Tax breaks on tap for breweries.

Microbreweries will not be squeezed out of the brewery market, thanks to Finance Minister Janet Ecker's announcement on the reduction in alcohol tax in the 2003 Ontario Budget, says one northern brewery operator.

"(The tax reduction) is going to be wonderful, we are ecstatic (over it)," Barry Didier, CEO of Northern Breweries says.

"The government finally recognizes that it is the small breweries that are producing the jobs in Ontario - not the Labatt Molsons who are going around closing plants."

Ecker stated new regular beer prices will be $5.11 cents per litre and $3.61 cents per litre for draft on the first 15,000 hectolitres that is shipped in Ontario on or after May 26, 2003.

"A case has 8.184 litres," Didier says. "We will make over two dollars on each case.

"That is approximately $400,000 annually."

In previous years it seemed odds were stacked against them as a small brewery, he says.

"The government used to have the protection for Northern Ontario breweries with (regards to) the draft market and that disappeared," Didier says. "Then we used to have the only Sunday opening (for the sale of alcohol) and that disappeared, but (the tax reduction) is going to be of great assistance to us now."

Northern Breweries has had to incur the same cost as that of a larger brewing company, even though they operate on a smaller scale, he explains.

However, new partnerships in the brewery sector have allowed the Northern company to remain pliable in the market. Alliances with Agassiz Brewing Company of Manitoba and Champs of Quebec have placed the company in a good solid position for the next few years.

"We have agreed to produce beer for Manitoba and I believe (Agassiz Brewing Company) is expanding into Alberta this summer. They are also looking to expand into Ontario with their Catfish brand. In Sudbury we have made an alliance with Champs to produce beer for Quebec."

It was necessary to form partnerships with other microbreweries since the northern breweries cannot draw from dense population to maintain a good production level, he says.

"This outside production helps keep our staff busy and helps to reduce the cost per litre."

This summer Northern Breweries will be attempting to try its hand at merging into the American market.

"I think it's probably easier to get into the States than it is the other provinces."

The problem is that the company needs a resident brewery importer to gain access.

"You just cannot do it from Ontario. You have to have an importer. His name has to appear on the package. He has to be licensed and be responsible for all the beer there."

Past experiences have made them somewhat leery of entering the American market.

"What has happened to us in the past is these companies go out of business and we end up stuck with packaging, so you have to be careful who you partner with."

Didier says the company has entered the American market two or three times already. They are not finished trying to break into the market, however they are "just trying to find the right guy," he adds.