Agriculture Committee on April 18th, 2013

[Dan Paszkowski]

In large part, many of those countries produce more wine than they can consume in their own country. It's not just pride, it's quality. We believe we're producing a quality product. On a weekly basis we're winning highly acclaimed international awards around the world and we'd like the opportunity to sell those products in liquor boards across the country. If those products aren't selling, we have no reason to be putting forward this request. The fastest growing category in the LCBO right now is VQA wines.

[Frank Valeriote, Liberal, Guelph, ON]

Are you being denied shelf space? Is that...?

[Dan Paszkowski]

We're being given a certain amount of shelf space but not a significant amount. We believe that we have more wine to sell today than we did 10 years ago. We're requesting additional shelf space to be able to get a greater percentage of market share in Canada. You've got liquor boards that are putting out calls for wine and asking for more Australian wine and lower amounts of Canadian wine and vice versa in different circumstances.

But if you look at 10 jurisdictions across this country and see their sales of 100% Canadian wines amounting to less than 4% of their total sales, there's something wrong there. Canadians are looking for our wines. Canadians are asking for direct-to-consumer delivery across interprovincial borders, because they can't find our wines in their stores. There are opportunities there. As I mentioned, the opportunity to help us promote our wines across Canada will open up those opportunities.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thanks, Mr. Chair, and thank you for being here today, both of you, whether you're here in person or by video conference.

I'll start with you, Mr. Paszkowski. In your opening remarks you asked all of us to be advocates of Canadian wine, and I can tell you that I think we make some of the best wines anywhere in the world here in Canada. I really believe that. A few weeks ago, we had the Winery and Grower Alliance of Ontario here. I told them, and I'll tell you the same thing, that I'm a big lover of Burgundy varieties and some of the Pinots and Chardonnays being made here in Canada are among the best in the world.

I think we need to encourage more Canadians to enjoy some of the great wines. We've got ice wines being made here in Canada that I think are among the best in the world as well. In Quebec, some ice ciders are being made that I think are just outstanding. We've got some great products here in Canada and we definitely need to do more to showcase them.

I want to focus on a couple of things. First, I happen to chair the tourism caucus, so I noticed in your remarks about the impact on tourism. If we have some time, I'd like to focus on that. But before I get to that, I'd like to ask you a couple of other questions. What percentage of wine sales in Canada are Canadian wines?

[Dan Paszkowski]

Of total wine sales in Canada, you're looking at about 5% to 6% being VQA. You're looking at 25% being international-Canadian blends and the remainder being imported wines.

[Blake Richards, Conservative, Wild Rose, AB]

Okay. We need to do a better job as Canadians in enjoying our own products, and I'll tell you that I'm happy to lead the way on that.

What about exports? Do we export much wine, and, if so, where do we export it? What percentage of sales from our Canadian wineries is sold here in Canada and what percentage is exported?

[Dan Paszkowski]

Our top three export markets would be the United States, China, and Hong Kong, with about 75% of total exports going to the United States and China.

I mentioned that the value of exports is roughly around $28 million for 2011, and the volume of wine moving is about 2.5 million litres out of roughly 135 million litres of production in Canada. So it's a very small percentage of total production.

[Blake Richards, Conservative, Wild Rose, AB]

That leads me to another question.

Sometimes, trade barriers can be in the way of those types of things, obviously. I know that from interprovincial trade barriers within Canada. Dan Albas, my colleague from Okanagan, brought forward—I think you mentioned this—changes to knock down some of those interprovincial barriers.

I recognize that there are some challenges within the provincial jurisdictions themselves that have to be dealt with, in allowing that to fully take the effect it could. I would imagine you support those changes.

What are your thoughts on those and what impact have you seen as a result of them?

[Dan Paszkowski]

Absolutely. We've been pushing for this since 2007, so the private member's bill by Dan Albas and the support from Ron Cannan and a number of MPs from every side of the House made a historic change in amending that piece of legislation.

We've had limited success with the provinces, where, as I mentioned, we're approaching the one-year anniversary of the passage of Bill C-311. Manitoba and British Columbia are the only two jurisdictions that have opened up their borders to wine being shipped directly from a winery to a consumer. Nova Scotia and Quebec have passed enabling legislation for it. We believe that Nova Scotia is going to do the right thing and open it up as British Columbia has. In the case of Quebec, it's our understanding that they're going to do what Saskatchewan, Prince Edward Island, and Ontario have done and allow for a constituent to bring home one case per person per trip, which makes it extremely difficult.

