Drastic changes needed as Okanagan wine industry faces 'existential crisis'
The Okanagan wine industry urgently needs to re-invent itself on a scale not seen for decades, according to a wine industry consultant.
“A good part of the industry is in crisis,” Karen Graham, who is also a public policy consultant and founder of the WineDrops online publication, told iNFOnews.ca.
“I think we’re going to see fewer licensed wineries than we have today. I think the stronger set of wineries – some of them may be new and some of them may be small – I think we’ll see some very tough decisions. Those that make it through this will really come out stronger.”
The killing cold in December 2022 wiped out about half the grape crop in 2023.
The January 2024 cold snap was even deeper and while it’s too early to tell the full extent of the most recent damage, early speculation is that it may be worse than last winter.
That, combined with hot dry summers and forest fires that drove away customers, has hammered wineries hard and will impact them for years to come.
The problems with the industry run far deeper than climate change and date back much further than the last couple of winters.
“Vineyards and wineries in British Columbia are currently facing an existential crisis that hasn’t been seen since the 1990s,” said a 2023 Cascadia report done for the BC Grape Council called An Opportunities Assessment for the BC Grape and Wine Industry.
“Crucially, these challenges put the economic impact of the industry at risk,” the report said. “More than $3.75 billion in economic activity was generated along the grape and wine supply chain in 2019. The ability of British Columbian vineyards and wineries to recover from these challenges will be crucial to safeguard these impacts and re-establish a strong foundation for growth in the future.”
Back in the late 1980s, Canada and the U.S. signed the North American Free Trade Agreement (NAFTA) that broke down tariffs and essentially put an end to the BC Wine Industry as it existed at that time, which was based on hardy hybrid plants that did not produce the highest qualities of wine.
In response, the industry created the Vintners Quality Alliance (VQA) system in 1990 that guarantees high quality wines.
That triggered a massive replant program of less hardy but higher quality vines and the creation of world class and higher priced Okanagan wines.
It has also led, in Graham’s opinion, to complacency both amongst growers and their associations that have contributed to today’s problems, over and above the impact of climate change.
“There’s a little bit of a shortage of leadership at the organizations charged with leading the industry,” Graham said. “There is also a responsibility on the part of the industry representative bodies to foster a culture of collective self-reliance.”
There are a handful of such “bodies” that Graham describes as “alphabet soup” that need “rationalization.”
“That’s probably a big thing to say,” she noted. “People in the industry might raise their eyebrows at that because it might mean somebody will have to fold up shop and roll their operations into another entity.”
There is the BC Wine Authority, the BC Grape Growers’ Association, BC Wine Grape Council, Wine Growers BC and 10 regional associations.
“These different organizations are responsible for different aspects of the industry,” Miles Prodan, president and CEO of Wine Growers BC, told iNFOnews. “We meet regularly and we coordinate on specific issues. We’re working very closely, for instance, on the replant program that we desperately need.”
That may be, but more than a year after the December 2022 grape vine kill, the industry is still waiting to hear if the province is going to contribute to a replant program. Prodan hopes there’s an answer in the provincial budget this spring.
“It’s not a business strategy to continually go to government to request support,” Graham said. “In dire circumstances, maybe, but there has to be a bit more of a mature view taken and a more strategic way of going about the relationship with government across production, sales and agricultural support.”
Should some of these bodies be consolidated into one or two overarching organizations?
“As one of them, I can’t comment on that,” Proden said. “We do a great job of that aspect of the industry that we’re responsible for, which is marketing, communications and advocacy. Especially when the industry is under as much stress as it is now, it’s now as important as ever to make sure we’re all rowing in the same direction.”
Graham argues they’re not doing a good enough job of coordinating with research institutions like UBC and Summerland Research Centre on finding varieties that can thrive in the Okanagan’s heat, cold and multiple micro-climates.
The growers need to get their acts together too, she said, with the encouragement and guidance of their organizations.
“There is a lot of closely held information around things, especially around things like viticulture,” Graham said. “I think there needs to be a more convivial kind of approach and a setting for the industry where you’re willing to help out a neighbour.”
That doesn’t mean every one of the 200 wineries in the region lives in its own little silo, but there is not the kind of sharing that needs to be done.
“(The industry) has sailed along with tremendous success over the past few years and, maybe, hasn’t felt a need to invest in some institutional supports,” Graham said. “They’re really facing it now and I think that one of the big lessons from this crisis is to take those institutional supports, build those foundations more deeply and with more strength across the industry.
“Let’s do quite a lot more work to break down those silos to strengthen the industry so we are way more prepared for the next crisis because something, in a few years, will come down the road again. I’ve said a couple of times, don’t let a good crisis go to waste.”
On the plus side, she said, for every winery that is facing serious financial difficulty, there are 2.5 that are “really putting their roots in more deeply and hunkering down to get through this period.”
What the industry will look like in three or four years when replanted vines are able to produce commercial amounts of new grapes, is very much unknown.
“There are simply too many wineries per consumer,” Graham said. “Even though, over the decades, (consumers) have really stepped forward and championed and supported with purchases from the BC wine industry, there are just too many operators and brands trying to establish themselves in what is already a very crowded and very expensive market.”
She sees a need to expand markets outside of BC and look at innovative strategies to compete with low-cost international wine imports.
That doesn’t necessarily mean moving to large scale wineries that can diversify their crops to deal with different weather events.
“It’s a generalized statement but you do hear it quite often: Smaller wineries have the charm and it’s the larger ones that have the marketing power,” Graham said. “Both things are true but I think there is room for both.
“We don’t want the Okanagan to be just a fairly uniform ocean of very similar wines. First of all, I don’t think that’s even possible because it is such a geographically, geologically interesting and complex area. No matter what, you are going to get different wines from different subregions. At this juncture I’m not at all recommending that very small – what used to be called farmgate wineries – aspire to become medium sized wineries.”
What the ideal size and style of winery that will be most able to survive is yet to be determined.
“I’m really hopeful to see the industry not only emerge stronger but more collegial, more coherent and with a really stronger institution foundation,” Graham said.
— This article was updated at 1:11 p.m. Monday, Jan. 29, 2024, to correct the spelling of Miles Prodan's name.
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