As an Ontario Craft Cider producer and member of the Ontario Craft Cider Association, I am writing to you to express my concerns for the sustainability of Ontario’s Craft Cider Industry. Ontario Craft Cider is produced in all regions of Southern Ontario and Ontario is one of the leading apple producers in North America. Naturally, the Ontario Craft Cider sector has an opportunity to become a premier producer, exporter, and driver of tourism for Ontario’s economy.
Ontario has benefited from an explosion in the craft alcohol sector with the proliferation of craft breweries across Ontario. This explosion brought with it growth, jobs, and increased tax revenue. Cider has the potential to be even bigger because, distinct from breweries, Ontario Craft Cider uses only domestic 100% Ontario grown apples, and Ontario has the advantage to leverage this unique opportunity to become a world leader in cider production while providing a boon to our agriculture sector.
Ontario Craft Cider is at a distinct disadvantage compared to all other categories in the beverage alcohol sector. Ontario Craft Cider is grouped into the Ontario Wine Act, which has stagnated its growth. Not only that, but a can of cider, which retails for approximately $3.35 a can, similar retail to a can of Ontario Craft beer, is taxed the same as an import bottle of wine versus being taxed the same as a VQA bottle of wine and receiving the taxation benefits that a VQA wine receives under the Ontario Wine Act. Beer is taxed at the lowest tax rate at roughly half that of cider while beer and cider have similar retail prices. This taxation discrepancy is unsustainable for Ontario Craft Ciders. When you compare apples to barley, Ontario grown and produced cider is nearly 4-5 times more expensive to produce than beer and is taxed at twice the rate of comparable products. While beer enjoys cheaper foreign imported ingredients, lower tax rates, and better retail markups, Ontario Craft Cider is struggling despite overt market successes. Beer aside, Ontario wine costs more on the shelf because it can compete at $15 a bottle. Compared to Ontario Craft Cider, that is more than a five-fold increase, ml to ml, between what cider commands at market and what wine commands at market, while the cost to produce cider and wine in Ontario are almost identical. This means while beer and wine earn dollars per unit, cider earns pennies per unit. This is unsustainable.
In addition to our tax disparity within Ontario, the Ontario Small Cidery and Distillery Program has been delayed for a second year in a row, putting extreme pressure on our operation and our association.