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When the bartender at Cava, a tapas bar in midtown Toronto, hands over the wine list, I am gripped by a momentary feeling of panic. I don't recognize a single label on the menu. That's because almost none of these wines—New Zealand sauvignon blanc, Oregon pinot noir—are available at my local liquor store.

Happily, I'm dining with Steven Campbell, owner of the Lifford Wine Agency. Campbell has been working in the hospitality business since the 1980s, when he ran the upscale Toronto restaurant Delisle. He bought Lifford in 1994, and now employs 30 people. With 350 international labels on its roster, Lifford is the largest distributor of specialty wines to Ontario's hospitality industry. From its storefront just down the road from Honest Ed's in Toronto, Lifford finds wine for some of the city's top restaurants—including Cava, the Four Seasons, the Jamie Kennedy Wine Bar and Barberian's Steak House—plus hotels and resorts across the province. It also sells wine by the caseload to private customers, and occasionally finds new labels for the LCBO.

Campbell is a talent scout, cool-hunter and tastemaker all in one—scouring the world's winemaking regions for up-and-coming vineyards, new trends and, of course, wines his customers will actually buy. "Wine is an unusual consumer product," says Campbell. "It's a living thing. It changes over time."

You'd think Campbell's days would be filled with nothing but wine shows and exclusive tastings, visits to foreign wineries and meals at posh restaurants. While his job does indeed carry the kind of perks the rest of us only dream about, Campbell spends a big chunk of his time managing nuts and bolts. Wine distribution is highly competitive—there are more than 500 licensed wine agents in Ontario alone. It's also highly complicated, ruled as it is by the bureaucratic behemoth that is the Liquor Control Board of Ontario.

The LCBO's rules forbid wine agents from actually selling alcohol. Rather, they act as brokers—they find the suppliers and the buyers, but don't handle the transaction. "We facilitate the sale from the LCBO to the customer," says Campbell. "That's what makes us unique in small business." (To read how Campbell and other agents get wine from the vineyard to your favourite restaurant, see "Let's play monopoly.")

To stay ahead of the LCBO—and his rivals—Campbell needs more than a good palate and a nose for wine. His business is about building relationships with suppliers, educating customers and making sure his employees know what they're talking about—and that they stick around. It's also about beating the other guy to the best products and ensuring that he's got a steady supply for his clients. Those same principles apply to just about every small business.

Exclusivity is key

With restaurants accounting for the vast majority of Lifford's business, the agency pays particular attention to keeping them happy. Campbell knows that for restaurateurs, exclusivity in their wine list is a major concern. To put it baldly, if the diner can't see the wine at the liquor store, the diner can't see the markup.

The general rule of thumb, at least in the U.S., is that, for one glass of wine, a restaurant charges roughly the same as it paid for the entire bottle. In other words, if a glass costs $7, the restaurant probably paid $7 for the whole bottle. "That means you're never going to see a bottle of Mouton Cadet on a well-researched wine list," says Cava's owner, Chris McDonald, who says the markup in Canada is lower than in the U.S., thanks to our higher taxes. "Mouton Cadet isn't a great-value product, and everyone knows what it costs."

Part of the reason Lifford does so well with restaurants is that most of its products aren't available on LCBO shelves. "Restaurants need to make money on alcohol," Campbell says. "And if you don't know what the price of a bottle is, it won't bother you."

If you've got something good, don't let it go

If a diner comes back to your restaurant looking for the same wine he ordered last month, you'd better have more of it in stock. On the agency side, that means that if a restaurant has one of your labels on its wine list, you'd better have a line on where you can get more cases.

At Cava, McDonald recently bought two cases of Pierre Sparr Riesling Mambourg Grand Cru 2001 Alsatian (he says it's delicious) from the LCBO. "The LCBO will buy it once in a while, and then let it run out," he says. "You may not see it for another six months." That means McDonald has to substitute another label on his wine list and train his staff on how to sell it. Meanwhile, McDonald's Alsatian stemware—tulip-shaped glasses designed to enhance the wine's taste—takes up yet more precious shelf space. "I could buy a season's supply of the wine," he says, "but I don't have the storage for that, either."

