Finally, some good news for BC producers of wine, beer and spirits. In the Comeau court case reported on in the Spring issue of Orchard & Vine, the New Brunswick judge ruled on April 29 that provincial laws that restrict interprovincial transport of liquor are unconstitutional. The judgment found that Section 121 of the Canadian Constitution prohibits legislative barriers to free trade of goods – including alcoholic products – within Canada. “It is currently not binding on other provinces because it is the decision of a NB trial court,” says Mark Hicken, a Vancouver lawyer who publishes WineLaw.ca. “If it is appealed to the Supreme Court as is likely, it may eventually become binding across the country. This is a very significant development for the Canadian wine industry because it may transform their markets from customers in a single province to all of the residents of the entire country.” Could open interprovincial trade be the future or a pipe dream? Even the U.S. now allows Direct To Consumer (DTC) shipment of wine, the result of a similar court challenge known as the Granholm case.
BC wineries are not waiting patiently for interprovincial trade barriers to suddenly disappear and provide new markets for their wines. One presentation at the 2016 Wine & Liquor Law conference in Vancouver addressed the challenges and benefits of exporting wine to the U.S. “It is 10 times larger than Canada and more people are drinking more expensive wines like Pinot Noir,“ says Christopher R. Hermann of Stoel Rives LLP in Portland, Oregon.”
The two options according to Hermann are to:
Establish and operate a U.S.-based wine importer/distributor.
Contract with a U.S. Importer/distributor. “While this has fewer requirements, distributors are not all that interested in smaller producers.”
“Although highly regulated, the U.S. system offers a more open market and more freedom to find creative ways to sell wine,” he says. “With direct to consumer sales now allowed in 40 states, smaller wineries have proliferated in the U.S. And you can engage the market even if you are other than a U.S. producer.”
For many BC wineries, such as Wild Goose Vineyards, looking to Europe for a potential audience makes a lot of sense. According to Roland Kruger, GM of Wild Goose Vineyards, selling wine to other provinces is as difficult as, if not more so, than selling wine abroad. He’s not alone. The reality is that interprovincial barriers negate advantages from familiarity with the home market.
2016 Prowein
Wild Goose Vineyards at the Wines of Canada pavilion at the 2016 Prowein International Trade Fair for Wines and Spirits in Dusseldorf.
In addition to a recent free trade agreement between Canada and the EU, there is free trade within the EU. As well, several countries, especially those in Northern Europe, boast prosperous, knowledgeable consumers willing to try out good value wines from intriguing, new wine regions like Canada. Some Canadian wineries like Pelee Island Winery in Ontario have been rewarded with substantial success for their marketing efforts.
The Wines of Canada pavilion at the 2016 Prowein International Trade Fair for Wines and Spirits in Dusseldorf in March boasted 22 Canadian wineries from Ontario, BC and Nova Scotia. Participating for the first time, Kruger found the event “remarkable” and an “eye-opener.” Commenting on the new and improved Canadian booth at the trade show, he pointed out that “the show included nearly 7,000 wineries from around the world and attendance of 60,000 people, mainly buyers. We met agents from Sweden, Denmark, Belgium and the UK and made 20-30 contacts from Europe, including Russia and Eastern Europe. We are focusing on finding niche markets in Europe for smaller quantities of wine,” he adds. ■
