Wine Shopping
The future of international wines on BC grocery store shelves in our post-NAFTA world is not clear.
The recent signing of the US Mexico Canada Agreement (USMCA, the “new NAFTA”) and a side letter agreeing to allow US wines to be sold in BC grocery stores, has put the BC VQA wine industry into a wait and see pattern. Some things will stay the same and some things will likely change.
“We are certain that the original BC VQA licenses will remain intact under the new USMCA,” said Miles Prodan, Director of the BC Wine Institute, (BCWI). “While the side letter provides for the sale of US wines in BC grocery stores, it is not clear as to how that will happen.”
The Wine Institute developed the BC VQA store licenses for the industry during the 1980’s and still has responsibility over them, Prodan explains. “Originally licenses were put together to give the early farm gate and estate wineries a venue to sell their products off-site as a way to develop their sales,” says Prodan. But not many wineries operated them, he added. “When the BC Vintners Quality Alliance was established there were 21 licenses that were aggregated and given the rights to sell any BC VQA wines.”
Industry veteran Harry McWatters, president of Encore Vineyards was adamant when O&V spoke to him late last year. “The BC VQA licenses were grandfathered into NAFTA,” McWatters pointed out emphatically. Indeed he should know, as a co-owner of Sumac Ridge he was granted one of the first off-site licenses in the province.
“Those licenses, granted and controlled by the Institute, were grandfathered into the original NAFTA to be allowed to sell only BC VQA product.” Prodan confirms.
The third party operators of those licenses have existed in various forms of private retail stores over the years. A couple of better known ones are the store in Penticton that has long been in the BC Wine Information Center and Discover Wines in Kelowna and Kamloops.
“It was a good business model for me,” says Tracy Gray, former owner of Discover Wines. “I had staff who knew the product and could provide customer service far and above the LDB, and it was all local which has a strong following.” But as Gray points out, she had limited shelf space and could not carry a full range of BC VQA producers.
When the provincial government allowed wine sales in grocery stores three years ago, Save On Foods worked with the Wine Institute to have BC VQA wine sales in a number of their stores across the province, by acquiring the BCWI operating agreements for many of the original VQA licenses. This changed the wine sale landscape, but not the regulations.
Gray’s Discover wine licenses were two that Save On acquired in a business transaction, but they didn’t buy the licenses, because they cant. “The BC industry, through the Wine Institute actually still owns and controls those licenses,” explains Prodan. “We have an operating agreement with Save On for them to use those licenses to promote and sell BC VQA product only.” In theory, Prodan points out, those licenses could be taken away from Save On.
BC VQA wine sales in Save On have been great for the industry says Prodan. Save On states their goal is to have a selection from every VQA winery in the province. They have given smaller wineries access to retail sales in larger centers that they might not have had otherwise and Save On has enjoyed championing the local product.
But to muddy the waters, the provincial government created two more licence categories of their own. Smaller BC wine sales areas are showing up in other grocery stores, principally in Loblaws (“Super Store” and “Independent”) stores. They sell 100 per cent BC wines, but are not restricted to BC VQA.
Along with that increase in exposure came increased attention from other wine making countries who began to eye those grocery store shelves and the happy customers who emptied them. “We told them that would draw attention,” says Prodan. “Those 12 licenses were sold through auction by the province to the retailers and are not part of the NAFTA agreement.”
The BC government has also allowed “store within a store” style wine shops where customers would be served independently of the grocery store. Those stores are allowed to carry international wines, beer and spirits. “The interesting thing is that none of these stores have been built so far,” says Prodan. “So the province actually does allow for international wine sales in grocery stores, it’s just that there aren’t any.”
But getting back to the original BC VQA licenses, they remain grandfathered into the new trade agreement. “We do have the new USMCA,” says Prodan, “but it still recognizes those licenses that belong to the BC Wine Institute.”
“We now also have a side letter to USMCA, an agreement between the US and Canada to allow US wines to have access to grocery shelves,” says Prodan. “But we don’t know what that will look like.”
The US doesn’t have an issue with the BC wines being on the shelf, they have an issue with BC wines being the only ones on the shelf, Prodan explains. “We don’t have a problem with that, we compete with foreign wines already, he points out. “But how that will take place will become clear over the next 13 months and is really up to the provincial government to determine.”