This is why Lifford only signs deals with wineries that have guaranteed supply for at least one season (so he can fill orders for his clients through their busy periods). Campbell keeps track of demand using previous years' sales data, and is constantly monitoring inventory. "Someone like Steve makes an effort to have a continuous supply," says McDonald.

Expensive doesn't mean better

These days, it's easy to buy great wine, says Campbell. "There are no mysteries left. Universities are cranking out winemaking graduates, and they make great wine. The secret is buying great wine at a great price." Whether it's California, Australia's Koonawarra region or Pommard in Burgundy, Campbell and his team search the world's vine circuit for the best value in terms of price and quality.

Ten years ago, Campbell was the only importer to attend Vin Sud, the South American wine show held in Santiago, Chile. He met each grower, tasted all their vintages and accepted invites to four estates. He came home with two exclusive contracts.

Over the past 30 years, Chile's wine industry has been the focus of intense foreign investment. "Chile is a great place to grow wine. It's like California upside down," says Campbell. "But the foreigners pay big money for the land. Then they hire foreign experts to build the winery and foreign experts to run it—all of which costs money. So they end up making good Chilean wine, but at a much higher price than the guy who inherited his vineyard from his grandfather's grandfather's grandfather."

Roberto Echeverria is one of those guys. The 200-acre Echeverria Vineyard in Molina, Chile, has been in his family for eight generations. Echeverria sells into 30 countries, among which Canada is a minor but growing market. But his wines aren't available at the LCBO because he doesn't produce enough bottles (though Lifford recently placed three of Echeverria's labels on the Four Seasons's catering list). "We're large among the small growers in Chile, so Lifford is exactly the profile of agency we look for," says Echeverria, with the flawless English of an international businessman.

What attracted Campbell is the fact that Echeverria's sauvignon blanc, which sells for $12.50 a bottle, is better than competing wines that cost $17 or $18. "We've got to build a following," says Echeverria. By landing the first Canadian deal with the vineyard (Campbell says there's no official contract—most of his suppliers are farmers, "who are very honourable people"), Lifford ensured a steady supply of high-quality, reasonably priced wine.

Meet the people

It's a few hours before the doors open on the 2006 Toronto Wine and Cheese Show. In the vast dreariness that is the International Centre, wine agents line up bottles like artillery shells. Over the next two days, the merchants here will pour thousands of litres of wine; very little of it will end up in the spittoons scattered throughout the hall. "People get pretty drunk," says one agent.

This isn't exactly a sexy event—the TWCS is aimed at entry-level wine drinkers, those who don't know a merlot from a chardonnay (which, according to an industry survey, is roughly half of Canadians). But it's a crucial stop for Lifford. Because its suppliers are too small to do their own marketing, shows like this one are the agency's only real opportunity to reach potential customers. Rather than selling cases of fine foreign wines, Lifford is trying to build brand recognition, so that the next time someone sees one of its wines on the menu at a restaurant (or on LCBO shelves, which account for 10% of Lifford's business), they'll remember it and, hopefully, buy it. It's also partly an educational exercise—to convert beer-drinkers to the grape, or persuade connoisseurs of plonk to upgrade.

Lifford participates in several shows and tastings in the course of a year, each one catering to a different segment of the market. A month after the TWCS, for instance, Campbell and his team poured samples at the California Wine Fair, an annual tour sponsored by California's 840 wineries (Lifford represents five of them, including Niebaum-Coppola, owned by Francis Ford Coppola). This event, where many of the labels were in the $50-plus "super-premium" category, caters to serious oenophiles who buy cases for private consumption. Lifford also hosts its own private tastings, aimed at restaurants looking for new brands to add to their wine lists—by far the most lucrative market, because they order in bulk, and on a regular basis. Its largest tasting, held each May, attracts restaurateurs from across the province.

