10 million in sales to Quebec beer runs this year and he expects that figure to keep growing.

Oland said he agreed with a suggestion by Conservative MP Dan Albas that the federal government refer the Comeau case directly to the Supreme Court of Canada for a quicker ruling.

"The sooner there's some kind of decision, the better for everyone involved," said Oland.

He said Moosehead can compete in an open market if both tax and non-tax barriers to trade are eliminated by all provinces.

"We sell beer in all 50 states in the United States with pretty open borders and hopefully we'll get to that point in Canada soon."