08.04.2016  
 

Protectionist Measures Draw International Complaint

British Columbia-only wine sales in supermarkets remains a contentious issue

 
by Peter Mitham
 
wine british columbia canada trade supermarket sales
 
Certain Save-on-Foods locations are among the B.C. supermarkets permitted to sell wine.
Vancouver, British Columbia—Oops, she did it again.

British Columbia premier Christy Clark’s bid to restrict supermarket wine sales to wines from her own province has once more triggered a letter of complaint from the countries supplying the majority of wines sold in Canada.

Trade representatives from British Columbia and the United States met July 7 to discuss concerns raised in an April 29 letter signed by the trade representatives of the United States as well as Argentina, Australia, Chile, Mexico, New Zealand and the EU. Together, the countries supply 97.5% of the wine Canada imported last year.

By limiting supermarket sales of wine to B.C. product, B.C. has—in the opinion of Canada’s trading partners—betrayed the country’s international trade commitments under World Trade Organization agreements.

The letter of complaint states, “Accordingly, we request that British Columbia amend the relevant regulations in order to ensure that the sale of wine in grocery stores is permitted on a non-discriminatory basis.”

This isn’t the first time such a request has been made.

Tom LaFaille, vice president and international trade counsel for California’s Wine Institute cried foul in January 2015, expressing concern that plans to designate shelving for B.C. wines in the province’s supermarkets—as well as plans to grant a limited number of new licenses to grocery stores exclusively for their sale—violated the North American Free Trade Agreement (NAFTA).

An exclusive arrangement with the Overwaitea Food Group, owned by billionaire Jim Pattison, led to the first supermarket wine sales in April 2015, despite LaFaille’s request that “the initiative be withdrawn or modified to allow for equal access of all wines at B.C. grocery stores” (see “California Wineries Talk Tough to Canada”). 

Seven stores opened in the first year, racking up $3 million in sales from 50,000 bottles of wine, and another seven are in various stages of completion. All are operating under licenses originally granted to the B.C. Wine Institute (BCWI) in 1991 to give B.C. wines an edge in the market following the implementation of NAFTA.

The new complaint reflects the intransigence of the province, which has maintained—as has the BCWI—that designating space for B.C. wines is an acceptable exercise of trade provisions for local products.

Yet other provinces have struck arrangements to promote local wines without restricting foreign wine sales. The fledgling wine industry in New Brunswick, for instance, supplies wine to select locations of Loblaw Companies Ltd., which showcases a range of local products in high-profile displays while stocking low-budget foreign wines at the checkout lane alongside magazines and candy.

Responding to a query from Wines & Vines, B.C.’s International Trade Minister Teresa Wat offered a written statement that said her staff is forwarding further information to trade officials in Ottawa and Washington regarding its strategy for B.C. wine sales. The discussions at the July 7 meeting promised to “improve our lines of communications to avoid future misunderstandings.”

But Wat wasn’t backing down from selling only B.C. wines in supermarkets.

“We plan to keep the number of private wine outlets that sell only B.C. wine consistent with those allowed and already created under existing trade laws and are confident in the approach we have taken,” she said. “The B.C. wine on shelves model is a limited program that will see no more than 60 outlets—our trade partners have been aware of these B.C.-wine-only licenses for decades.”

However, liquor licensing consultant Bert Hick, a former general manager of the BC Liquor Control and Licensing Branch and now principal of Rising Tide Consultants Ltd. in Vancouver, said he isn’t aware of any such licenses ever existing.

“The Americans are trying to figure out where these licenses are coming from,” he told Wines & Vines. “I was the general manager of the liquor (licensing) branch back in 1987-88, and I’m not aware of any dormant licenses that were created and kept around for 28 years.”

The number of allegedly dormant licenses available has diminished from as many as 50 to about 18, of which six have been auctioned off via online bidding, Hick said. All were bought by Loblaw Cos. Ltd. for between $1 million and $1.25 million, with plans to deploy them at their new City Market locations.

“All the other grocery folks who have been participating in these auctions just say that’s ridiculously high,” Hick said. “They can’t afford to compete at that price point.”

The auction of additional licenses is planned for this fall, but Hick says that at such high prices, there’s a clear risk that supermarket wine sales in B.C. could depend on just two major retailers.

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