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B.C. wine industry disappointed over USMCA-related grocery store sales changes

B.C.鈥檚 wine industry will soon lose its advantage of dedicated grocery in-store shelf space
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Dirty Laundry winery in Summerland, B.C., estimates it will sell fewer bottles of red and white in grocery stores as shelf space previously reserved for local companies will soon be shared with U.S. imports.

鈥淚 don鈥檛 think it鈥檒l be devastating, but it will certainly impact us,鈥 said Paul Sawler, the winery鈥檚 director of sales and marketing.

B.C.鈥檚 wine industry will soon lose its advantage of dedicated grocery in-store shelf space 鈥 a practice deemed discriminatory through the lens of U.S. President Donald Trump鈥檚 America-first ethos 鈥 as grocers will have to make room for out-of-province offerings.

But with the Nov. 1, 2019 deadline for implementation more than a year away, those in the industry say it鈥檚 difficult to know what the change will look like and just how hard it鈥檒l hit local vintners.

Imported wines currently can only be sold at the province鈥檚 grocery stores in a so-called store-within-a-store model, which the U.S. has called discriminatory and complained about to the World Trade Organization alleging unfair sales practices.

The U.S. and Canada agreed to end the 鈥渙ngoing trade concern鈥 in a pair of side letters to the new United States-Mexico-Canada Agreement reached late Sunday night.

The change is not surprising, but is disappointing, said Miles Prodan, the CEO of the B.C. Wine Institute, a not-for-profit organization that represents the interests of the province鈥檚 wineries.

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There are 271 licensed grape wineries in the province, according to the institute, and the industry contributes $2.8 billion annually to the B.C. economy.

The majority of the wineries are small in scale, he said, producing about 5,000 cases a year or less.

The grocery-store model was the only real channel many of these smaller operations had to access consumers, he said.

鈥淭he growth of the sales for small wineries increased significantly,鈥 he said.

鈥淧rior to that, and it continues to be, very difficult for small wineries to access retail stores,鈥 he said, adding everyone, including foreign wines, beer and spirits, is fighting for limited space within existing stores.

For Dirty Laundry, which this year will produce 30,000 cases, it鈥檚 not a critical source of sales, but an important market and the winery鈥檚 fastest growing one, Sawler said.

It accounts for 15 per cent of the company鈥檚 sales in the province, not including on the vineyard鈥檚 premises, he said. The company anticipates its sales in the channel will fall as a result.

鈥淏ut how much it will impact us? You know, it鈥檚 anybody鈥檚 guess at this point,鈥 he said, adding a lot depends on how the grocery chains handle the change.

The grocers themselves don鈥檛 yet know what the future will look like.

Only 29 grocery stores in the province sell B.C. wine in aisles as the practice requires a special licence.

Save-On-Foods offers provincial wine at 19 of its stores.

鈥淲e don鈥檛 believe this change in legislation will affect our operations and it definitely does not affect our long-standing commitment to supporting our local B.C. wineries and the B.C. agri-food industry,鈥 the chain wrote in an email.

Loblaw Companies Ltd. sells B.C. wine at 10 of its stores, but doesn鈥檛 have any further licences and thus no plans for expanding the practice at the moment, spokeswoman Catherine Thomas wrote in an email.

The company doesn鈥檛 have enough information about the changes to provide any comment on how its in-store wine stock will change come November 2019, she said.

Aleksandra Sagan, The Canadian Press

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