Miles Prodan
KELOWNA, BC - Recently, a small group of BC wineries spoke out against recent changes to new provincial laws that open up new sales channels to 100%-BC grown and produced wines.
This alliance of wineries has expressed concerns which mirror those of private liquor store owners who are not comfortable with the ability of the 21 farm-to-table BC Wine Institute-owned BC VQA licences to allow wines to be placed on the shelves of grocery stores.
For the entire 25-year history of the wine industry in this province, the BC Wine Institute (BCWI) has been, and continues to be, the industry's member-elected unified voice. We respect that there has been a concerted effort to dissuade our members from participating in this new market opportunity, and some of our wineries have expressed concerns; however, we are committed to protecting and promoting our vital, yet still nascent, industry for all of our members' benefit.
To be clear, all BC Wine producers are grateful for the productive relationship our industry has had with ALL its retail partners, and look forward to many more years of mutual growth. However, the opportunity to place our small number of licences into this new opportunity of higher traffic, well-marketed, and agricultural product friendly environments is the right thing to do for our members who rely on these licences when the government and private stores will not carry their products, often due to their low production volumes.
In an audit conducted by the BC Wine Institute of its market channels in BC, it was discovered that BC Wineries able to sell through the private retail (LRS) channel saw that channel become one of their largest markets, but whose sales represent an average of only 4% of the retailers' sales. Meaning the average private retailer is focussed on selling everything but locally-produced wines, such as beer, spirits and imported wines.
Furthermore, despite the fact that more than 2800 labels of BCVQA Wine are on the market today, the maximum available ever found in an LRS was 248, and the average was below 100. Contrast that with the two BC VQA licences currently operated by the Overwaitea Food Group, which carry over 1000 labels each, and more than 70% of those not available for sale in any other offsite retail venue.
Every BC Winery Owner invests millions of dollars just to make that first bottle, and due to traditionally restrictive market access points in BC, wine is often sold only from the winery property, or simply put in cases in vehicles and shopped around to a handful of restaurants. Today, due to overwhelming public input during the extensive BC Liquor Review conducted by the Province of British Columbia, the modernization of the law to allow 100% BC Wines on grocery shelves is dramatically changing the business outlook for the better for our entire industry.
That said, not every grocery store will carry our wines, because there is a limited number of licences available - only 21 BC VQA licences exist for the entire province, some of which are currently operating as free-standing BC VQA Wine Stores, therefore not necessarily available, and any transference of those licences would take time. In early 2016, it is anticipated that 24 dormant licences, known now as "Bill 22 licences" will be added to this total - meaning a maximum of 45 licences could be available to qualified grocers, throughout the entire province.
With 45 licences potentially available over time, and carrying only one minor product line in comparison, it is completely irrational to suggest that these 100% BC Wine-on-shelf grocery stores could impact the viability of the nearly 932 licensed public and private retail stores.
And therein lies the issue we face today, whether it is private liquor retailers, or this group of BC Wineries, the politics of fear and distortion of facts have overtaken reason in some cases, which unfortunately have been repeated by media, and the BC Wine Institute hopes that the truth can prevail - here are some key points which address the concerns raised:
FACTS:
- There are 21 BC VQA licences today, and in early 2016, 24 "Bill 22 licences" will be auctioned off, making a maximum of only 45 "wine-on-shelf" licences possible for the entire province.
- The 21 BC VQA licences are not new licences, they are formally attached to operating BC VQA Wine Stores, and therefore are a net-zero increase in retail establishments.
- Given the restriction of only able to sell BC VQA wine, historically BC VQA licences have not been seen as competitive to private liquor retailers and not subject to the "1KM' rule and remain so with the ability to move into grocery.
- Bill 22 licences are simply dormant industry licences, which were always available, that will be activated to support market access for BC Wineries as the law and all trade agreements allow.
- There is currently no trade challenge under NAFTA, or any other agreement, simply statements made by the USA and Australia expressing concern. The Canadian and BC governments are well equipped to address these concerns. *It should be noted, those countries made similar statements when BC allowed some alcohol sales at farmers' markets, and is simply a standard operating procedure as part of ongoing diplomatic and trade relations.