[The Chair, Conservative, Merv Tweed]

I have to stop you there.

[Blake Richards, Conservative, Wild Rose, AB]

I'm just trying to get in a couple more things, but I guess we'll have to do that after—

[The Chair, Conservative, Merv Tweed]

It seems ironic that we would limit what people can bring in and out of Canada as opposed to another country. It doesn't make sense to me.

Ms. Brosseau, go ahead.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Thank you, Chair.

I would like to thank both of our witnesses.

Dave, I'm going to ask you a few questions because I think we've been focusing a lot on the wine.

Something that caught my attention earlier was the repeal of container sizes, because when this was slipped into Budget 2012—it was in the omnibus budget bill, a huge bill—it slipped under the radar. What we've learned afterwards is that there was really no consultation done on this. Everybody that my colleagues and I have talked to is completely against these changes.

What do you think about the deregulation and changes of the container sizes?

[Dave McAnerney]

My view is that if there's going to be deregulation, you need to make sure there is an equal playing field in North America, which I don't believe is the case today.

I think it would negatively impact many food processors in Canada. I'm not sure it would have a significant impact on our business, but as I look at the Canadian food industry, I do think it would have a negative impact. Again, there needs to be a level playing field.

When I look at the sorts of operations south of the border, I see lower wages and lower benefit costs. I don't believe that the plants in the U.S. operate at the same safety standards nor with the same standards for food safety, in terms of plant....

While I think we have relatively strong access to U.S. markets, it's still more problematic shipping products to the U.S. than would be the reverse, shipping from the U.S. into Canada.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Absolutely. Every company I've heard from, every player in this industry, has told me that this could cause job loss. This can close plants. This is a big change, and it's not positive. It's not a job creation measure.

You have 300 Canadians employed with Sun-Rype?

[Dave McAnerney]

Correct.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Where do the apples come from? Are they Canadian apples? Are they from other countries?

[Dave McAnerney]

Because our apple juice is not from concentrate, we're a little bit unique in that we rely on fresh apples. We are contracted in British Columbia for 100% of the process-grade apples, so we're an important revenue stream for the growers in the Okanagan.

The growers are also struggling financially. It's not a healthy industry here in the Okanagan. They certainly rely on us. There are other outlets; if we weren't here, they would be forced to ship their apples to processors south of the border at a much greater freight cost.

We get 100% of the apples grown in British Columbia for process-grade, but that's not enough to supply our needs. Our demand domestically is greater than that.

Historically we've sourced excess requirements out of Washington state. That's one of the reasons why we've made our acquisitions in Washington state, to make sure that we're not constrained by apple supply. There have been a number of years where we've actually had to hold off on production and sales because we quite simply couldn't get enough apples.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Do you have any recommendations on any way in which the federal government could help you? I know that “buy local” is a huge, huge movement. We were talking about buying Canadian wine, and I hear more and more Canadians who want to support local. They want to make sure that they are giving money back, and that it's staying here in Canada.

It makes me come to think of a national food strategy, something that we do not have in Canada. Would you support something like that, an ongoing vision for Canada on how we're going to feed ourselves—beverages, beer, wine, food—but something that's more long term, supporting not just a buy local but a buy Canadian initiative?

[Dave McAnerney]

Yes, I'd say that's a great idea, and it's important for two reasons. Not only is it good for jobs in Canada, but it's really good for the environment.

When I look at the global food chain—I mentioned the product I saw being imported all the way from Poland—I don't understand why we're shipping juice in a packaged container all the way across the globe when we could be supporting local. So I certainly think that's a great idea.

In our industry we're fortunate in that many of the regular retailers are also recognizing the benefits of that. Within our organization we're trying to figure out how to partner and how to maximize the value the consumer sees in supporting local.

One of our customers, for example, is the Save-On Overwaitea group. We've done some wonderful promotions in conjunction with BC Tree Fruits and the growers promoting not only Sun-Rype juice and snacks but also locally grown apples. That has been very effective, and it has driven a lot of sales.

I think anything the government can do to continue to support awareness of the positive benefits that supporting local has on the environment, as well as on the economy, would be a step in the right direction.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Zimmer, you have the floor.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thanks for coming today to committee.

I just wanted to say that I'm from British Columbia, Dave, and I grew up on Sun-Rype apple juice in the old cans, if you remember that. You had to open them with a can opener. So I go way back with Sun-Rype.

[An hon. member]

How old are you?

[Voices]

Oh, oh!