B.C. Wine Shop Faces Closure

Coquitlam, British Columbia -- There's just one mall in Coquitlam's Westwood Plateau subdivision, a suburban enclave east of Vancouver, B.C., and just one wine shop. One of the first in a network of 17 stores established by the B.C. Wine Institute under licenses the province granted in the late 1990s to expand sales of B.C. wine in communities that might not otherwise have access to them. Carol's Wines now faces the prospect of having its license withdrawn at the end of September, because its annual sales fall short of the $500,000 CAD (about USD$467,000) required by the BCWI.

With stock limited to B.C. wines bearing the Vintners Quality Alliance seal, the shop has never sold more than a few hundred thousand dollars of wine in a given year. Sales last year amounted to $440,000 CAD. The recession, and a 6% surcharge the BCWI introduced earlier this year on VQA wines supplied by non-BCWI members, haven't made it any easier for owner Carol Briggs to boost sales.

Regulations governing the store limit Briggs' stock, she said, noting that when the surcharge for non-BCWI wineries' product was introduced, one winery pulled its stock from VQA stores altogether, while the prices of others rose beyond what consumers were willing to spend (for more on the surcharge, see "B.C. Wineries Claim Discrimination").

With the latest operating agreement stipulating that operators must meet a minimum sales target of $600,000 during the next year, Briggs believes the BCWI is asking too much. "My sales are not going up $150,000 in the next year," she said. "They've raised the bar too high."

Briggs, who is seeking arbitration regarding the move to pull her license, said her store is one of six in the province that aren't achieving BCWI sales targets, and one of two shops that were asked to sign two-year contracts last year, as opposed to the five-year agreements given most other stores.

The other store operating under a two-year agreement, Arrowsmith Wine Shoppe in Vancouver Island's Parksville. Owner Terry Quick expects confirmation that his license is being withdrawn following a BCWI board meeting Sept. 15.

BCWI general manager Lisa Cameron said Quick's fears are unfounded, and the sole store whose license is being withdrawn -- Carol's Wines --  is merely suffering the consequences of having never met the terms of the operating agreement it signed with the BCWI.

The moves follow BCWI's May 2009 withdrawal of the license for a store at the Wine Country Welcome Centre in Oliver, a town at the heart of South Okanagan wine country. That decision, also a result of the shop not meeting sales targets, doesn't sit right with owner Jim Ruhland, whose adjoining Toasted Oak restaurant was a respected dining destination that did a booming trade in local wines (the restaurant reopened this week as the Firehall Bistro). The restaurant also played host to popular local events such as the annual Banée of Oliver, which celebrates the local wine industry.

Wine sales exceeded CA$4.5 million in the six years that the two businesses were open, Ruhland said, and the business more than fulfilled its role of raising awareness of B.C. wine. But he suggested that administrative changes at BCWI have resulted in a greater emphasis on revenue generation rather than marketing and awareness. (A portion of BCWI funding comes from VQA store sales.)

"It's just turned into this hardcore business -- numbers -- and they even raised the quota amounts for all the stores -- right in the middle of a recession. It's ridiculous," Ruhland said.

Ruhland believes it made sense for the BCWI to hold VQA store licenses when it was responsible for administering the BC VQA standard and the B.C. wine industry was finding its feet. Now, with quality assurance in the hands of the B.C. Wine Authority, and the institute's role limited to marketing and promoting VQA wines, Ruhland believes VQA store owners should hold the licenses under which their stores operate. This would free them from the limitations the BCWI agreements impose, and free the BCWI to focus on marketing and lobbying on behalf of its members rather than retailing.

"The different layers of bureaucracy are at this point stifling the growth of the industry," he said, noting that he's considering alternatives to contesting the withdrawal of his store's license. "I'm hoping for a reversal -- or a change that's going to happen from the government level -- that the BCWI needs to actually give these licenses to the operators themselves so that they can operate like independent businesses."

Calls for reform have the backing of the Canadian Federation of Independent Business, whose members include Carol's Wines, Arrowsmith Wines and four other VQA wine stores.

Brian Bonney, CFIB director of provincial affairs, British Columbia, recently wrote B.C. housing and social development minister Rich Coleman, whose portfolio includes liquor licensing, urging him to review the BCWI's administration of the wine shop licenses it holds.

"Given that the provincial government has delegated authority to the BCWI, the government has the responsibility to ensure that the BCWI is well-operated and meets the needs of the industry it was designed to support," Bonney wrote.

Bonney told Wines & Vines he's especially concerned that the stores facing closure are profitable, something worth respecting during a recession. "The real troubling factor with this whole issue is that these stores are profitable," Bonney said. "In these economic times, for the government to be supporting a designated body in closing down these stores is not right."

Coleman hasn't responded to Bonney's letter, nor was he available to speak with Wines & Vines prior to deadline.

Lisa Cameron disputed the accuracy of the information Bonney's letter presented to government, however, and wished the license es affected had discussed their concerns with the BCWI before approaching the business association.

Cameron said the BCWI has taken steps to improve communications with VQA store operators, establishing a committee to address the concerns of store owners, holding meetings for store operators twice a year (in spring and fall), and hiring Jay Drysdale as a store liaison.

"We are trying to open the lines of communication," she said. "But if they're not communicating, how do we know that there's an issue?"

Still, the prospect of closure has chilled many store operators, who signed new agreements with the BCWI last year following a negotiation process many feel fell short of a meaningful consultation with store owners. The current operating agreement leaves stores at the mercy of the BCWI, which serves member wineries and doesn't allow store owners to sit on its committees.

The threat of closure is real, said Tracy Gray, co-owner with Suzanne Mick of Discover Wines in Kelowna.  The pair operate one of the top-grossing VQA stores in the province, and aren't likely to face the withdrawal of their license. However, Gray said the possibility places operators in a vulnerable position: "We've got this huge ball and chain that is threatening and very negative, and that really holds us back. As a business owner that's incredibly frustrating."