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11.28.2012  
 

B.C. Broker Negotiates Wine Surplus

Winemakers say connection for bulk wine trade was needed

 
by Peter Mitham
 
 
tom di bello
 
Tom Di Bello, who is finishing filling his tanks this week, thinks he’ll be slightly ahead when all the wine is pressed.
Penticton, British Columbia, Canada—With the British Columbia Wine Institute estimating the province’s grape crop reaching 35,000 tons this year, some observers are talking about the potential for a surplus.

Concerns about a potential surplus of B.C. grapes have been simmering among grapegrowers here for the past few years. With acreage approaching 10,000 acres and many wineries striving to carve niches for themselves, there’s a relatively large volume of high-quality grape juice swirling around the province.

During the recession of 2008-09, many wineries introduced blends or second labels that offered consumers greater value for their dollar (see “Northwest Vintners Strategize.”)

Surplus was expected
But a state of the industry report prepared by Simon Fraser University researchers in 2011 noted that the industry was anticipating an “expected supply surplus of grapes.”

With the 2011 harvest totaling 22,722 tons and yielding approximately 14.8 million liters of wine, that surplus came a step closer. This past May, veteran wine writer John Schreiner noted on his blog, “It looks like more wine is being made in British Columbia than we are consuming.”

Pointing to industry statistics suggesting a growing spread between production and domestic sales, Schreiner said there were grounds for a belief that “some wineries at least might be dealing with a surplus.” He added: “There is every reason to expect that the gap between sales and production will be larger this vintage.”

Now, having previously brokered deals for wine and grapes through his eponymous consulting company, Wendenburg Wine Consulting, Penticton’s Mark Wendenburg and his wife Jackie have launched B.C. Bulk Wine Brokers Ltd.

Wendenburg doesn’t feel the industry is grappling with a surplus, but he does see a need to make connections between wineries with wine to sell and vats to fill.

“Every winemaking country that I’ve been to or worked at has a company buying and selling bulk wine,” Wendenburg told Wines & Vines this week.

While a wine exchange exists in Ontario, and British Columbia’s biggest players—Mission Hill Family Estate and the Mark Anthony Group, Andrew Peller Ltd. and Constellation Brands—are of a size that allow them to source bulk wine using in-house resources, no one is serving smaller and mid-sized wineries. The B.C. Grapegrowers Association hosts an online buy-sell forum for members, but Wendenburg saw a need for a discreet, private service.

“We just thought there was a market and a niche and a need for this kind of business,” he said. “Because of the small size of the business—some 20,000 tons (in 2011)—and the 243 licensed wineries...they’re quite far apart and so they don’t all know each other.”

Initial response
The early response to the service has been good, with 10 wineries seeking Wendenburg’s services, but many winemakers are still sorting out their needs following the 2012 harvest.

Tom Di Bello of Summerland, B.C., for example, was just finishing filling his tanks this week and said he has to crunch some numbers before he knows his needs. He thinks he’ll be slightly ahead when it comes to the wine he pressed from this year’s crop, and he may opt to seek wine to top up his production rather than seek a buyer for what he has.

Di Bello says Wendenburg’s service will help him if he needs to find some extra wine—or a buyer—in the future.

“It’s hard to advertise it, and it’s hard to find,” he said. “It’ll definitely make it a lot easier.”

Di Bello noted that wineries have ways to manage surplus wine, but a single point of exchange will improve the flow of wine through B.C.’s growing industry.

“There’s definitely a need for it.”

Wendenburg, for his part, points out that growing export markets (see “Canada Uncorks Export Funding”) means there are options for buyers and outlets for any surplus, defusing any over-supply within the province.

“A year from now we’ll know, unless some people are still deciding to sit on their surplus,” he said. “I don’t know where that market’s going to go, but there’s nothing stopping someone looking at all these wines and saying, ‘I could make one great big red wine out of that and I’ve got a market for it offshore.’”

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