Christine Coletta, owner of Okanagan Crush Pad winery in Summerland, B.C., makes more money selling her wine in the United Kingdom than in B.C.
“My wines there sell for 40 pounds ($65) a bottle, and the same wine here would sell for $22, so you can see the vast difference” she says.
Ms. Coletta spent years culminating relationships with distributors in the U.K. and now gets to see her product on wine lists in London restaurants. She’d like to see this happen in a Toronto restaurant, but with the Canadian system the way it is currently, it’s not likely to happen soon, she says.
Like many winemakers in Canada, she would like to get her products on shelves and wine lists across the country, but interprovincial trade policies and monopoly systems make it difficult for wineries to sell out of province for a decent profit. So, expansion beyond provincial borders often means going global instead.
“We’ve all been encouraged to set up shop in our domestic market and do a robust job of building market share here,” says Ms. Coletta. “The problem is very few people can venture further afield. The larger wineries are in a position to do that because they have the inventory, but for smaller wineries, our cost of production is so high we have to look for the best margins that we can, and in all cases, that’s staying within our own province.”
The usual advice for entrepreneurs and small businesses in Canada is to start local and grow domestically before taking the leap into the global markets – and there are many good reasons for this, say business experts. But with the world becoming more connected, global markets are sometimes easier to tap and there are certain industries, like the wine industry, that may be forced, as a result of regulations or policy, to go global as part of their expansion plan.
Being ‘born global,’ meaning companies that seek global markets from the onset, is rare, says Larry Plummer, associate professor of entrepreneurship at Western University’s Ivey School of Business in London, Ont. Those companies that go global from the start often have a reason, he adds, like a product that only makes sense to market in a certain industry or country.
“The traditional trajectory of a small business is still to conquer local markets and grow domestically,” he explains. “But there are definitely circumstances that force companies into going global.”
One example, says Mr. Plummer, is the biotechnology sector where, for years, companies from around the world established startups in Canada, and North America in general, because of the favourable intellectual property laws and strong biotech hubs.
The same goes for Canada’s manufacturers of medical technology. It’s sometimes easier for these companies to sell products to places like the U.S. than it is to sell within Canada’s public health system.
However, in the case of the alcohol business, provincial policy is what’s forcing companies to look beyond Canadian borders instead of within them.
In Canada, each province oversees liquor sales and there are limits to transporting alcohol from province-to-province. The Supreme Court recently upheld these limits in 2016 after a five-year legal battle by a New Brunswick man who bought beer in Quebec – because it was cheaper – and was fined by police for returning with more than he was allowed.
Mr. Plummer says he’s heard for years from local brewers that tell him it’s easier to sell their beer in places like upstate New York than it is in Manitoba.
“This creates tension and artificial reasons for a company to go international,” he adds. “Because, as a brewer, if I sell every beer I could possibly sell in my province and I want to continue to grow, what happens if we’re then forcing companies to go international when that’s not in their best strategic interest?”
The wine industry has been fighting these interprovincial restrictions for years as well, explains Miles Prodan, president and chief executive officer of Wine Growers British Columbia, because, while access to global markets is positive for a lot of reasons, it’s more expensive for producers to sell abroad.
“Generally, the further you get from home the less money you make,” says Mr. Prodan, as costs such as transportation can get pricey. “A winery makes the most margin when they sell it from the winery.”
But getting B.C. wines on the shelves in places like Ontario’s LCBO (the province’s liquor control board) isn’t always feasible because the retailer needs higher quantities that many smaller B.C. wine producers can’t deliver. However, selling direct to Canadians, no matter what province they’re in, would do a lot to support the industry and “it just makes sense,” says Mr. Prodan.
Right now, certain provinces have allowed direct sales from wineries, so people in B.C., Manitoba and Nova Scotia can have wine made in other provinces – like Ontario – shipped to them. However, someone in Ontario couldn’t order for direct shipment from a B.C. winery. That’s what those in the industry are hoping will change.
For now, Ms. Coletta says she is going to continue to build her name and reputation by nurturing her international channels.
“It’s an incredible experience,” she says. “You go into the [global] market and find out how valued your wines really are, people are paying top dollar and you’re up against pretty stiff competition. I think it’s good for us to put ourselves out there.”