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It’s not just beer, Comeau case would reshape Canada wineries

Way back in 1927, at the tail end of the prohibition era and just before Canada's current legislation governing the inter-provincial transportation and sale of liquor and spirits was passed, my grandpa, Andrew Peller, arrived in Canada with a dream of some day operating a winery. It took a few decades, but he finally realized that dream, opening the first Peller family winery in 1961.

Today, about 90 years later, I continue to pursue my family's vision as part of a vibrant and sophisticated Canadian wine industry that generates more than $9-billion in economic impact in Canada a year, with about 700 wineries, jobs for 37,000 Canadians and nearly four million tourist visits annually. No wonder the House of Commons Standing Committee on Finance, in its recent report on how to spur productivity and competitiveness in Canada, has recommended the introduction of a program to help further develop and expand the wine industry in Canada.

With all that has changed in the intervening years, how ironic is it that the impact of the Prohibition-era legislation, which gave provincial governments and liquor boards the right to restrict the delivery of wine from one province to another, is still being felt in 2017?

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Five years ago, Bill C-311 (An Act to amend the Importation of Intoxicating Liquors Act) was passed in both the House of Commons and the Senate. The act partially lifted the federal prohibition on inter-provincial importation of wine, allowing it for personal use. Yet, as of today, only three provinces – British Columbia, Manitoba and Nova Scotia, representing less than 20 per cent of the Canadian population – have elected to permit direct wine delivery for personal use. What of the other 80 per cent of wine drinkers in this country?

Well, if a Canadian wine is not available from the liquor retail stores of their home provinces, they just can't access it. What a shame for Canadian wineries that cannot acquire new customers. What a shame for wine drinkers who cannot have an award-winning premium small-production wine delivered to them from an out-of-province winery.

Given the significant internal trade barriers, it is small surprise that wines produced in Canada have only 32 per cent of the domestic wines-sales market share, while imports enjoy 68 per cent of sales. Contrast our situation to that of other great wine countries, such as the United States, Chile, Argentina, France, Italy, Australia and New Zealand, where domestic wineries have the foundational right to ship directly to retail and consumers and therefore hold a significantly larger proportion of their home market. For example, in the United States, wineries are flourishing in every wine-producing state, with U.S. wines representing 68 per cent of all wines sold in that country.

In fact – more irony – thanks to international trade agreements and highly subsidized wine industries worldwide, foreign companies have easier access to consumers across our country than is available to a Canadian winery in one province that would like to sell its products to a consumer in another province.

Last week, the Supreme Court of Canada began to hear the Gérard Comeau case. As an intervenor in the Comeau case, the Canadian Vintners Association, of which I am a director, sees this as the best chance for success in tearing down barriers to trade. Providing direct-delivery privileges of Canadian wines will enable the industry to grow and thrive. This is essential. Opening a direct delivery channel will provide greater choice for the consumer, support the growth of the Canadian wine industry, create jobs and stimulate economic growth. It will increase sales for every winery in Canada and bring our industry into the 21st century.

Further, direct delivery enjoys the support of Canadians. According to a recent survey conducted for the Canadian Vintners Association, nearly all Canadians (87 per cent) believe that consumers should be permitted to order wine for delivery to their home from any Canadian winery located in any province. Similar proportions think Canada's agricultural and wine industries will benefit if there are more ways in which local wine can be purchased (88 per cent); and that consumers, too, will benefit if there are more convenient ways to purchase Canadian wine (85 per cent). Nearly as many (83 per cent) believe the wine industry in Canada will have the potential to grow and be a more robust source of employment with such a change.

The Court has the opportunity to strike down a long-standing misinterpretation of the Constitution Act of 1867, which has allowed for non-tariff trade barriers between provinces, such as the one on alcohol, to proliferate. They have the opportunity to begin to lay the foundation for a more coherent Canadian marketplace.

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Earlier this year, the Standing Senate Committee on Banking, Trade and Commerce recommended that internal barriers to trade be removed, in this our sesquicentennial year, as a 150th birthday present to all Canadians. As the calendar pages flip inexorably forward to 2018, let's hope that the Supreme Court will seize the opportunity to play its part in making that 150th birthday wish come true.

John Peller is the CEO of Peller Estates Winery

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