Cross-border wine

This is a follow up to an earlier post from January 2011: Cross-Border Barriers (http://wp.me/p1dVAg-1X).

A piece of legislation of interest to wine lovers is presently winding its course through the parliamentary process in Ottawa.  This legislation is lost in all the noise on such matters as election malfeasances, debates over the right-ness of economic stimulus or fiscal restraint, federal funding for provincial health budgets and so on.

The legislation I speak of is Bill C-311 which has been introduced in the House of Commons intending to amend the Importation of Intoxicating Liquors Act (IILA) to create a national personal use exemption, thereby enabling individuals to import wine for their personal use from one province to another.  Perhaps most importantly the legislation will make it possible for wineries to ship to individuals out-of-province without sanctions and fines.

Why is this an issue?

Presently you or I are prohibited by the provisions of IILA from bringing wine from BC to Ontario, for instance, without the importation of that wine being processed by the LCBO (meaning, of course, that the LCBO applies its markups and local taxes to the cost of that wine to me or you). The point of our regulators is: we must stop all possible sources of revenue leakage, at all costs!

The IILA dates from 1928, when Prohibition in Canada was brought to an end and at which time the provincial liquor control bodies were put in place.  The need at the time was to restrict access to beverage alcohol so the abuses that led to Prohibition could be avoided going forward. It was necessary at the time to restrict consumer access to demon alcohol and this meant both within – and across – provincial boundaries.

We have come a long way since 1928.  For instance, consider the shift in emphasis that has occurred at the LCBO within the past generation.  No longer is the focus on control – it is still there – but rather the LCBO has adopted an aggressive distribution strategy built on marketing, healthy consumption of beverage alcohol, exploration of new regions, grape varieties and taste sensations and embracing a cross-generational hedonistic lifestyle which has a large component of wine and spirits at its social centre.

The LCBO is no different from the monopolies in other provinces: prudent consumption by everyone in the province of [your name here] builds revenue for the provincial budget. Marketing helps grow revenue…and restrictions of illegal cross-border imports help minimize revenue leakage.

While some provincial authorities – such as the LCBO in Ontario – have recently relaxed the restrictions on personal transport of wines across provincial boundaries where such wine is intended for personal use (one case of wine can now be transported by an individual across provincial lines under the LCBO relief provisions), the IILA is still in force making it an offense to import wines ordered from a winery in another province, unless the order was processed by your local liquor monopoly.

Give us a break!

This is Canada and it’s already hard enough to buy local wine locally.  It is even harder for the consumer to endure a further set of hurdles imposed where we are prohibited from directly ordering wine from a BC maker without additional bureaucratic and financial hoops to bring said wine into Ontario. It might be acceptable if it weren’t for the fact that we likely can’t get those BC wines we hanker for any other way …because our provincial monopolies would rather sell icons from anywhere but Canada, to bolster their margins and reduce their risks of unsold product. The monopolies apply very safe buying practices these days: they go for wines made in fashionable regions which also possess high critic scores. Did I mention this is Canada and many of our monopoly buyers don’t believe we make wines of acceptable quality…?

An earlier version of Bill 311 was introduced as a motion in the last government by Ron Cannan, the Conservative MP from Kelowna-Lake Country.  While that first motion did not go anywhere before the spring election was called in 2011 Cannan’s motion was resurrected as Bill C-311 in the current house by a fellow Conservative backbencher from BC, the member from Okanagan-Coquihalla, Dan Albas.

Albas and Cannan both represent ridings in the heart of Okanagan wine country and while he and Cannan have clear regional focus, their leadership provides  good representation of the interests of their constituents as well as winemakers elsewhere in Canada, and consumers of wine in every province.  Good on them!

The good news is that Bill C-311 has completed second reading and is now under review by the House Finance Committee before returning to the House for third and final reading.  To this point support for Bill C-311 has been unanimous.  This is unheard of in the current age of fiercely partisan politics and reflects a widespread disbelief that we can trade freely with Mexico but can trade freely in wine between Canadian provinces.

Before you break out a bottle of Jackson-Triggs BC traditional method sparkling wine, remember we are in Canada.  The provincial governments and their monopolies will still have to agree to accept the provisions of the amendments to the IILA imposed by Bill C-311 when passed.

There are big stakes associated with the domestic wine industry in Canada and the economic impact of this industry has grown rapidly in recent years, as quality has improved.

A recent study assessed the economic impact of Ontario VQA wines on the provincial economy. This study was commissioned by the Wine Council of Ontario and was conducted by the consulting firm, KPMG. The study found that the economic effect of VQA on the Ontario economy had grown considerably between 2007 and 2011. VQA revenue grew by 50% in the four years to $268 million in 2011. Solid performance was achieved despite the adverse effects of the recession of 2008/9 and 1300 new jobs in the VQA sector were created during this period. In the year-ended March 31, 2011 the sector is estimated to have created $191 million in added-value to the province of Ontario (an amount which equals $12.29 per litre of VQA wine sold (up from $11.50 in 2007).

It should be noted that market share of Ontario VQA wines in 2011 was 26% of all wines sold in Ontario, an increase from 20% in 2007. The domestic wine industry is growing in importance and we need to facilitate this growth in whatever ways make sense.  Clearly Albas and Cannan know this, as do their colleagues in Ottawa.  Let’s hope our provincial governments don’t step on their own interests as Bill C-311 proceeds.

There is an interesting sidelight to the story of Bill C-311. Ron Cannan is Chair of the Conservative Wine Caucus and in this capacity works with his colleagues across the country to promote the wine regions of Canada.  This sort of advocacy is much needed and hopefully the federal activity will spawn similar advocacy by local MPPs on behalf of their constituent wine producers.  Even if the MPPs can’t muster active advocacy for their industry they should at least be ready to stand aside and make the wines of their province more easily available in-province and across provincial borders when C-31 is enacted. If you have views on this and would like to see easier access in Ontario for wines from BC, Nova Scotia or Quebec, let you MPP know your views

An interesting web site chronicles this issue: http://www.freemygrapes.ca/welcome.shtml.

à bientôt…

Copyright© W. John Switzer 2003 – 2012.

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Author: John Switzer

I am wine writer, educator and tour guide. From 2005 to June 2014 I published a bi-weekly newsletter, the Winesights Vintages Newsletter (WVN). This Newsletter was closed in July 2014 when the Government of Canada put in place the onerous administrative requirements of Canada's Anti-Spam Legislation. The legacy of WVN continues on this blog spot where I post wine-related articles as well as reviews of a small selection of best-value wines from each bi-weekly LCBO Vintages release. I hold the WSET Diploma, I am a WSET Certified Educator, I teach in the WSET program at the Independent Wine Education Guild in Toronto where I am the past Director of the WSET Diploma program. Since 2010 I have been a judge at Decanter World Wine Awards on the Rhône panel and I am a member of the Society of Wine Educators.

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