Nine years ago, the craft beer industry looked like an overflowing glass of suds to Kate Walker.
Walker and her husband Matt purchased Nelson Brewing Company in April 2016 as business was booming in B.C. The pair have since revitalized the 34-year-old brewery by renovating its taproom, investing in infrastructure such as a new canning machine, and cultivating a positive workplace culture that earned two national awards in 2023.
But if she was to consider starting a brewing company from scratch in 2025, Walker says it wouldn't happen.
“There is just no chance I would ever be looking at opening a craft brewery in this day and age given the current situation. I just don't think that it would make sense."
Walker and other craft brewers in B.C. are calling on the government to reform what they say is unfair taxation that benefits foreign-owned companies and not domestic businesses.
In 2010 there were just 54 breweries in B.C compared to 230 breweries and 30 brewpubs in 2025. Despite that growth, the B.C. Craft Brewers Guild, which represents 219 members, says over 20 breweries have shut down this year.
Breweries in B.C. are taxed according to how much beer they produce in hectolitres annually. But foreign-owned commercial companies pay a flat tax rate for any production above 350,000 hectolitres. That has led to those companies receiving $9 million in annual tax rebates, according to the guild.
The provincial government introduced tax reforms in 2015 meant to encourage domestic growth by creating categories of mark-up rates depending on annual production. A micro-brewery that produces up to 15,000 hectolitres pays 0.40 cents per litre. Craft brewers that make 15,001-350,000 hectolitres are charged 0.41-0.99 cents per litre.
Yet Walker says the current mark-up makes it too difficult for smaller producers to compete. Nelson Brewing Company, for example, projects it will produce 6,500 hectolitres this year. But the company is taxed the same as competitors that produce more than twice that amount.
Meanwhile, the cost of ingredients, packaging supplies and labour has increased at what Walker describes as "a pretty exponential rate over the last five years." (The guild estimates a 30 per cent rise in expenses since 2020.) Now Nelson Brewing Company has to balance growing costs with keeping its products affordable and a desire to grow as a business.
“We try really hard to not increase our prices to price people out of the market and not have them able to afford craft beers," says Walker. "So we've been experiencing a lot of margin compression where our costs are going up at a pretty significant rate, but not wanting to pass those costs along to the consumer.”
Liquor sales mark-ups contributed over $1 billion in revenue to the government in 2023-24, but residents are also drinking less beer than they used to.
Beer sales per litre declined 5.3 per cent during the 2022-2024 fiscal years, according to the B.C. Liquor Distribution Branch, while sales of spirits, low-alcohol or dealcoholized products are increasing.
In a statement to the Nelson Star, Agriculture and Food Minister Lana Popham acknowledged tax reform is needed to help the craft beer industry. The ministry began a review of its mark-up policy in 2024, but said it had to be paused while the liquor branch scrambled to respond to U.S. tariffs. The ministry said it is committed to resuming the review.
“This is a challenging time for many craft brewers because of supply chain issues caused by the U.S. tariffs, increased competition, rising costs and a recent downward trend in consumption," said Popham.
“We recognize the concerns raised by the B.C. Craft Brewers Guild and are looking into the current beer markup structure to ensure it reflects today’s business conditions. We will continue to work closely with the guild to support the long-term viability of the sector.”
Walker said if the ministry changed to a revenue-neutral structure, it would reduce Nelson Brewing Company's taxes by 70 per cent. Those savings, she says, could be reinvested back into the company and community.
“It just comes to being able to hire more people to keep up with the growth that we're experiencing to help us reach our true potential.”
