B.C. winemakers want to expand across Canada, but entrenched bureaucracy resists change

By Niilo Edwards and Matt Steeves, Postmedia News August 7, 2013

The oppressive clout wielded by our provincial liquor boards claimed another victim in the Canadian wine industry at the recent premiers’ meeting known as the Council of the Federation. At issue is a jurisdictional squabble that reaches beyond the issue of permitting the inter-provincial shipments of wine. The bigger picture is lost in the headlines.
Simply put, when it comes to fostering success for the Canadian wine industry, our political decision-makers are being ill-advised by liquor boards that cannot see the vineyard for the grapes. In the view of the liquor boards, our domestic wine industry provides an opportunity for the machinery of government to control, tax, and regulate rather than to coach, promote and expand.
Canadian winemakers have the proven ability to produce world-class products. Vintage after vintage, our wines are holding their own against wines of more traditional regions of the world. These products are winning medals, receiving accolades and surpassing expectations by leaps and bounds.
Our domestic wine industry is expected to experience 17-per-cent growth within the next five years, and therefore, wineries must identify new markets in which to sell their product. We believe that market exists right here at home, but major regulatory barriers continue to prevent our own wineries from enjoying unrestricted access to the domestic market. While the Vintner’s Quality Alliance (VQA) in British Columbia and Ontario, in tandem with other industry associations, is mandated to support the needs of the industry, its ability to assist is limited to the regulations set by the heavy hand of the provincial liquor boards.
Bureaucrats take note: Canadian winemakers have yet to produce a product that pairs well with over-regulation, and our guess is they will not achieve this feat anytime soon.
We will never know the true potential that is contained within our domestic wine industry until the liquor boards agree to relinquish their prohibition-era policies and let Canadian wine flow in the direction to which the market dictates. Correcting this means changing the current system of delivery, something that liquor boards (particularly Ontario’s LCBO) vehemently oppose.
The current LCBO regulations are arguably the most sweeping in the country when it comes to liquor imports. For example, in order for a winery or wine agent to list a product for sale in Ontario’s stores, the product must meet various criteria contained within a five-step process that takes nine weeks to complete. These products must also undergo laboratory testing in LCBO labs at the wineries’ expense, even though the product may already bear quality standards set by VQA. Ad hoc product submissions from wineries are considered for sale only after prior approval is achieved from management in the LCBO’s product supply department. This means the introduction of new products from Canadian wineries into the LCBO system is at the sole discretion of management. In addition, should the wineries be unable to meet the minimum threshold of 300 cases, their product may not be considered for sale in the LCBO system.

Such stringent regulations make it impossible for small Canadian boutique wineries to achieve the exposure that comes with having your product listed in government stores. The individual may order Canadian wines not listed in government stores through a “private ordering program,” but only after paying the LCBO three to four times the actual retail price in markup.
Liquor boards claim they stand to lose too much taxation and revenue by relinquishing control of domestic sales. But has anyone broached the idea of discussing policy options to mitigate lost revenue while allowing the consumer to enjoy the freedom of ordering a case of Okanagan Chardonnay for delivery to any point in the country? No, at least not publicly.
This laziness among our policy-makers smacks of an entrenched institutional belief that it is easier to live under a broken system than to expend resources to fix it and make it better. One certainly can’t blame industry for this shortcoming. With the exception of a few multinational investors who back the larger labels that commonly populate the shelves of your local liquor store, the average Canadian winery ranges from small to medium production and is a largely mom-and pop type operation. These wineries are busy trying to earn a living in an industry that is considered by many to be their “vow of poverty.”
The Canadian wine industry is hitting a coming-of-age milestone, and with this, Canada has the potential to become a serious contender among other new world wine-producing countries. But in order for both the producer and consumer to reap the benefits, it is up to our government to assist in this continued growth by creating meaningful, fair and modern policy changes to our out-of-date liquor regulations. Failure to create this change will relegate Canada to the sandbox of wine-producing countries.
The ball (or perhaps the bottle) is now in the court of our provincial politicians to set aside their differences and take the necessary political leadership to free Canadian grapes.
Niilo Edwards and Matt Steeves are certified sommeliers following trends in the Canadian wine industry. Edwards resides in Vancouver and Steeves calls Ottawa home. Together they run Quercus Vino. Follow them on Twitter @quercusvino.

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