A growing fight in Ontario’s wine industry is reigniting calls to overhaul the province’s alcohol system.
The government is close to unveiling a plan to invest millions in the region’s wine industry, in an effort to produce a higher-quality grape harvest. The program will match up to $12-million of contributions by growers over four years, sources say.
But what growers and vintners really want is more shelf space at the liquor store – and they argue that won’t happen as long as the Liquor Control Board of Ontario (LCBO) continues to provide limited shelf space for their products.
“Growers really don’t want to be subsidized. We would love to see our industry support itself by having market access increased,” said Trevor Falk, a third-generation grape grower whose home company, William Falk Farms Ltd., runs 18 different properties in Niagara-on-the-Lake. “I’m not going to tell you how many times we’ve told them [the province] because it is embarrassing.”
The pooled money will be used to upgrade the quality of vines, and to invest in high-tech equipment that protects vines from winter damage and extends the summer growing season.
But growers like Mr. Falk say with more market share, that kind of advancement could be handled by Ontario grape growers and wine makers themselves. To them, more shelf space means more access to consumers, lower prices and ultimately better grapes.
The diverging views over how to support Ontario’s wine industry has sparked renewed calls for the end of the province’s monopoly control of alcohol sales – a system that critics argue is largely a relic of the 1920s. At that time, the province was given full control over alcohol distribution to boost tax revenues. Now, the industry says those same laws are stifling growth.
Disheartened by the current system which they say pits Ontario wine makers against each other as they compete against cheaper imports at the LCBO, many are questioning the government’s commitment to growing their industry. As Ontarians head to the polls this fall, the Grape Growers of Ontario have launched media blitzes in hopes their plea for more consumer access takes hold as an election issue.
Ontario wines make up about 44 per cent of wine sales in the province, while imports make up the rest. Compared to other wine-producing regions, that’s a small share – it’s 90 per cent in Australia, 63 per cent in California and 57 per cent in New Zealand, according to the Grape Growers of Ontario.
“I would love to challenge the LCBO to get our market share up to 50 per cent,” said Bill George Jr., chairman of the organization, which represents over 600 growers.
For its part, the LCBO says it has made strides in recent years to ramp up its promotion of local wines through various moves includingincreased shelf space, prominent displays, specially trained staff advocates and special promotions.
But vintners and grape growers argue the system is thwarting their efforts to grow Ontario market share because it limits consumers’ access to their products.
“Of course we are going to be frustrated. What other wine jurisdiction in the world has their whole market controlled by a government monopoly?” asked Jeff Aubry, president of Coyote’s Run Estate Winery in Niagara-on-the-Lake.
While the LCBO is his biggest customer, he says the province has categorically failed to make the system work, especially for vintners who make VQA wines. Those wines are made from 100 per cent Ontario grapes, while blended wines contain both Ontario and foreign grapes.
“At the end of the day, the government of Ontario controls liquor distribution in this province. It is 100 per cent in their power to increase market access for Ontario wine,” Mr. Aubry said.
Andrew Chornenky, a spokesman for Ontario Finance Minister Dwight Duncan, said the provincial government “strongly supports” the wine and grape industries and consulted closely with stakeholders when developing its long-term strategy.
The province’s upcoming subsidy program is just one part of a larger government strategy, first announced in 2009, to promote the production of VQA wines.
“As for the distribution system – under the current system of selling beverage alcohol it provides a balance of social responsibility and access for both customers and suppliers,” he said.
The LCBO says its product selection is based on customer demand. “There is a fair and transparent competition process (for agents and suppliers) for listings open to all wines within the category the LCBO is seeking new products.”
Among other provinces, Alberta allows private stores to sell alcohol, while beer and wine can also be purchased in Quebec convenience stores. New Brunswick Premier David Alward, meanwhile, revealed earlier this month that his government is mulling whether to allow alcohol sales in corner stores.
Ontario has long opposed privatization. In 2005, it rejected the Beverage Alcohol System Review Panel’s recommendation to allow the private sector to take over wholesale and retail alcohol sales. The panel had argued the government monopoly was failing to generate the maximum return for taxpayers.
For the industry, the stakes are getting higher: Buzz is growing that 2010 is going to be Ontario’s best vintage ever, and more and more consumers are embracing the “buy local” trend.
That ought to be reason enough for the LCBO to create more shelf space for Ontario wines by cutting back on imports, said Seaton McLean, co-owner of the Closson Chase Vineyards in Prince Edward County, Ont.
“Then the ‘O’ in the LCBO would mean something,” he said.
- Ontario wine sales: $550-million
- Grape crop value: more than $69-million
- One litre of VQA wine generates $11.50 of economic impact in Ontario compared with 67 cents for a litre of imported wine.
Snapshot of Liquor Control Board of Ontario wine sales (April 1, 2010 to Feb. 26, 2011)
- Sales of VQA table wines up 14.8 per cent, to $96-million.
- Sales of Ontario blended wines up 3 per cent, to $184-million.
- Total wine sales (including foreign wines) up 6.4 per cent, to $1.4-billion.
Sources: Grape Growers of Ontario, LCBO