BUSINESS

A test of tastes

Canadian wineries are fighting domestic bias

DEIRDRE McMURDY May 20 1991
BUSINESS

A test of tastes

Canadian wineries are fighting domestic bias

DEIRDRE McMURDY May 20 1991

A test of tastes

BUSINESS

Canadian wineries are fighting domestic bias

For five years, Michael Riewaldt has waged a lonely battle. As the owner of a downtown Toronto restaurant called Metropolis, Riewaldt is committed to using only Canadian ingredients—items such as salmon from British Columbia, wild rice from Saskatchewan and Cornish game hens from Manitoba. A German-bom immigrant who came to Canada in 1985, Riewaldt says that he decided on an all-Canadian menu because he wanted to demonstrate his support for the domestic food industry. Customers, too, seem to like the policy—but Riewaldt says that many of them still turn up their noses at the thought of drinking Canadian wine. “Canadians love the glamor of imported products, especially when it comes to wine,” says Riewaldt, whose current wine list features 19 Ontario varieties and two from British Columbia’s Okanagan Valley. But he adds: “When I convince them to at least try a Canadian wine, they are always surprised at how good it is.”

Relatively few Canadians appear to share Riewaldt’s enthusiasm for domestic wines. In Ontario, the heartland of Canada’s wine industry, domestic producers now account for only about 40 per cent of wine sales. That is down from a nearly two-thirds share in the early 1970s. Canadian vintners have an even smaller share of the market for so-called varietal wines—higher-quality wines made largely or exclusively from a single variety of grapes, such as chardonnay or Riesling, which usually sell for $8 or more a bottle. But in spite of the problems they face, most Canadian wine producers say that they are cautiously optimistic about the industry’s future. Declared Donald Ziraldo, president of Inniskillen Wines Inc. of Niagara-on-the-Lake, Ont., a medium-size estate winery: “There is no question that the threat of international competition has forced the industry to organize and become much more aggressive.”

Largely as a result of those changes, Canadian wineries are beginning to win recognition in foreign markets. Ontario wines received seven gold medals at the 1990 Intervin Awards, an internationally renowned competition held annually in New York City. And at the equally prestigious 1990 International Wine and Spirit Competition in London, wines from several small Ontario wineries competed successfully against products from France, Italy, California and other major wine-growing areas, capturing three gold medals and a trophy for the best dry Riesling. Canada is also gaining a worldwide reputation as a leading producer of ice wine, a sweet dessert wine that is produced in small quantities from grapes harvested after the first frost of the season. Said Tom Capozzi, chairman of the B.C. Wine Institute: “The old attitude was that if you are going to someone’s for dinner, you weren’t going to bring over a bottle of Canadian wine. We’re very proud that is changing.”

Despite those successes, only about one per cent of the wine produced in Canada each year is exported—a level that industry spokesmen acknowledge is unlikely to increase in the near future. Traditionally, Canadian wineries have depended for their survival on favorable tax policies, which forced Canadian consumers to pay a higher markup on imported wines than on local varieties. Ontario, which produces 80 per cent of the grapes used to make Canadian wine, for many years marked up its own wines by one per cent, while imported wines were marked up 66 per cent.

But in the past three years, the industry has lost many of its tax advantages. As a result of complaints to the General Agreement on Tariffs and Trade, the international organization that rules on trade-related issues, and the introduction of the 1989 Canada-U.S. Free Trade Agreement, Canada has agreed to phase out the preferential pricing of domestic wine.

In the run-up to the FTA, many Canadian nationalists predicted that free trade would devastate the domestic wine industry. They charged that Canadian wineries would be washed aside by a tide of cheap California wine. But so far, there is little evidence to support those dire forecasts. Said George Heiss Jr., a co-owner of Gray Monk Cellars Ltd., one of British Columbia’s largest estate wineries: “Since the Free Trade Agreement, we have to spend an awful lot more time at wine shows and promotion, but we are getting through it all right.” Indeed, Canadian wine makers say that they hope to increase their domestic sales by producing higher-quality wines that can compete successfully with U.S., European and Australian imports. They are also lobbying federal and provincial politicians for a removal of interprovincial trade barriers, which hinder their ability to sell wine outside the province where it is made.

But the most important problem facing Canadian wine makers and grape growers appears to be the widespread public perception that domestic wines are inferior to imported products. In part, some wine producers say, that perception exists because the domestic industry has traditionally focused on producing sweeter, less expensive wines targeted for the mass market. But during the past two decades, many consumers developed a preference for drier wines, which domestic wineries until recently failed to supply. Says John Hall, chairman of the Ontario Wine Council, an organization that represents 19 wineries in the province: “Consumer tastes changed more quickly than the industry did, but now that lag has been made up.”

Unfortunately, industry officials say, most Canadians still have an outdated view of domestic wines. Says Donna Lailey, a grape grower in Ontario’s wine-rich Niagara Peninsula: “The only way we will survive is to convince people that we have a quality product. So many Canadians don’t know their own products.” One of the first steps in that process was the launch in 1987 of the Vintners Quality Alliance (VQA) program in Ontario and British Columbia. An organization of wine producers and grape growers dedicated to improving the quality of domestic wines, the VQA sponsors wine-tasting competitions and awards qualifying wines the right to display the VQA symbol on their labels.

The pressure for increased access to cheaper—and sometimes higher-quality—international grape supplies comes almost entirely from larger wineries like T. G. Bright & Co. Ltd. of Niagara Falls, Ont., and Cartier Wines & Beverages Corp. of Mississauga, Ont. Those companies face direct competition from huge wineries such as Gallo Bros, of Modesto, Calif. Says David Ringler, vice-president of marketing for Andrés Wines Ltd. of Winona, Ont., another major producer: “Most of our consumers are those who buy volume table wines. They haven’t been exposed to the varietal concept.”

Unlike the larger wine companies, Canada’s small wineries tend to focus on producing higher-quality wines for a more specialized market, using locally grown grapes. “We don’t want to lose the personal touch,” says David Hulley, wine maker for Stone Church Vineyards, which opened last year in Niagara-on-the-Lake. According to Hulley, the firm produced 4,500 12bottle cases of wine in 1990 and plans to increase its production to a maximum of 20,000 cases by 1995. “We want to be a small, high-quality wine producer,” he says. “For that, we can compete with anyone in the world. In fact, we welcome the challenge.” He adds that at a recent wine show in the Netherlands, he struck a deal to supply an initial shipment of 240 cases to a distributor in that country.

Another small winery that is gaining ground is Grand Pré Estates Winery, about 100 km northwest of Halifax in the Annapolis Valley. Founded 12 years ago, the firm went into receivership in 1989 after its original owners attempted to expand too rapidly. Later that year, Grand Pré was taken over by James Landry, a former automobile dealer. Under Landry, the firm made an $88,000 profit in 1990. Grand Pré’s products now include several classic white varietals, such as chardonnay and gewtirtztraminer, as well as a burgundy-style red made from a variety of grape that originated in the Soviet Union. Said Landry: “We want to remain a small, vintage winery which does not sacrifice quality to increase production. The biggest problem has been in educating Nova Scotians about wines.” But like Toronto restaurant owner Riewaldt, Landry says that he is determined to help Canadian consumers develop an appreciation for domestic vintages.

DEIRDRE McMURDY with JOHN DeMONT in Halifax and HAL QUINN in Vancouver

DEIRDRE McMURDY

JOHN DeMONT

HAL QUINN