mhicken December 2nd, 2009
Some of Ontario’s largest producers (those that make Cellared in Canada wines) have withdrawn from the Wine Council of Ontario and formed their own alternative trade organization, the Winery and Grower Alliance of Ontario. The split was apparently caused by the Ontario government’s introduction of increased taxation on CIC wines in order to support the growth of VQA sales. There now appear to be two distinct camps within the Ontario industry, those that produce solely VQA product and those that produce both VQA and CIC product. The latter group is apparently set to fight the new tax as reported in this story from Wines & Vines: Ontario Wineries From New Group.
Tags: cic, industry, ontario, trade, vqa, wine
mhicken November 3rd, 2009
Just out for lunch and happened to walk by the LDB’s government liquor store at Harbour Centre. New signage for Cellared in Canada product was up. The CIC product is now displayed in a separate section with a sign that reads “Bottled in British Columbia” with smaller print stating “from International and Domestic Wine”. The real BC product is displayed separately with a “BC VQA” sign. This signage is a vast improvement from the previous displays which simply read “British Columbia” on both CIC and VQA product. Readers will know that I don’t often offer kudos to the LDB but this signage is honest and clear. Well done.
Update (November 6, 2009): the updated Cellared in Canada signage was covered in the Vancouver Sun today. A few issues remain … the new signage does not contemplate 100% BC wine that is not part of the VQA system (this wine is rarely, if ever, sold in government stores), and … CIC wine sales should not be included in domestic sales figures.
Tags: bc, british columbia, cellared in canada, LDB, marketing, signs, vqa, wine
mhicken October 5th, 2009
It appears that change is already in progress for “Cellared in Canada” (CIC) wines as 2 of B.C.’s Big 3 commercial wineries are reported to be changing their CIC labels so as to promote more transparency and honesty in labelling. The Vancouver Sun reported on the weekend that changes are in progress and will be in place prior to the Olympics. The adjunct to this is that the retail level marketing and display of these products also needs to be changed so that consumers will not receive any misleading information as to the origin of the wines at the store level. In both government and private stores, CIC wines need to be displayed separately from real B.C. product, perhaps in a new display section with a name something like “Global Blends”. The BC LDB will also need to fix its statistical reporting practices for BC wines as it is currently including CIC sales within BC sales statistics. It’s not really that difficult to do … hopefully, we will see change on this quickly in order to protect the “British Columbia” brand for wines that are produced from 100% BC grown grapes.
Update (Oct 9, 2009): More coverage on this issue from the political side on Global TV News yesterday. However, it appears that good progress is being made on cleaning up the labelling and marketing issues: Jancis Robinson has stories on her web site that cover changes for Cellared in Canada wines in British Columbia and a working group for Ontario to enact changes on Cellared in Canada there. I have also heard that changes are imminent at the BC LDB.
Tags: bc, cellared in canada, labelling, LDB, retail, vancouver sun, vqa, wine
mhicken September 23rd, 2009
Here’s another aspect to the current Cellared in Canada mess. The LDB reports that it sold 6.5 million litres of domestic wine in the last quarter which would translate into 26 million litres annually. That would be difficult considering that BC’s entire annual production is only 13-14 million litres (BCWI numbers). As a result, it appears that the LDB is reporting the sale of some or all CIC wines as being “domestic” (look under BC Non-VQA product in its quarterly sales reports) when in fact these products are not BC wines. If one recategorizes CIC sales into the import category then there is a dramatic affect on BC wine sale statistics. For example, the LDB reports that “domestic” wine had a market share for the last quarter of about 48% by volume and 43% by value. However, those numbers include the suspicious “BC Non-VQA” sales which are likely CIC wines. If one recategorizes those sales into the import column then domestic market share drops to 14% by volume and 19.5% by value.
Tags: bc, cellared in canada, LDB, market, sales, share, statistics, vqa, wine
mhicken September 4th, 2009
An ongoing issue between the operators of the VQA wine stores and the BC Wine Institute (BCWI) has surfaced again following the BCWI’s threat to revoke 2 VQA store licenses for allegedly not meeting sales quotas. Carol’s Wines in Coquitlam and Arrowsmith Wine Shoppe in Parksville have both been told their licenses will be pulled by the BCWI as of the end of September. The BCWI technically holds all of the licenses for the VQA stores which were given to it when it was originally established as the marketing authority and regulator for VQA wines. However, the BCWI is no longer the regulator of VQA standards (this was transferred to the BC Wine Authority) and now only represents about half of BC wineries for marketing purposes (although most of the big ones are members). Despite an obvious conflict of interest, the BCWI still holds the retail licenses and makes a good chunk of its revenue from a cut of VQA store sales.
