By: Briana Tomkinson
For almost a century, Canadian wineries have been prevented from shipping their wines direct-ly to customers living in other provinces. After the most recent federal budget announcement earlier this year, however, wine industry leaders say they are cautiously optimistic that Prohibi-tion-era rules restricting trade could soon be relaxed—a move which industry leaders say could be a game-changer for Canada’s many boutique wineries.
In March, Prime Minister Justin Trudeau’s government announced that the 2019 federal budget would remove a requirement that alcohol shipped across provincial borders must be sold or consigned to a provincial liquor authority. According to Canadian Vintners Association presi-dent Dan Paszkowski, if the proposed rule change passes in June, it would remove the last federal barrier to internal trade in alcohol.
The only catch? Provincial governments still have the power to make their own rules regulating the sale and distribution of alcohol within their borders.
The last time the feds relaxed their rules, only a handful of provinces chose to follow suit. In 2012, the federal government relaxed certain restrictions on interprovincial trade that had been in place since 1928, officially allowing Canadians to bring alcohol across borders for personal use. However, Paszkowski said only three provinces—British Columbia, Manitoba and Nova Scotia—chose to update their regulations to allow residents to ship wine to their doorsteps.
In other provinces like Alberta, for example, Paszkowski said citizens can bring in as much wine as they can carry on their person. However, it remains illegal to have even one bottle cou-riered to your home from a winery in B.C. or Ontario. Canadians who flout the rules risk fines, and even jail time in some instances, he said.
“It’s the 21st Century, and yet we’re still restricted from the full use of wine clubs, the internet, and social media because we could only sell to people who reside in the province,” Paszkow-ski said.
Although online ordering from wineries or wine clubs is uncommon, polling has shown that a strong majority of Canadian consumers would like to be able to have wine shipped to their doorsteps. A Gandalf Group poll commissioned by the Canadian Vintners Association in 2017 found 87% of consumers believed Canadians should be allowed to order wine to their home from a winery.
In Canada, the vast majority of wine consumers shop at provincially run liquor stores. In the poll, between 80% and 93% of customers said they bought their wine from a government-mandated liquor outlet. The one provincial exception was Alberta, where only 15% buy from a government-run store, and 80% buy from a privately owned and operated liquor store.
Only 19% of Canadians said they bought wine directly from wineries, though this option was more popular in British Columbia, where 27% said they did so. Only about 2% of customers said they shopped online at a government-run online store, private online store or wine club. Very few consumers, just 9%, were even aware of the option of ordering wine directly from a winery.
Although government-run liquor stores have a virtual monopoly on sales, domestically produ-ced wine has little to no representation on store shelves. In seven out of 10 provinces, Vintners Quality Alliance (VQA) wines—a designation that officially verifies the origin and quality of Ca-nadian-made wine—have less than a 3% market share. In Quebec, the market share for VQA wine is less than one percent at the province’s Société des Alcools du Québec (SAQ) stores. “We don’t even have a category at the SAQ,” Paskowski said.
If the provinces do come on board, the impact on Canadian wineries could be significant. Cur-rently, about four million tourists visit Canada’s 700-plus wineries every year, Paszkowski said. Those who like the wine often want to ship a few bottles home, but under the current regula-tions, wine producers are prevented from doing so.
“Wine is one of the only products in the country where you visit the retailer, and they want it delivered, and you have to say no. You can order a gun from another province, but you can’t order a bottle of wine shipped in another province,” Paszkowski said.
It’s not just sales to tourists that Canadian wineries are missing out on either. According to Sta-tistics Canada, most of the wine sold in Canada, about 74% of reds and almost 60% of whites, is imported from other countries, while Canadian-made wine only represents about 12% of the premium wine market.
“The government’s very interested in the export market, but when you only own 12% of your market, well, we can’t really turn our back on Canada. Our opportunity to export is when our market share is greater,” Paskowski said.
Although online wine sales and wine clubs are only 2% of the market in Canada, they are an important sales channel for boutique wineries, especially those whose wines are not stocked in provincially run liquor stores.
Ontario’s Kwäf wine club, for example, has become an important sales channel for many small wineries in the province. Club subscribers receive six sommelier-selected Ontario wines deliv-ered to their homes every three months for $125 to $138 CAD per box. The club ships only to subscribers living in Ontario and the handful of provinces that have relaxed restrictions on in-terprovincial wine trade.
However, according to Director of Business-to-Consumer Operations, Amber Fountain, even if Kwäf could ship anywhere in Canada, the company would still focus on promoting Ontario wines to Ontarians. The foot traffic from wine tourism is a vital spinoff benefit for Kwäf’s winer-ies. Most of its customers are in the greater Toronto area, within easy road trip distance to many of the wineries that supply Kwäf.
“Us sending their wine across the country isn’t really going to help them get people to their door,” Fountain said. “We want people to become fans of our wineries.”
The almost five-year-old company, which was recently acquired by Calgary-based alcohol e-commerce company Blacksquare, has succeeded on the strength of the mutually beneficial partnerships it has cultivated with local wineries, Fountain said.
Kwäf promises customers it will send only “good” wine, so the company’s sommeliers spend a lot of time sourcing and tasting new wines, searching for tastes that are new and exciting. Kwäf makes a special effort to seek out small-scale producers whose wines are not carried by the Liquor Control Board of Ontario (LCBO) stores, even purchasing the full production of a particular wine to offer as an exclusive release for members.
Partner wineries often include gifts and value-add to encourage subscribers to visit in person, which can help cement a winery’s relationships with their customers. Tasting passes, dis-counts to restaurants, exclusive winery experience tours, and opportunities to meet the wine-makers are important perks of the club. The ultimate goal, Fountain said, is to help cultivate a greater appreciation for local wines, particularly those customers won’t find on liquor store shelves.
“We understand our customers won’t only order wine through us for day-to-day consumption. It’s meant to supplement people’s enjoyment of wine. It’s more for exploration, to try new wines,” Fountain said.
Perhaps one day, the rest of Canada will be able to enjoy exploring new tastes shipped directly to their doorsteps as well.