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So you want to open a winery (August 3, 2006)

The day I handed in the final manuscript for The Wine Atlas of Canada, I had a call from my friend Dave Gamble in Summerland, BC. Dave has his ear to the ground in matters oenological because he publishes the quarterly news magazine Canadian Grapes to Wine. He told me of a winery that had just started up in the southern Okanagan called Oliver Twist Estate. At the eleventh hour I managed to shoehorn a reference to it into the book as a future winery. When I googled Oliver Twist Estate (located near the town of Oliver) a web page came up that listed British Columbia wineries with "licenses pending." There were twenty-five new names on it!

Everyone, it seems, wants to get into the wine business in Canada. This sentiment reminds me of something a hobby sailor once told me: "The two happiest two days in the life of a yacht owner are the day he buys the boat and the day he sells it."

The idea of owning a winery is the ultimate romantic fantasy for anyone who has ever taken pleasure in a glass of wine. But it is the most expensive mistress you'll ever service. The cost of the land, planting vineyards, hiring labour, buying equipment and building a winery is now the preserve of the very rich. Whether you get a return on your investment has lot to do with the amount of money you're prepared to put into promotion and an effective sales and marketing force. And that's presupposing the wine you produce is good.

A lot of small wineries today are under-capitalized and heading for trouble. This makes them a target for take-over. The phenomenon of small fish being swallowed by larger fish is now painfully evident in the Ontario wine industry. Look at Peller Estates. First they acquired Hillebrand and then Thirty Bench. EastDell merged with Lakeview and Birchwood and then Thomas and Vaughan to become an entity called Diamond Estates. Then you have Vincor, who started it all by amalgamating Cartier-Inniskillin (their Ontario and BC operations) with Brights and then acquired Sumac Ridge and Hawthorne Mountain. Then along comes an even bigger fish, Constellation Brands of New York State, the world's largest wine conglomerate, and swallows them whole without even having the decency to forewarn me so that I can make mention of that before my manuscript went to the printers.

Constellation's takeover will have profound effects on the Canadian wine industry. First, there is no guarantee that the futuristic winery that Frank Gehry designed for Le Clos Jordanne (Vincor's joint venture with the Burgundy shipper Boisset) will ever be built. I can't imagine that Constellation will ante up the millions of dollars necessary to build a showplace winery in Ontario. Then there is the question of Vincor's 165 retail wine stores in their Wine Rack chain. Constellation now has access to these stores. And how long before the Alcohol & Gaming Commission caves in to their demands to have all their products available in these stores?

As Richard Johnston, Chair of the Prince Edward County Winegrowers Association, rightly put it, "We (in Ontario) have an industry that has been based on three unhealthy realities. First, the bulk of Ontario wine sold in the province is actually a blend of foreign and domestic grapes... Second, the pre-NAFTA wine industry players have special protections and privileges that give them a market-share dominance with its corresponding political influence. Third, the proliferating authentic Ontario wine producers are working with one hand tied behind their backs unable to effectively access the LCBO and denied the right to any other retail distribution network."

Perhaps the Vincor sale will open up the system not only to the small Ontario wineries but will bring down provincial barriers and wrest the control of wine sales from government monopolies. This would be the most positive result of the loss of a Canadian icon corporation and a benefit to wine lovers from sea to sea.

(The Wine Atlas of Canada will be published in October by Random House (Canada).)

 

 

 

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