Many VQA store owners are unhappy with the current setup and the Canadian Federation of Independent Business is acting on their behalf, having recently sent a letter to the Minister responsible for liquor distribution and licensing, Rich Coleman. The letter outlines a litany of complaints including allegations of: unilateral changes in the terms of the licenses, restricted product availability, increases in BCWI fees, administrative issues and the aforementioned conflict of interest. Most of the problems relate to the current patchwork structure of the retail licensing system which is long overdue for major reform. However, it is the individual operators of the stores that tend to get caught in the middle. Only a complete overhaul of the retail system will solve these issues in the long term.
Update: this issue has now been covered in more detail (with comment from the BCWI) in this story for the trade magazine, Wines & Vines.
Tags: bc, bc wine institute, bcwi, licenses, retail, vqa, wine
mhicken June 22nd, 2009
Good article on the Wine Business Monthly web site today discussing the structural problems in Ontario’s wine industry. The article covers off issues related to overproduction, imported juice, “cellared in Canada” wines, direct sales, restrictive LCBO distribution policies, VQA rebates and domestic/import market share. The article points out that B.C.’s industry is much healthier than Ontario’s, partly due to better retail distribution for domestic product, VQA rebates and greater consumer acceptance of domestic product. However, there are common problems. Given Canada’s relatively miniscule share of the international wine market, wouldn’t it be nice if we had a common national vision in order to fix the problems and create growth for all Canadian wine?
Tags: bc wine, distribution, LCBO, LDB, market share, ontario wine, retail, vqa, vqa rebate
mhicken May 14th, 2009
The trade magazine, Wines & Vines, posted an article on their website today reporting on the fact that some BC wineries have pulled their wine from VQA wine stores. The issue was also recently covered with less detail in my newsletter, Juice. The problems are related to on ongoing dispute between wineries that are members of BCWI and those that are not. The operators of VQA stores (for which BCWI holds the licenses) appear to be caught in the middle of the dispute. The BCWI imposed a surcharge on non-member wine sold through VQA stores, presumably in order to encourage membership or continued membership in the BCWI. In response, non-member wineries pulled their wine from VQA stores and some of it has now gone into the government store channel (!) where the wineries can make as much money if the VQA rebates are factored in. There appears to be no immediate resolution to the dispute.
For what it’s worth, my opinion is that a unified marketing body for BC wine would be incredibly valuable. However, I also believe that there is an inherent conflict of interest in a marketing body operating a chain of retail stores. While the VQA stores have done a tremendous job of promoting BC wine since their inception, it is not good for the end consumer to lose access to their favourite wines - particularly in locations where they have traditionally been used to seeing them. I’d be interested to hear your opinions on this.
Tags: bc, bcwi, surcharge, vqa, vqa rebate, wine, wine institute
mhicken April 24th, 2009
An interesting article appeared in the Ottawa Citizen yesterday entitled “Pity there isn’t more B.C. in the LCBO” … it advocates the availability of more B.C. wine in Ontario but also explains why that may be unlikely to happen. A related story is that the Ontario government recently did not renew funding for the VQA winery rebate program in Ontario which effectively made it desirable for smaller Ontario wineries to sell through the LCBO. A similar (continuing) program exists in BC for VQA wines here and the LDB. However, the programs are not reciprocal so there is a major economic disadvantage to trying to sell through the other province’s stores. Maybe it’s time for some sort of national solution here so that we can let Canadians across the country properly enjoy all of our national wines. There may even be a constitutional imperative to do so if this Toronto lawyer’s analysis is correct.
Tags: bc, IILA, LCBO, LDB, ontario, prices, rebate, vqa, wine
mhicken April 22nd, 2009
In response to changes made to the pricing structure at VQA Stores by the BC Wine Institute, some BC wineries have pulled certain products from VQA stores, sending the wine into alternate retail channels including government liquor stores (GLS). The current issue is generally related to ongoing tensions between member and non-member wineries of BCWI. This specific additional problem arose when the BCWI changed the pricing policy for wine in VQA stores that was sourced from wineries who are not members of the BC Wine Institute. It was determined to charge those wineries a 6% surcharge for selling through VQA stores, presumably in order to encourage wineries to become or remain members of the BCWI. This change meant that it was just as profitable (or more so) for the non-member wineries to sell the wine through other channels including government stores. The GLS channel offers a “quality enhancement” rebate to VQA wineries for selling in government stores that results in the wineries receiving net proceeds close to those of alternate private channels. Unfortunately for the VQA store owners, some of the diverted wine comprises best-selling brands. It seems that no solution is in sight at the present time.
Tags: bc wine institute, bcwi, markups, prices, taxes, vqa, vqa stores, wine
