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Steve Lornie, Christine Coletta and David Scholefield bring in Pinot Gris for the 2010 Haywire wine, an Okanagan Crush Pad brand. (Stuart Bish)
Steve Lornie, Christine Coletta and David Scholefield bring in Pinot Gris for the 2010 Haywire wine, an Okanagan Crush Pad brand. (Stuart Bish)

Controversy froths up over B.C. 'virtual winery' Add to ...

Do you care more about the land or the brand when buying a bottle of wine? It's a relevant question because very often the two are not one and the same.

The distinction is being drawn into sharp relief in British Columbia, where some established producers are crying foul over the emergence of so-called virtual wineries.

Under the virtual-winery model, a person with no vineyard or equipment uses an existing winery to crush and ferment purchased grapes, then bottles the results under his or her own label. It's a sort of commercial analogue to the U-brew cuvée your neighbour keeps laying on you at dinner parties, but with a big difference - it's usually pressed from top-quality local grapes and sold at ultrapremium prices.

The controversy, so far mostly confined to private complaints to provincial liquor inspectors, frothed up like a vat of fermenting merlot recently on a blog called Cherries and Clay. It centres on the launch last month of Okanagan Crush Pad, a new winery that makes its own brand but also has been set up to serve individuals who want to realize their dreams without having to obtain a winery licence.

Opponents say the model invites unfair competition, giving urban dabblers a fast track into an industry where others have been forced to sink small fortunes into land, barrels, buildings and meticulous inventory control to satisfy tortuous provincial policies surrounding the manufacture and sale of alcohol.

"Winery owners have to fill out forms, paperwork, submitting taxes to federal and provincial authorities, getting audited by excise people - it goes on and on," says Richard Roskell, who co-owns Marichel Vineyard and Winery with his wife, Elisabeth Roskell, in Naramata, B.C., in the heart of the Okanagan Valley. "Once you create a category that's on the margins, in the grey area, that doesn't have to go through those hoops and whistles, it creates a different playing field."

But Okanagan Crush Pad says there's nothing grey about it. The company, home to an in-house brand called Haywire, plans to assume all responsibility for wines it's contracted to make. To comply with liquor laws, the venture will take ownership of the juice under its winery licence, as required, track volumes and submit relevant documentation to the province. Unlicensed clients using its custom-crush facility will in effect become profit-sharing partners, reaping a fee for designing labels and promoting the product. Cellar operations will be led by Okanagan Crush Pad winemaker Michael Bartier and consultant Alberto Antonini, both industry veterans.

"All wine produced will be under the channels of the Liquor Act and Liquor Distribution Act," says Christine Coletta, a long-time marketing consultant to the wine industry, who owns Okanagan Crush Pad with husband Steve Lornie. Ms. Coletta says she has consulted with lawyers and is "100-per-cent confident that we will be following all the regulations."

To most consumers, the kerfuffle might seem like a case of sour grapes, a knee-jerk attempt to stifle competition. But there's a solid basis to some of the concerns.

Decades ago, the British Columbia Liquor Distribution Branch - the monopoly agency that controls the distribution and sale of alcohol - introduced a so-called land-based winery model. Under that scenario, to do business with the BCLDB, winemakers must own at least two acres of planted vineyard land. They also must make and bottle everything on the property.

The policy was in part seen as a way to spur agri-tourism and promote stability within the budding sector, which it did. Today there are more than 200 wineries in the province, all with considerable investments in land, buildings and equipment.

Now, the crush-pad model appears poised to shift the competitive landscape. "The uneven playing field is what irks most of the guys who are owner-operators," says Ross Hackworth, owner of Nichol Vineyard in Naramata. He anticipates it could cut into his own modest business of 2,500 cases a year, though he remains more soft-spoken than some of his colleagues. "There's definitely a few people who are steamed about this whole process."

Mr. Hackworth, coincidentally a winery client of Ms. Coletta's Vancouver-based public-relations firm, concedes the evolution toward virtual vino is inevitable. Landless brands have sprouted up over the past two decades in virtually every wine region of the world, including Niagara with such laudable brands as Temkin-Paskus and Charles Baker.

Mark Hicken, a Vancouver lawyer who provides services to the industry under Vintage Law Group, says there's nothing to prevent crush pads from doing business, providing they structure their deals properly. He adds that ventures such as Okanagan Crush Pad (not a client, though he has been retained by Ms. Coletta on other business) could play a fruitful role opening doors for entrepreneurs stymied by an "overly restrictive" system.

Paradoxically, crush pads have been doing exactly that in British Columbia for years. Many established wineries, Joie and La Frenz among them, crafted their first vintages elsewhere - to get cash rolling prior to the construction of their own buildings.

Mr. Roskell at Marichel applauds such collegial arrangements and has even made his own licensed winery available for four other start-ups. But he contrasts that "reasonable" strategy from one that would enable people to enter the sector with no intention of starting a bona fide winery.

"Every industry has its hurdles and largely that's a very desirable thing because it protects the consumer," he says. "You want to operate responsibly because you have a farm at stake. When people don't have that behind them, when it's a label you can walk away from, and no licence, then their motivation to make sure that they're crossing all the t's and dotting all the i's is that much less."

A former pilot, Mr. Roskell says it's no different from starting an airline or car-rental business, where capital investments and regulations governing such things as mechanics' standards ensure consumers aren't getting a fly-by-night product or service.

"Virtual wineries? Wow, it doesn't bring benefits," he says. "It brings questions."

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