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Canada's Wine Industry Wants a Vote

Initiative would allow interprovincial wine shipments

by Peter Mitham
Jean Pierre Blackburn
Federal minister of state (agriculture) Jean Pierre Blackburn said, "There should not be trade barriers.
Vancouver, B.C.—Wine shipments should move freely across Canada, according to a roundtable of wine industry representatives convened for the second annual Canadian Wine Summit at the Vancouver Playhouse International Wine Festival in British Columbia this week. With a federal election in Canada set for May 2, both industry and consumers should be making candidates aware that demolishing trade barriers is a priority, many attendees said.

Canada’s Importation of Intoxicating Liquors Act, which took effect in 1928, makes it illegal to ship beer, wine and spirits across provincial boundaries. The act hands sole authority for liquor retailing and distribution to individual provinces, which can then assign rights to agents and licensees (for background on the law, see “Canadian Wine Law Challenged.”)

The byzantine system hampers trade in a world where goods and information can potentially be set in motion with a few keystrokes.
“I believe we can have a really simple system,” said Charles Pillitteri, CEO of 80,000-case Pillitteri Estates Winery in Niagara-on-the-Lake, Ontario, when he called for trade barriers to become an election issue. “It’s not that I want us to be less Canadian; I want us to be more proactive.”
Charles Pillitteri Estates Winery
Charles Pillitteri is CEO of Pillitteri Estates Winery.

Not all of the two-dozen participants in the March 30 summit—which gathered a cross-section of wineries, agents, distributors, public and private liquor vendors, as well as academic researchers and government—agreed with Pillitteri’s stance.

Disrupt the system

Some fear that a wholesale lifting of trade restrictions might be disruptive to the existing system and open the door to the free movement of not just domestic wines but cheaper foreign product.

Many called for minor adjustments that allow for the transport of wines for personal use, rather than changes that would effectively allow for online retailing by major companies. “It’s really about consumers being able to access limited product and supporting the agriculture base and their ability to serve their customer base,” said Josie Tyabji, who chairs the B.C. Wine Institute and also serves as national business operations strategist for Vincor Canada.

She noted the irony that Canadians can return from the U.S. packing 1.5 liters of wine, but federal law makes it illegal for the same thing to happen across provincial boundaries.

While the law is seldom enforced, the fact that it remains on the books creates problems—especially for wineries that want to ship to consumers. Two-and-a-half years ago, Canada’s provincial liquor boards sent letters to wineries reminding them of the law (see “Canada Warns Inter-Province Shippers.”)

Sandra Oldfield, winemaker at 35,000-case Tinhorn Creek Vineyards in Oliver, B.C., said that 20% of her wine club members (or about 360 people) live in the neighboring province of Alberta and have to visit the winery to pick up their wines—usually about two cases per year. She can’t ship wine to them, or to tourists who don’t want to carry their purchases around in the heat of an Okanagan summer. It is no problem, however, for her to order a gun by phone from Alberta and have it delivered to the winery.

Oldfield also sought to assuage fears voiced by Janice Ruddock, managing director of the Winery Association of Nova Scotia, regarding the impact on smaller, emerging wine regions in Canada if interprovincial movement of wine is allowed.

“It’s still too early,” she said. “If (consumers) see B.C. and Ontario wines on our lists, they’re not going to try our wines.”

Yet the impact of any move toward unrestricted movement of wine in Canada would be limited, if the United States’ experience is any indication. Research by ShipCompliant and Wines & Vines indicates that just 2% of U.S. wine production sells through direct-to-consumer channels, the majority carried out from tasting rooms. DtC shipments—from tasting rooms, wine clubs and online or phone orders—account for less than 1%. Moreover, ultra-premium wines account for the majority of shipped orders. The figures suggest that eliminating barriers to interprovincial wine shipments in Canada would affect the sale and movement of only 15,000 to 20,000 cases of wine.

One more round

This isn’t the first time a challenge has been discussed. Sid Cross, a lawyer and wine aficionado who attended the summit (but wasn’t one of the formal presenters), reminded participants that a challenge to the federal law was discussed in 2009 but nothing had happened, despite consensus that something should. He didn’t want to see the same thing happen after this week’s summit. “I’m worried that we’re going to leave here and nothing’s going to happen,” he said.

The good news for wineries is that desire for change seems to be building among lawmakers. Removing barriers to inte rprovincial wine shipments was a line item in the budget that triggered a no-confidence motion, which eventually felled Canada’s government and led to the current election campaign.

The provision for a liberalized trading environment followed an initiative introduced last fall by Ron Cannan, a federal legislator who represents the Okanagan Valley constituency of Kelowna-Lake Country in Canada’s parliament. Cannan’s motion sought a personal-use exemption limited to wine and specifically stated that wines transported across provincial boundaries would not be “for resale, further distribution, sale or for any use other than personal consumption.”

Cannan’s initiative has the support of various wine industry groups, including the British Columbia Wine Institute and Canadian Vintners Association as well as the newly formed Association of Canadian Wine Consumers, led by Shirley-Ann George, formerly senior vice-president of policy, at the Canadian Chamber of Commerce, which also supports the initiative.

More recently, during a visit to Vancouver at the end of January to launch an initiative boosting awareness of the significant contribution to Canada’s economy made by food processors, federal Minister of State (Agriculture) Jean Pierre Blackburn identified restrictions on interprovincial movement of goods as the most important barrier to making more products from Canada available to Canadians. The most prominent example is restrictions on the movement of domestic wines within Canada.

“We want to have products that we can sell in every province,” he told media. “There should not be trade barriers.”

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Wine Industry Metrics
Off-Premise Sales » Month   12 Months  
December 2014 $776 million
$7,866 million
December 2013 $755 million $7,470 million
Direct-to-Consumer Shipments » Month   12 Months  
December 2014 $166 million
$1,820 million
December 2013 $145 million $1,576 million
Winery Job Index » Month   12 Months  
December 2014 155
December 2013 122 200
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