Council Favours Fine-Wine Boutiques
Denis Cahill The business plan for Calamus Estate Winery in Jordan is to increase production from 4,000 cases per year to 8,000. Shown at the winery, left to right, are sales manager Larry Horne, director of marketing and promotions Sheila Minkhorst and president Derek Saunders. Denis Cahill People shop for wine in Vineland Estates Winery's boutique.
It's the week before the LCBO's annual Ontario wine promotion, and the head of the Wine Council of Ontario is keen to chat about all the retailer is doing to promote local brands.
With strong grape harvests in 2006 and 2007, there will be plenty of Ontario wines popping up in the 600 government-controlled stores in coming weeks.
"It's really, really important to sell wine right now, so we're really, really focused on that," council president Hillary Dawson said Wednesday while sitting in the membership-driven trade organization's St. Catharines office.
Wineries can sell their products three ways: in winery tasting rooms, in restaurants or at the LCBO.
Because of limited space on LCBO Monique Beech tackles the issue in Part 2 of a two-part series shelves, several wines don't make it to the retailer.
Only a handful of wineries -- mainly Vincor Canada, owned by U. S.-based Constellation Brands Inc., and Andrew Peller Ltd. -- with licences that predate the 1993 North American Free-Trade Agreement are allowed to have their own wine stores.
In the last year, the number of wineries with products sold by the LCBO increased by 20 to 63. Still, another 73 wineries did not sell through the LCBO.
Dawson acknowledges there's a gap at the LCBO between general list wines and premium wines.
In particular, higher-end premium wines that retail for $18 and up, tend to get lost in the store-shelf shuffle.
These brands may be sold short-term in the specialty Vintages section, but smaller quantities and higher price tags mean they won't find a permanent home on the LCBO's general list.
"Say you're ... a small winery getting bigger and want to grow in volume at a higher price point. Where's the opportunity for you to sell at higher price points and build your brand?" said Dawson, whose organization represents 81 wineries.
"Where's the mid-point between general list and Vintages?"
Council favours fine-wine boutiques For more than a year, the council has studied the best way to open the retail sector to Ontario wineries.
The council has come up with the idea of privately owned fine-wine boutiques, where entrepreneurs could sell a mix of imported and domestic wines.
Some may choose to sell only Vintners Quality Alliance wines, Dawson said.
The wine council's idea is to keep working closely with the LCBO, while filling a niche for consumers and allowing Ontario wineries to expand, she said.
"What we're not saying is privatize the liquor board...." Dawson said.
"What we're saying is our model works hand in glove with what's already out there."
In Jordan, a group of entrepreneurs have come together within the last six years to join a crusade.
It's become a mission at Calamus Estate Winery to get Ontarians to drink more local wine. A big part of the battle plan is making those wines available to consumers.
At Calamus, the business plan is to double the rustic barn winery's production from 4,000 cases to 8,000. But that requires additional customers.
Selling to the LCBO is time-consuming and the shelf-space is limited, said Calamus investor and marketing director, Sheila Minkhorst.
"For someone our size, it's going to be limited," Minkhorst said.
"The shelf space we're going to get is going to be in Vintages, and it will not be in all stores. It will be in a small percentage of stores across Ontario."
Like many in the industry, Minkhorst pines for the VQA-only stores found in British Columbia, stores that sell only wine made with 100 per cent B. C. grapes.
She doesn't understand why B. C. can have VQA-only stores while Ontario is not allowed.
"If it's a trade practice issue, what's the difference between B. C. and Ontario?"
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If Ontario were to allow VQA-only stores, other countries might impose trade sanctions, provincial government officials have said.
"Whatever they did in B. C., they did in B. C.," Dawson said.
"Here in Ontario, the message has been sent loud and clear over and over again that offering a VQA-only store where you're restricting products to VQA is trade illegal. It's a hurdle we were determined to get over, right? If you can't get the government to push the hurdle aside, you have to go over it."
The wine council has had the private wine store issue studied by accounting firm Grant Thornton LLP, which drew up an economic report based on a model of 10 stores.
Dawson said the council considered a range of options -- from British Columbia's VQA-only stores to Alberta's private alcohol system to Quebec's corner store beer and wine sales. It arrived at what it thinks best fits Ontario's wine industry, which is fine-wine stores, she said.
The report is circling the inner chambers at Queen's Park -- hand-delivered by St. Catharines MPP Jim Bradley, who is the transportation minister and head of the wine secretariat.
Last month, Ontario Premier Dalton
McGuinty said he'd consider allowing private wine stores if the industry wants it.
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Private stores are just one of many options to help wineries get their products to consumers, said Jim Warren, a longtime winemaker and consultant.
Many fruit wineries want to sell their products at farmers' markets and have been lobbying government to allow it.
Wineries in remote areas want to sell their products at other wineries, Warren said.
"Whether (private) stores would be the answer for everybody, I don't think so," said Warren, a Hamilton resident who wears many hats, including executive director of Fruit Wines of Ontario and the Ontario Viniculture Association, which has 49 members.
"But for some wineries, it might present a better opportunity. I think trying to satisfy everybody by this one opportunity isn't going to work, but it's going to please some people."
Donna Lailey, who owns Lailey Vineyards in Niagara-on-the-Lake with her husband, David, said she'd welcome a few VQA-only stores in strategic areas, such as Toronto, Ottawa and London.
But not fine-wine stores. That would just replicate the LCBO's Vintage section, said Lailey, a member of the independent Ontario Wine Producers Association.
"What is it going to do for VQA?" Lailey said.
"I'm looking for something that's going to sustain the agricultural base in the region. By opening fine-wine stores, to me, it's something Constellation would want to be able to sell their wines that they make all over the world."
Bruce Walker, Vincor's vice-president of government relations, said the company is willing to work with any retail option.
But Walker, whose company owns 161 private stores, said fine-wine boutiques might end up spreading out customers, rather than boosting wine sales.
"That's really the big question."
The mix of imported and domestic wines that would be offered for sale at a fine-wine store appeals to Allan Schmidt, president of Vineland Estates Winery.
Most customers in Ontario are switch hitters, he said, they buy wine from around the world.
They don't want to make two stops, at a VQA-only store and the LCBO, he said.
"I want to sell my wine to the same customer who is buying top Napa wines or the Barossa Valley (in Australia) or Tuscany," said Schmidt, whose winery produces 60,000 cases per year.
"That's the customer I want buying my wines."
Consumer demand for Ontario wines may not be enough to sustain a store selling just VQA wines, Dawson said. Some of the VQA stores in B. C. are struggling, she said.
Dawson sees fine-wine boutiques as a win-win for wineries and government.
"When people drink more wine, they're going to drink wine more broadly, right?
"When they become more tuned into wine, they'll drink it. It will probably mean increased sales at the LCBO, increased sales for these other (private stores) and increased traffic to our wineries as people become more committed and interested in our industry."