The B.C. Alliance for Smart Liquor Retail Choices said a shift away from selling B.C. wines in independent liquor and wine stores, to grocery store sales, could seriously compromise most small to medium sized B.C. wineries.
“Grocery stores are just starting wine sales in British Columbia. If the model expands, small B.C. wineries will be in trouble. Not only because they could favour cheaper wines produced by large B.C. wineries, but the international wines from the U.S., Australia, Chile and the European Union won’t be far behind,” said Kim Pullen, president of the Church and State Winery.
The B.C. Alliance for Smart Liquor Retail Choice said they are the largest current distribution channel for B.C. wine through freestanding private liquor and wine stores. According to them, this accounts for $73.3 million in annual sales for 30 per cent of all VQA sales. They state sales through these stores are critically important to the B.C. wine industry, particularly for smaller producers.
The alliance said in other countries, and in the United States, with grocery store wine sales, 65-70 per cent of all wine sales occur in grocery stores.
According to the alliance, the grocery store channel favours large producers who have sufficient economies of scale to work on low profit margins, supply private label wines and who can provide sufficient quantities. Smaller wine producers can’t compete.
Pullen said food stores will always want to sell the lowest priced product with the highest gross margin. And the alliance said to think they will change their model for wines is naïve. Only the larger wine producers will benefit.
One of the member associations of the B.C. Alliance for Smart Liquor Retail Choices obtained a comprehensive legal opinion prepared by a leading international trade lawyer at Fasken Martineau. It concludes that the “B.C. wine on regular shelves” grocery model is a violation of both NAFTA and GATT. It also concludes that the issuance of any new licenses for B.C. wine sales (the Bill-22 licenses) would also be in trade violation.
“As far as we are aware, there are no jurisdictions in the world that have successfully restricted regular shelf grocery sales to local wines. The reason for this is simple,” says Pullen. “It is not permissible under international trade agreements.”
The member organizations of The B.C. Alliance for Smart Liquor Retail Choices are ABLE B.C. (the Alliance for Beverage Licensees); the B.C. Private Liquor Store Association and small to medium sized B.C. wineries.
The B.C. Alliance for Smart Liquor Retail Choices is requesting that the B.C. Government impose a moratorium on issuing additional licenses to grocery stores to sell wine in order to allow time for a thorough investigation of both the trade compliance issues and the effects upon small wineries and retailers.
The B.C. Alliance for Smart Liquor Retail Choices will meet on Oct. 1 at 2 p.m. to discuss this issue.
All small to medium sized B.C. wineries are invited to attend the session taking place at the Poplar Grove Winery in Penticton.