Svan Lembke and Lee Cartier
Svan Lembke and Lee Cartier from Okanagan School of Business.
A study by Lee Cartier and Svan Lembke at the Okanagan School of Business is recommending BC wineries should increase production of mid-value wines, but also implement a system of grading wines similar to that used in France and Italy.
Both those countries produce a wide range of wines, from very inexpensive table wines to extremely high-end and very expensive super premium wines. The French industry led the way with wine classification, introducing the Appellation d’origine controlee system in 1935, while Italy adopted a four-level classification system in 1963.
In Italy, for example, one can find Vino da Tavola, which denotes inexpensive ‘table wines’; IGT wines that are low to medium priced younger wines; the DOC classification denoting better quality wines made in a particular region according to strict winemaking traditions; and finally the DOCG, denoting superior wines produced according to very strict guidelines.
Cartier and Lembke say these ranking systems allow France and Italy to market lower end wines without hurting the brand of higher end wines (Grand Cru in France, or DOCG in Italy).
By contrast, BC has the VQA classification that denotes a wine made entirely of BC sourced grapes, but that single classification doesn’t tell the buyer if the wine is a high end or mid-value wine.
“Right now we are looking at how the market in BC has changed, and we are expecting growth especially in that mid-value segment,” said Lembke. “The question we are asking is, if you are looking for opportunities producing for the mid-market segment, how will that affect your overall brand in the future?”
Cartier says their research shows that the buyers of premium wines are less sensitive to price, but very focused on the brand of the wines they drink. His concern is that the brand of VQA wines will suffer if they are increasingly being sold at lower price points.
“The VQA designation is a great quality standard, but we now see that VQA winemakers are starting to sell into that mid-market segment, and the question is, what does that do to the reputation of that winemaker if there’s no difference between a mid-range VQA wine and a premium VQA wine?” Cartier asks.
While concerned about the impact of this trend on the reputation of BC wines, both Cartier and Lembke are recommending BC winemakers and grape growers should in fact pursue the mid-market segment, because it’s one of the few areas where there is room for growth.
“Foreign imports dominate the mid-range segment, but what if BC starts producing for this market too?,” Cartier asks. “In 1989, BC held literally zero per cent of the premium wine segment, and that figure is 67 per cent today, so winemakers here have done an amazing job.
“But, can you do the same thing in the mid-range market?”
Lembke clearly thinks it’s not just possible but very achievable, as long as the BC industry makes some changes in how it grows grapes and markets its wines.
“We need to rethink how we compete and how we produce,” she says. “We believe growth and prosperity await us in the mid-value market, and we certainly have the home court advantage.
“The pros are that we have loyal customers and a fantastic growth opportunity, but the potential cons are that we see lower margins in this segment, and we risk diluting the value of our brand.”
For that reason, Lembke says BC should introduce a multi-tiered classification system, similar to those used in France, Italy, Spain, and a few other countries. By doing so, a buyer would know that a particular VQA wine is not only made with local grapes, but is also a superior wine made to a higher standard.
“Why are all these countries spending all this time and money and effort on this?” Lembke asks. “It’s because their consumers are looking for guidance based on quality, and otherwise they only have price to go by when buying what they hope is a true premium wine.
“We believe consumers here in BC are also looking for that guidance.”