Big Rock Brewery Inc. (TSX: BR) (“Big Rock” or the “Corporation“), today announced it has undertaken significant cost-cutting measures, including reductions to the Corporation’s workforce, in response to the persisting regulatory environment for brewers of its size in Alberta.
The 104% increase in the net Alberta beer mark-up (provincial tax) imposed on Big Rock by the previous Government of Alberta in late 2018 (being a 160% increase since 2016) has forced the Corporation’s senior management to take immediate cost-cutting measures as the increase in the tax on Big Rock’s beer in Alberta has eroded the profitability achieved by Big Rock in 2018.
Big Rock, an Alberta-based brewer and employer, has proudly supported local jobs and community events while contributing to the Alberta economy as a significant local purchaser and reliable taxpayer in the province for 34 years. If the current provincial tax framework for beer in Alberta persists through year-end of fiscal 2019, Big Rock’s net Albertaprovincial liquor tax charges of $10.7 million for fiscal 2018 are estimated to increase to greater than $21 million for fiscal 2019 (based on 2018 Alberta sales volumes).
Under the direction of President & CEO Wayne Arsenault and CFO Don Sewell, the Corporation undertook an extensive evaluation of all aspects of Big Rock’s business and financial results. The evaluation identified several cost-cutting measures that will allow the Corporation to remain competitive, support anticipated growth and drive long-term value for shareholders. These measures are being implemented to reduce the Corporation’s operating expenses and focus spending on growth and profitability. Management is committed to maintaining and continuing to support its relationships with customers, consumers, employees, shareholders and other stakeholders, while returning the business to profitability in this current regulatory environment.
The cost-cutting measures undertaken by the Corporation include certain one-time restructuring costs. The Corporation expects to benefit from these measures by realizing lower operating costs beginning in the 3rd quarter of fiscal year 2019.
“Our ultimate goal is to allocate our resources in a manner that will ensure the success of the future business and maximizes shareholder value,” commented Wayne Arsenault, President & CEO. “We are creating a sustainable business model by accessing new ways to grow revenues, reduce expenses and improve margins, despite the current tax regime and regulatory environment for beer in Alberta. This process can be painful, and we recognize that personnel reductions are difficult for our employees, their families and the community. We value the dedicated team at Big Rock for working hard towards this goal. We will continue to work with the new Government of Alberta to establish a positive regulatory environment for small brewers in the province that is predictable, stable and supports growth.”
About Big Rock Brewery Inc.
In 1985, Ed McNally founded Big Rock to contest the time’s beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, four ciders (Rock Creek Cider® series) and custom-crafted private label products keep us at the forefront of the craft beer revolution and still proudly contesting the beer trends of today. With brewing operations in Calgary, Alberta, Vancouver, British Columbia, and Toronto, Ontario, and sales in five Canadian provinces and two territories, Big Rock has been a significant supporter of local Canadian breweries and communities for over 33 years. Big Rock trades on the TSX under the symbol “BR”.
For more information on Big Rock Brewery visit www.bigrockbeer.com