Alberta’s attack on Okanagan wines may open other doors for the industry
Alberta delivered a harsh blow to Okanagan wineries last month by banning them from selling in its liquor stores if they also ship wines directly to customers.
While Wine Growers BC is fighting back with everything it has, the whole dispute shines a light on the lack of free trade in wine across provincial borders.
“Sometimes a crisis will create an opportunity,” Dan Paszkowski, president and CEO of Wine Growers Canada, told iNFOnews.ca. “Maybe this will create an opportunity for the direct-to-consumer model to finally be implemented to stop this from ever happening again.”
On Jan. 22, the Alberta Gaming and Liquor Commission sent letters to numerous BC wineries as well as to wineries from other provinces.
The letters said the wineries were guilty of selling their wines directly to consumers so their sales through the liquor stores would be prohibited within a matter of hours if they didn’t promise to stop.
Wines Growers BC contends the wineries are not doing anything illegal, the Alberta liquor board has no authority to impose the restrictions and it did not provide any opportunity to appeal the decision.
“It was a very hard-handed approach and has a very significant impact on the BC industry,” Paszkowski said.
While direct-to-consumer wines tend to be higher priced products that are not normally sold in liquor stores, those same wineries sell through hotels and restaurants where supplies will soon run out.
“That hotel would purchase that wine and sell it in their store,” Paszkowski said. “It can no longer enter into the province, which means that hotel can no longer sell that wine unless that winery signs a cease and desist letter. Once it’s off their menu, they’ll replace it with a wine from Chile. It’s got long-term repercussions.”
READ MORE: 'Muscling': Alberta government won't stock B.C. wines that sell direct to consumers
If and when the dispute ends, wineries will likely have to start all over again fighting to get back into the Alberta retail market.
“When you have listings in retail stores across Alberta, or any province, you put a lot of marketing dollars behind that and you build a consumer loyalty,” Paszkowski said. “Once that wine is gone, for even a short period of time, you’ve got to start that loyalty building all over again. It’s significant damage to the BC industry if this continues.”
The roots of the dispute date back to the days of prohibition in the late 1800s that continued through to the First World War.
It wasn’t until the 1920s that most provinces repealed their anti-drinking laws but the federal law against shipping alcohol between provinces remained.
In 2012, largely through the efforts of Okanagan-Coquihalla MP Dan Albas, the federal government repealed that ban.
Manitoba was the first to act that year by opening its doors to direct-to-consumer sales of all alcohol products. BC later that year allowed 100% Canadian wine from other provinces to be shipped to residents.
In 2015, Nova Scotia followed suit.
Later that year, Saskatchewan and BC struck a deal where the taxes were paid in the province of origin but Saskatchewan imposed an import levy of $7 per bottle which essentially made it impossible to sell BC wines in that province, Paszkowski said.
Further amendments in the federal legislation in 2019 opened the door to sales through provincial liquor stores
That requires the often more expensive Okanagan wines to compete for scant shelf space with wines from around the world. As a result, there's not many BC wines on shelves in other provinces.
Also in 2019, an alcohol beverage working group was created under the umbrella of the Canada Free Trade Agreement with a four-year mandate to come up with a national direct-to-consumer plan.
That was released last spring. It expanded the list of products that could be sold directly to customers to all wines, ciders, beer and spirits, rather than limiting it to 100% Canadian wines.
The taxes and bottle deposits would be paid in the provinces where the customer lives and a tracking system would be put in place.
The regular provincial markup on the wines – used to cover the cost of handling them through liquor distribution branches – would not be charged. Instead, a smaller administrative fee for tracking the shipments and taxes would likely be put in place.
READ MORE: Drastic changes needed as Okanagan wine industry faces 'existential crisis'
“If you allow a direct-to-consumer system to be put in place you are going to educate Ontarians or Nova Scotians about British Columbia wines,” Paszkowski said. “Those who have a very big interest in wine will start ordering those wines. The liquor store will know exactly how many bottles of Burrowing Owl Merlot are entering into Ontario, for example, for personal consumption by direct-to-customer purchasers and they’ll list the product because they’ll recognize that it’s going to sell.”
The catch in all of this is that the recommendation for the national program has been in existence for almost a year but, as far as Paszkowski knows, no province has taken any steps towards implementing it.
The silver lining in the current Alberta dispute is that it may trigger other provinces to get on board with a system that Paszkowski argues is much more reasonable and financially beneficial to the provinces.
“Sometimes a crisis creates an opportunity,” Paszkowski repeated. “The opportunity may be there but the crisis is right now. Those wines that have been prohibited from entering the province (of Alberta) have to be allowed to go back. Consumers deserve it and the wineries have not done anything wrong.”
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