Tuesday, February 3, 2009

Conflict bristles again among B.C. winery factions

Ian Mavety

This week, I heard a report of a noticeable jump in the price of a few wines sold in the province’s 20 VQA stores.

This report seems inaccurate. But what is accurate is that some of the large VQA wineries not members of the British Columbia Wine Institute are reducing the number of wines made available in VQA stores. Domaine de Chaberton of Langley, for example, will not replenish VQA store stocks on its value-priced wines.

What is behind this is the decision to the Institute to impose a surcharge on non-Institute members for using the VQA store distribution channel. This may well signal the end of the prickly truce between those wineries that belong to the Institute and those that put their wines through the VQA tasting process but do not belong to the BCWI.

Many of the latter belong to the Association of British Columbia Winegrowers. Early in January, Blue Mountain proprietor Ian Mavety, the current president of the ABCW, sent an angry letter on this issue to several cabinet ministers in Victoria. To date, none has replied.

The VQA store licenses technically are controlled by the BCWI. These stores are limited to sell only VQA wines produced in British Columbia. For most of the past two decades, the wineries that put their wines through the VQA tasting panels all belonged to the BCWI. A portion of the revenue these wine sales generate is retained by the BCWI and helps pay for its marketing and promotional activities.

Until last year, BCWI also managed the VQA process. To be permitted to display the VQA symbol on a wine, the wine must be made with grapes grown in British Columbia; and it must be certified free of technical faults by a professional tasting panel which meets more or less monthly.

The VQA regulation has now been taken over by the new British Columbia Wine Authority.

The rules that set up the BCWA require all wineries that have started since January 1, 2007, to submit their wines to the VQA panels.

Wineries that started earlier than that, like Blue Mountain Vineyard and Cellars, need not get VQA approval for now. However, in 2020, every winery will be required to VQA its wines if it wants to use British Columbia geographical indicators on its label.

Most wineries now belong to the Institute, which has a global marketing role. However, that membership is voluntary. Member wineries pay 10 cents for every litre they make annually to belong. Such large producers as Domaine de Chaberton and Blasted Church have recently withdrawn, content to look after marketing by themselves - particularily now that they also have to pay annual fees to the BCWA.

When the BCWA was being set up a few years ago, the acting chair decided that the VQA stores should be allowed to sell all VQA wines, whether or not the winery was a member of the Wine Institute.

Last year, the board of the Wine Institute decided that non-member wineries were getting a free ride by being allowed to sell through VQA stores on the same terms as member wineries.

Member wineries have been offering their wines to the stores at a 30 percent discount to the retail price. The Institute decided that non-member wineries would have to offer a 36 percent discount. The six percent surcharge in effect is what it costs them extra to use the VQA stores unless they become members of the Institute. The change became effective on February 1.

In his letter, Mavety called the surcharge “extortion plain and simple.”

He argued that the institute has decided that “if they cannot get wineries to join the association voluntarily, they will compel them to join or suffer hardship by being denied access to” the VQA stores. He also asked that “if they can add a surcharge today of 6% what stops them from adding a further 20 or 30% next month or next year.”

There is some logic on what the Institute has done, although one would hardly see it as an effective tool for recruiting new members. (Member wineries pay 10 cents a litre to belong to the Institute.)

The surcharge has re-awakened the small winery paranoia that the giants in the Canadian wine industry – Vincor and Andrew Peller Ltd. – once again are out to squash small wineries. “It would appear,” Mavety argued, “that the large firms, particularly those owned and operated outside of the province are dictating this change and are attempting to further constrain trade.”

Whether or not one agrees with that position, it would surprise me if the government lifts a finger. The internal wrangling of the British Columbia wine industry over the last five years has left ministers and bureaucrats with no appetite to get back in the middle.


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