B.C. Wine Law still Riddled with Complication

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If the 2013 Wine Law in B.C. conference is any indication, organizers will have to consider increasing it from one day to two, and adding more space for participants. To bring them up-to-date on a myriad of issues, a dozen speakers delivered detailed presentations covering virtually every wine law–related topic to stakeholders representing a gamut of sectors in the wine industry.

Space prohibits covering all of them in a single piece. For example, privatizing and modernizing both wholesale distribution and retail sales of wine under the state of Washington’s Initiative 1183, which are experiencing teething problems, is interesting but strictly academic in British Columbia, where change is ponderous.

But not impossible, according to Frank Haddad, executive director of recently established Modernize Wine Association of B.C. “Our goal is to modernize B.C.’s liquor laws, regulations and policies,” Haddad explained in his address. He suggests secondary tasting rooms in Oliver and Okanagan Falls to increase wine tourism. They have revitalized small towns like Healdsburg, California, and Walla Walla, Washington,” he says.

There is the matter of rampant counterfeiting of Canadian Icewine, especially in China, a serious trade issue which applies to Canada’s top wine export to the world’s fastest growing wine market. In his address, ‘Freezing the Flood,’ Christopher S. Wilson of Bull Housser, described the challenges and a number of educational, legal and technical steps that Canadian producers can take. The problem for negotiators seeking a trade solution: there is no national standard for Canadian icewine; only provincial ones that carry little or no weight in nation to nation exchanges.

An analysis of the 2013 Grape Supply Forecast, presented by Michael Welsh of Mott, Welsh & Associates, a South Okanagan law firm based in Penticton, reveals some of the difficulties facing the industry. It came on the heels of the talk by Miles Prodan, executive director of the B.C. Wine Institute, who reported sales of VQA wines are up marginally, but are not growing as fast as non-VQA, Cellared in Canada or imported wines.

“The strength is in winery sales,” Welsh says, “which has to do with bill C-311,” opening the door to interprovincial shipping of wine. His key points:

• A levelling off of new plantings of grape vines, with only 400 acres projected for 2013 concentrated in the Okanagan and Similkameen Valleys. With suitable arable land now all planted in the Okanagan and the high cost of good vineyard properties, new plantings will continue to decline. “Additional plantings will be by new small wineries, not independent growers, and in more marginal areas, such as the Shuswap, Kootenays and Grand Forks.

• Despite the slowdown in new plantings, tonnage is soaring and will continue surging until 2015. 2012 is 20% higher than 2011, bringing the total to around 32,000 tons. When recently planted vineyards come into full production that figure will increase by 14,000 tons (930,000 cases) over the next three years.

• Only 38% of the tonnage (495 growers/3782 tons) is derived from independent growers, contrasted with 62% from vineyards owned or controlled by wineries.

• With the premium market for B.C. wines (versus growing Cellared in Canada and mid-value categories) declining, many independent growers are unable to sell grapes to the premium market. Because of low prices ($600/ton), especially for Cellared in Canada wines, more growers will start their own wineries, enabling them to sell directly to consumers. Some of the small wineries will fail because the market is saturated

• Solutions include expanding interprovincial trade; uniting a “fractious” B.C. wine industry for the efficiencies to compete in the mid-value market; custom crush options to reduce capital costs; and raising B.C. content in Cellared in Canada wines.

In favour of making life easier for B.C. growers and wineries is the obvious fact that, currently, when consumers spend $15 or $20 on a bottle of 100% B.C. wine, especially in the case of direct to consumer sales, they are putting most of that money back into the B.C. economy. For imported wine, and even Cellared in Canada wines, the B.C. amount is minuscule in comparison. That is something the provincial government should consider when drafting rules, regulations and legislation for winery licensing in particular and liquor distribution in general.

The last presentation on Land Use Regulation in B.C., by R. Max Collett of Bull Houser, provided evidence on how regulations can get in the way, and stifle growth. Growers and wineries live under a “complex, multi-layered web of laws, bylaws, policies and practices,” he says. Applicable laws include the Agriculture Land Commission Act (ALR), Farm Practices Protection Act, Environmental Management Act, Water Act, and Land Act.

For a winery restaurant, like Miradoro at Tinhorn Creek, there are more layers – B.C. Liquor Control & Licensing, B.C. Liquor Control & Distribution, regional government and local First Nations. ALR requirements mean the restaurant operates with a winery lounge license, not a restaurant primary license, which limits the use, hours, capacity and both indoor and outdoor space. Further, the LCLB requires only wine manufactured and bottled in B.C. can be served in a winery lounge. So Miradoro can’t serve local beer, spirits, or wine from other jurisdictions. “We’d like to allow customers to compare our wines with similar varieties from Ontario or Washington,” says Sandra Oldfield, CEO and wine maker at Tinhorn Creek.

Collett provided a few individual examples of non-farm use or exclusion applications accompanying winery lounges by Summerhill Winery, Hillside Estate Winery and Lulu Island Winery. So it is possible if it is “not intrusive to the underlying farm operation.” ■