British Columbia Wines Stall in Home Market
Sales revenues are up in B.C., but market share and price per bottle dip
While more than 90 labels showed up at this week’s fall release event in Vancouver hosted by the British Columbia Wine Institute, the latest numbers from the B.C. Liquor Distribution Branch (BCLDB) indicate that wines entering the market face stiff competition.
Wines bearing the B.C. VQA designation—granted to wines made entirely from B.C.-grown grapes that meet established quality standards—saw their share of dollars spent on wine in B.C. peak at 20.4% in 2010 (BCLDB figures do not include cellar door sales). By the end of 2012, market share had fallen to 18.9%—and despite rising in June, preliminary numbers for the 12 months ended Aug. 31 suggest their share of the market had dipped to 18.6%.
A piece of the pie
The shift comes despite a rise in sales of B.C. VQA wines, which totaled $178 million in 2012, up from $146 million in 2008.
“While we continue to grow our piece of the pie, the pie is getting bigger faster than our piece,” Miles Prodan, executive director of the B.C. Wine Institute, told Wines & Vines. “We’re selling more juice, but we’re not making as much money (per bottle).”
Competitors include California, which was featured at this year’s Vancouver International Wine Festival and poses a formidable challenge to B.C. producers.
“There’s a lot more product in the system, so it’s becoming more competitive for B.C. VQA wines,” Prodan said. “It doesn’t help that we’ve got, for instance, places like California that are focussed on the Canadian or B.C. (wine markets) and have that supported with multimillion-dollar consumer advertising campaigns.”
Money to spend
Canada’s strong dollar in 2011 and 2012—it’s traded at near par with the U.S. dollar—has helped make it an attractive export market. Domestic buyers have used their buying power to snap up foreign wines at prices much cheaper than any point in recent years.
Consumers keen to buy local have supported an overall rise in the average price of a bottle of B.C. VQA wine, with the average price through the BCLDB now approximately $15.65, up from $15.42 in 2010.
However, the past two years have seen pricing inch back from a peak of $16.08 in 2011.
“The prices aren’t as high as they have been. It’s competitive pressure. We’ve got the quality, we’ve got the quantity, but it’s the consumer that’s driving that for us,” Prodan said.
“Before ’08 there were $40, $50, $60 bottles of B.C. VQA wine. When the market corrected people traded down, and it hasn’t gotten back up there. And even more problematic for B.C. is that there’s a lot more competition in those price bands, so it makes it hard to drive those prices up.”
This hasn’t stopped producers from releasing bottles at the $100 mark—most recently, La Stella Winery in Osoyoos, B.C., with its 2010 Maestoso “Solo” Merlot—but as Prodan noted, “There’s a lot more choice out there of the moderate priced wines.”
The shift among consumers means direct relationships with consumers are assuming greater importance—both wine tourism and wine clubs.
“It’s really about establishing their own brand,” he said. “The new growth is ‘just maintaining.’”