Happy workers equals higher sales

The Lifford Agency employs 15 commission-based salespeople, most of them women (Campbell says they have a better sense of smell); like most agents, many of them have degrees or certificates in wine connoisseurship, along with experience in the hospitality trade. In fact, he claims to have not only the best-trained sales staff in the business, but the best-travelled, as well. Which in his mind amounts to the same thing. (As an added bonus, Lifford employees consider the extra AirMiles a perk, so they tend to stay with the company for a long time.)

In 2006, Campbell sent wine-tasting teams to Australia, South Africa and Italy. This January, he'll take six of his 15 salespeople on a tour of New Zealand—an up-and-coming market that's amazing because low pollution leaves the fruit fresh and pure. "There's nothing like standing in the vineyard talking to the winemaker to understand the wine you're selling," he says. "I've personally been in all but maybe three of the vineyards of the wines we sell."

All that travel means a lot of tasting—on one tour, Campbell developed a blister on his tongue. But that's the price of knowing your sémillon from your sauvignon, and your north-facing vineyard from the one facing south. Listening to Campbell talk about Chile, you'd think he was a native vintner: "You've got coastal mountains, which wring some of the water from the ocean breezes. The interior valley is in the rain shadow, so they don't get a lot of moisture, but they get gorgeous sunshine. And in the back you have the Andes. They wring out all the water left in the ocean breezes and create rivers that provide great irrigation."

Such on-the-ground experience means Lifford's sales team can pass along their enthusiasm for, and knowledge of, each wine when they go on sales calls, and when they provide follow-up support for sommeliers and wait staff. Those servers can in turn up-sell diners from a lower-priced bottle to a higher-priced, higher-margin one, by suggesting food pairings and talking a bit about each bottle's pedigree. "It's important to be able to say, 'I visited Echeverria in Chile last January. The winery is right in the vineyard, and they hand-pick the grapes,'" says Campbell. "That provides an opportunity for the restaurant to do a better job."

LET'S PLAY MONOPOLY

Ontario, like all of Canada's provinces save Alberta, holds a monopoly on booze. Alcohol is a huge source of revenue—a record $3.6 billion for the Ontario government in 2005-'06. Wine accounted for more than a third of that.

The LCBO sells 18,000 brands of liquor and wine—most of them sourced by agents (who receive a commission on each bottle sold). But only about 3,500 of the brands are available on the LCBO's so-called General List. Another 4,575 are sold through its high-end Vintages division. Why the discrepancy? Part of the problem is that the LCBO's mandate is to supply the entire province with a similar selection of wine. So, it's forced to stock only high-volume products. And because shelf space is at a premium, all its labels must be supported by serious marketing—something small wineries can't afford. At Vintages—created in 1981 to carry smaller-batch and niche products from around the world, geared toward different geographic tastes—space is even more scarce. Which leaves a lot of wine off the table.

That's where companies like Lifford come in. The remaining 10,000 or so brands—most of them wine—are available only through agencies, on consignment. The system was introduced in the late 1980s, when Campbell was still owner of an upscale restaurant. Agents would complain that Vintages didn't have enough space for all the wines they wanted to import. "They were hoping to find a way to get smaller labels into the province," says Campbell.

They got their wish—sort of. Let's say Lifford wants to order 100 cases of sauvignon blanc from a winery in Chile that's been popular with its clients in the past. The agency's first step is to place an order with the LCBO; the LCBO then places the order with the winery. When it receives the 100 cases, it places them under bond in a consignment warehouse. That leaves the system vulnerable to bottlenecks: In February, the LCBO had to suspend consignment orders because it ran out of storage space.

Here's the zinger: The winery doesn't get paid by the LCBO until all 100 cases are sold. And because Lifford gets its commission from the winery, it doesn't get paid either. "If you go over the permitted period to sell the wine, the LCBO can seize the stock and sell it through retail," says one agent. "They are ugly terms."