Grapes
When the BC Liberals won the election of 2013 one of their first initiatives was to make it easier for BC consumers to buy BC wine.
A legislative committee headed by MLA John Yap toured the province and reported back that while some citizens remained concerned about wider public exposure to alcohol, more wanted convenient opportunities to buy local wine. Mindful of the countervailing sentiments, the government decided there would be grocery store wine sales, but no new licenses created to make that happen. The promise was accomplished by separating independently-owned VQA wine stores from their licences that were administered by the BC Wine Institute. A parcel of other apparently dormant licences was also discovered, and sold at auction. The result now is some 31 grocery store wine departments divided mostly between Save-on-Foods and Superstore and some of its partners.
My purpose here is to show that, having completed the transition to grocery wine sales, the sector is evolving quickly, creating new challenges for the BC wine industry.
Rows of Grapes, Aisles of Wine
When the private wine stores were created the barriers to entry for entrepreneurs to get into the business were low, particularly because they did not have to purchase their inventory. The wine was acquired on consignment from the wineries who were paid when the wine was sold, or if unsold, returned to the winery. These VQA stores were technically non-compliant with Canada's national treatment and non-discrimination commitments in the NAFTA and the World Trade Organization, as US and other world wines were prohibited, but our trade partners chose to look the other way while our “infant industry” went through its modernization transition.
Once the government’s decision on groceries was made, some VQA store owners were happy to cash in and return their licence to the BCWI; for others it took some arm twisting.
With the transition to the grocery store model complete, and as current government policy seems to mandate that no new wine store licences will be created, the licensing regime is probably more complicated than it needs to be and is already in evolution.
At one level there are government liquor stores which sell a wide range of beers, spirits, wines and liqueurs. The current BC NDP government created an advisory committee chaired by lawyer Mark Hicken to sort out contradictions in the governance, regulatory, retail, and wholesale operations of the BCLDB.
At the second level are liquor retail stores and cold beer and wine stores, which offer a range of products similar to government stores, but on a smaller scale.
Our focus here, however, is specifically grocery-based wine retail. As I noted above, there are two licences: the BC VQA exclusive licences transferred from former independent BC VQA stores (a few of these stores remain) to Save-on-Foods, and the previously “dormant” licences auctioned to SoF and Superstore. The VQA-only licences, administered through the BCWI, have restricted the holder to sales of BC VQA grape wine alone, while the other (administered by the government) allowed BC-made non-VQA wine, fruit wines, cider and sake.
In effecting the transition from independent wine stores to the grocery-based model, the government and the BCWI reassured the industry that it would gain wider marketplace exposure for their products, and our trade partners would continue looking away from our trade policy transgression.
The latter promise exhibited wilful disingenuity on the part of all involved: such a fundamental alteration in the marketing of wine, from which our trade partners were excluded, was bound to be challenged, as it successfully was. The Canadian and BC governments accepted the grievances of our trade partners at the NAFTA II negotiations and the WTO and the protection was removed. As of now, grocers may stock wine and similar alcoholic beverages from anywhere in the world. Superstore and associated grocers have begun selling Cellared in Canada products sourced around the world and packaged in Canada, and may add other international wines. Save-on-Foods remains committed to BC products. Superstore competes essentially with a narrower selection of BC products and international wines at lower prices, SoF on a wider selection of BC products, specialized staffing, and volume discounts.
The trade policy concession made redundant the distinction between VQA-store and auction-based licences. Wine departments previously based on VQA wine will add previously non-VQA wines, cider and sake, and “alternative packaging” (bag-in-box and cans) will be featured. The BC Wine Authority may be asked to accept box wines and cans as eligible for VQA certification, but then, recall that screwcaps were thought once to be beneath VQA standard! Again, this may prove redundant if VQA-licence stores are able to stock non-VQA products. There is no apparent reason to retain two distinct licences.
The Slippery Slope?
The BC wine industry is in a very vulnerable position. Generational change means Boomers who “created” the modern BC wine industry are making way for Millenials and younger consumers who are less committed to wine as part of their lifestyle, so we may have reached peak demand in the home market. The Supreme Court of Canada ruling on the R v. Comeau case sustained provincial hurdles to free shipping of wine to the wider Canadian market. COVID-19, fires and floods have shown how sensitive the restaurant and tourist markets are to random external disruption.
Ninety percent of BC wine is sold in BC and the grocery sector, but a large part of that market is now vulnerable to competition from imported wines. The only thing that separates SoF from Superstore is the former's commitment to buying local, but how long will SoF be able to maintain its local preference against lower-priced products from the rest of the world?
On its 30th birthday VQA is more necessary than ever in reassuring consumers their wine is local, sound, and worth the premium price compared with industrial-scale winemaking around the world. But the VQA designation is less distinct than ever. Does it make sense for the BCWI to retain its administrative claim on its redundant VQA-only licences? What do the VQA rules, enforced by the BCWA, mean in this new environment?
Ernie Keenes is a retired journalist and political scientist with an ongoing interest in governance and regulatory issues in wine. He works in wine retail in Kelowna and is a partner in a strictly non-commercial vineyard and winery in West Kelowna.