- Given that the same laws which permit BC VQA licences to be moved to grocery also allow for other liquor licences to be placed in grocery using the store-in-store model, imported products are permitted in grocery under those licences, eliminating any trade concern regarding restricted access.
- Other provinces operate with similar licence models and mixes, and have done so for decades, with no trade claims.
- Erroneous claims that a trade dispute would force BC to sell import product in a more favourable way than locally-produced wine is not consistent with any precedent anywhere. These statements are a deliberate attempt to mislead the industry, media and the public.
- Any legal opinions secured by special interest parties are not statements of fact, but simply interpretations of them, and cannot be considered definitive in any way in relation to the outcome of a legal dispute made by court or duly appointed arbitrator.
- This move to allow BC VQA licences in qualified grocers will not significantly increase the number of liquor retail outlets in any one community, nor even have a perceptible impact on the liquor retail sector in our communities, due to the very low number of licences available for the entire province.
- There are currently 932 existing or proposed, government and private, liquor stores in British Columbia - more than 20 times the number of BC VQA Wine Stores and soon to be activated Bill 22 licences.
- These 45 100% BC Wine licences are in no way capable of having a gross effect on other retailers' ability to remain viable. In total, these licences represent about 2.5% of retail outlets in the province.
- On average, 100% BC Wine represents only 4% of a private liquor store's gross sales, which is the sole product offering of a BC VQA Wine Store. ONLY 100% vine-to-bottle BC VQA artisan wine can be sold under these licences, and they cannot be modified to do otherwise.
- Of the 100% BC Wines available at private liquor stores, the highest number of individual wines ever found in those stores was 248, with most stores below 100 - with import wine, liquor, etc. there simply isn't room for more BC wine.
- Currently the only grocer selling liquor in BC, the Overwaitea Food Group has two grocery stores with BC VQA licences in Surrey carrying nearly 1000 100% BC Wine products, often ten times the availability of other retailers.
- More than 50% of sales at these two stores are currently from small wineries not carried by the Liquor Distribution Branch, meaning that these wines and wineries are being exposed to the marketplace in a meaningful way for the first time thanks to this new sales channel.
- The BC laws governing BC VQA licences, whether in a free standing store or a wine-on-shelf grocery store, explicitly prohibit "pay to play" activities, such as the purchasing of preferential display placements. Also, they require equal access to all of the wine producing regions of the province.
- There are more than 900 liquor store licences in BC (including LRS and Government Liquor Stores ("GLS")), each of which, in theory, could be placed in a grocery store using the store-in-store model.
- Despite the demonization of the grocers, private liquor retailers are actively pursuing them to buy their licences for substantial profits, with several sales complete already, and to be announced in the near future.
- All matters of public safety, including health impacts of the new liquor laws were considered during the public consultation, and wine is not considered a dangerous intoxicant by the World Health Organization.
- All security measures with respect to responsible retailing, like ensuring both the staff and purchaser are of legal age to sell and purchase the products are monitored strictly as per the law, and are subject to regular inspection, including the use of paid "secret shoppers" trained to test the retailers' procedures.
- Allowing the retail of a premium 100% BC-made product, that is a low grade intoxicant, in a food primary setting is a responsible approach to retailing alcohol.
- Where liquor retailers rely on inexpensive, high volume and high alcohol content products, often in single serve containers, 100% BC Wine-on-shelf is a low-pressure, low risk sales model that emphasizes experience, not intoxication.
The BC Wine Institute looks forward to hosting a series of Town Hall Forums with its members and interested parties for an update and discussion regarding BC Wine-in-Grocery with BCWI Chairman Shaun Everest, BCWI President & CEO Miles Prodan and Overwaitea Food Group Director of Wines of British Columbia Steve Moriarty on Monday, October 5th and Tuesday, October 6th, 2015:
Monday, October 5
Kelowna (Summerhill Pyramid Winery), 12:00 PM | REGISTER
Lake Country (Gray Monk Estate Winery), 7:00 PM | REGISTER
Tuesday, October 6
Penticton (Penticton & Wine Country Chamber of Commerce), 12:00 PM | REGISTER
Osoyoos (Nk'Mip Cellars), 7:00 PM | REGISTER
MEDIA CONTACT
Miles Prodan
President & CEO
British Columbia Wine Institute
T. 250.762.9744
