A label on a bottle of Fuzion Shiraz.Peter Power/The Globe and Mail
Getting a new, foreign wine brand into a Canadian consumer's hands is not easy.
Although there are more than 50,000 wineries worldwide, Canadian wine agents typically only care about the five or six best producers within the various price ranges, regions and grape varietals. A winery may make a great product, but if its staff doesn't speak English or can't provide samples on time, few agents will take a chance on it. And agents have to pick carefully, because they typically can't represent competing brands in the same market band.
They also prefer dealing with fewer, strong suppliers for ease of administration and the opportunity to leverage their investment in, say, a winery's low-end merlot by adding a chardonnay, a rose and higher-priced reserve offerings. So established agents carefully weigh the prospects of a wine's success in their markets before committing to a supplier. "You're trying to spot the trends before everybody else and you hope you have the right producer with the right product at the right price point," says Alex Patinios of Toronto's Dionysus Wines & Spirits Ltd.
The agent's task is getting that bottle onto the liquor board's shelves. In Ontario, there are hundreds of thousands of brands vying for about 7,000 slots on the LCBO's product list, and only a few hundred openings exist for new brands, explains wine-industry consultant Robert Ketchin. (Specialty listings, like Vintages in Ontario, are only one-time orders, though products may get re-ordered if they sell well.)
To break through, says Ketchin, "you've got to come in with a brand that has an amazing track record in other markets or fabulous reviews from wine gurus. Otherwise, you don't even have a chance to get an audience."
The LCBO won't even schedule a meeting unless the information supplied by the agent fits the criteria of what it's looking for. About 5 per cent of new wines that score a meeting go on to a tasting and review by a panel. Then the liquor board wants assurance that the supplier will support the brand with advertising and in-store promotion, a budgetary commitment that carries increasing influence on whether a wine gets picked up. After that, the product goes through laboratories to check for contaminants and ensure it meets labelling and packaging standards.
Liquor boards also demand very competitive pricing. They have all the statistics and trend reports, "so you have to come with a very sharp pencil," says Ketchin.
The supplier sets a price based on the production cost plus a marketing budget. Then the board adds a hefty mark-up and taxes. As a result, a bottle that costs the LCBO less than $5 will sell for $13 in-store. (The system works similarly in other provinces, though the taxes and mark-ups differ significantly.)
Because some taxes are flat, the higher the product price, the lower the percentage mark-up. Agents collect a 10 per cent commission on the price to the board.
If the wine successfully navigates the process — which takes six to 12 months — it gets a trial order or, for the lucky few, a permanent listing at the liquor board. But even that's not the end of the line. If, within a year, the brand fails to meet sales forecasts, it's yanked from the list.
Back to square one.