Canadian Wine Labels Will Change

Ontario and British Columbia address Cellared in Canada designations: Consumers demand transparency

by Peter Mitham
Mark Hickam Cellared in Canada
Attorney Mark Hicken thinks measures to segregate Cellared in Canada from VQA wines on British Columbia shelves do not go far enough.
Vancouver, B.C.  -- A storm of media attention is prompting changes in the handling -- and in some cases the content -- of Cellared in Canada wines. “Cellared in Canada” is a designation for wines produced in Canada with foreign grapes and as little as zero domestic grape content. British Columbia has no domestic content requirement for Cellared in Canada wines produced by wineries in that province, while Ontario has required not less than 30% domestic content in the wines.

Ontario originally introduced the designation in 1972 to provide for the blending of foreign wine with domestic wine during periods when domestic grapes were in short supply, but the term has been the subject of widespread criticism this year (see Wines & Vines’ coverage of the issue, Cellared in Canada Wines Under Siege).

Changes announced this week will boost the minimum domestic content in Ontario-made Cellared in Canada wines to 40%, or at least 25% on a per-bottle basis. For instance, under current rules an Ontario winemaker with 3,000 liters of local grape juice can blend it with up to 7,000 liters of foreign juice. When the mix goes in the bottles, not less than 25% of the wine in any given bottle can be from domestic grapes, and the proportion isn’t specified on the bottles -- which is why consumers don’t know what they’re drinking.

The new content requirements take effect next year, because it is too late in the season to implement this year, said Douglas Tindal, a spokesman for consumer services minister Ted McMeekin, whose portfolio includes Ontario’s Vintners’ Quality Alliance program. VQA wines are made exclusively from domestic grapes.

“The recent media attention to the Cellared in Canada wines was certainly a factor that was taken into account, but it was not the stimulus,” Tindal told Wines & Vines. He said the place of the designation was one of the questions during a consultation with the industry regarding the long-term sustainability of Ontario’s wine industry.

“I think everyone has agreed -- in this process of consultation that’s been ongoing for quite some time -- that the future of Ontario wines is VQA. And what we have done is give some pretty clear signals about how we intend to move into that environment.”

To that end, the boost in content requirements will be short-lived. Domestic content requirements will be eliminated for Cellared in Canada wines made in Ontario by 2014 -- along with the tax breaks wineries receive for producing these blends. The rationale is that consumers will transition to wines bearing the VQA seal. Ontario hopes to boost listings of these wines in Liquor Control Board of Ontario stores, the province’s liquor retailing division, through a 30% rebate that counters the liquor board’s markup on the wines.

Ongoing clarification of labeling and signage will be concurrent with initiatives by the Wine Council of Ontario and winemakers to revise labeling and an LCBO review of merchandising practices. WCO hopes to wrap up its review of labeling practices by Dec. 31, 2009. The LCBO has yet to provide detailed implementation plans regarding display and signage for VQA and Cellared in Canada wines, but Tindal said, “They’ll be rolled out as soon as practicable.”

Ontario also hopes to develop a varietal plan intended to match Ontario grape production with local wineries’ demands for grapes destined for VQA wines.

But Mark Hicken, a lawyer in Vancouver, British Columbia, with an interest in wine trade issues, believes weaning wineries and consumers from Cellared in Canada products will take more than managing grape supplies and increasing access to VQA wines.

“Putting more VQA wines in LCBO stores is a good idea,” he said. “I think that is a good idea -- and I think they will increase sales by doing that -- but I don’t think they will necessarily solve the Cellared in Canada issue.”

Hicken points to the situation in B.C., where Cellared in Canada wines outsell VQA wines by a large margin. The reason: Input costs are lower, resulting in a cheaper wine that competes effectively against higher-priced VQA-labeled wines made from expensive domestic grapes.

Attractive margins on wines using imported juice give companies like Vincor and Andrew Peller Ltd., Canada’s two biggest winemakers, a compelling reason to continue producing Cellared in Canada wines -- even if they don’t use the maximum foreign content. (Vincor, for example, claims that the average domestic content of its Cellared in Canada wines is “much higher” than the minimum).

“Canadian costs of producing grapes are a lot higher than they are in other regions where they’re currently buying the bulk juice, so I think it’s a difficult issue,” Hicken said. “I just don’t see the business side of being able to move people to that price-point, or even the desirability of it. But I guess we’ll see.”

Rich Coleman Cellared in Canada
B.C. housing and social development
minister Rich Coleman pledged to provide
clearer signage in government stores.

British Columbia, for its part, is taking steps to change how Cellared in Canada wines appear in government-run liquor stores. B.C. housing and social development minister Rich Coleman, whose portfolio includes the B.C. Liquor Distribution Branch, pledged to provide clearer signage, so that consumers know what they’re buying from Canada’s wine producers.
Both categories of wine have unique sections in B.C.’s government-run liquor stores, but new signage will further distinguish between the two.

B.C.’s and Ontario’s moves follow a pledge by Vincor and Andrew Peller to change how the term “Cellared in Canada” appears on wine labels. The position as well as the font and type size may change. Vincor suggested that “International Canadian Blend” could appear on labels, too. However, many observers want more transparency.

Sherry Martin, administrator of the growing Boycott “Cellared in Canada” Wines group on the social networking site Facebook said the Ontario proposals don’t go far enough. “It’s a step in the right direction, but we’re hoping to see more than this,” she said.

Deferring the increase in domestic content requirements won’t help grapegrowers trying to sell surplus grapes this fall, she said, while in the long-run consumers deserve a direct acknowledgement that the wines they’re buying from Ontario wineries include foreign grapes. Allowing references to Canada in the formula isn’t helpful.

Hicken agreed. “From a consumer’s perspective, it does come down to a labeling issue,” He said.

“They’re definitely making steps in the right direction in terms of changing the labels, and I really do encourage them and applaud them for doing that. But I think the problem really wouldn’t exist if there was honesty and transparency in the labeling and display of the product.”

Seattle-based Law Seminars International is organizing an upcoming conference on legal issues relating to the wine trade in Vancouver, B.C., on Nov. 12-13. One of the panel discussions will focus exclusively on labeling issues, including use of the Cellared in Canada designation.

Posted on 10.19.2009 - 10:41:13 PST
One very very large loop hole that has been mentioned is in the auditing system of grape must/juice from Canadian grapes. It's a known inside secret that where the playing with the numbers begins is with what is actually extracted in wine (Liters) from a ton of grapes. It is well known that the auditors that review the data have no way of knowing if you can extract 800 L/ton of grapes or more, which is completely unrealistic. In practice 600 to 650 is considered stretching it. Do the math and this leaves a gaping hole in what truly is the real content of "Canadian" wine. Worth an investigation into.
Okanagan, BC Canada