Agriculture Committee on April 25th, 2013

[Terry David Mulligan]

They won't talk about it. Even if asked directly, they won't talk about it. It's a very grey area you have touched on. Somebody will step forward at some point and actually spill the beans, but they didn't do it for my microphones. I haven't even heard comments off the record. It's a slippery slope: you're damned if you do, and damned if you don't. But I bet the truth is about halfway between you and me. It's an unfortunate situation. I'd love to see somebody expose it. It won't be me; it will be somebody who is on the inside. But it's a good point.

[Frank Valeriote, Liberal, Guelph, ON]

Without getting rid of the liquor control boards completely, do you see a solution to this, some halfway solution that will accommodate those trying to get access to the shelf space and the control of liquor sales?

[Terry David Mulligan]

I'll go back to my comment previously, which was that they have to be held accountable. The liquor boards have been beholden to nobody. Frankly, they walk around like bullies. They walk around like an enforcement police, and they are not. That's not their job.

They have to be reconfigured. They have to have people with a grassroots feeling for the industry. They are just completely and totally out of touch. I'm sorry, but that's basically what I get from my six years of conversation with the industry. You cannot talk to them; you cannot reason with them. They are very powerful. They don't like anybody messing with their domain, and I think you can understand that.

I have just a final point. I was asking a winemaker a couple of days ago to tell me about a Bordeaux of his and how it works because I knew I'd be talking to you folks. That Bordeaux wine in the Okanagan is $35. Then it has to be discounted to $25. Then when it's sold, if it's sold in Ontario and gets there, it's sold for $65. There's money being made here, lots of money, and it's at the expense of the winemaker.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you.

[The Chair, Conservative, Merv Tweed]

Go ahead, Mr. Payne.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

I'd like to thank Alex for bringing up the Alberta sugar piece for me, but I'm surprised he didn't mention Frank's tie.

[Voices]

Oh, oh!

[LaVar Payne, Conservative, Medicine Hat, AB]

Mr. Alger, I wanted to talk a little bit about Alberta sugar. What kind of ratio do you have in terms of sugar cane versus Alberta sugar?

[Brian Alger]

Primarily we spot buy, so we pretty much buy based upon the current market prices. Depending on what the prices are doing at the current time is how we make our buying decision. It simply again goes back to my original comments about shrinking margins and being able to try to distribute our brands and retain some margin.

Typically if we see that the beet sugar market is better, then that's where we'll buy it. If I had to hazard a guess I would probably say that 60% of our sugar is bought in the beet market.

[LaVar Payne, Conservative, Medicine Hat, AB]

Is there any ability to direct contract to get a better pricing with them?

[Brian Alger]

There is. Again the difficulty is that we're a relatively small producer, so we would have to make a fairly large commitment to be able to contract buy. Currently where we produce our products, we make a number of other products. All those other products are in high-fructose corn syrup and there we do that on contract buy. We buy on that simply because there are so many of those people who do want us to produce for high-fructose corn syrup, so we'll buy on contract there.

I'm kind of the lone sheep out there that produces within my facility with cane sugar, so that's what makes it difficult for me to contract buy. Typically the way it goes is that I spot buy.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you.

Mr. Mulligan, I guess I've been breaking the law for about 20 years or so because I used to go over to B.C. and bring in a couple of cases at a time. Unfortunately, I didn't even know I was breaking the law. Now I've done it again, if you can imagine. I've been bringing Ontario wine back to my place in Alberta. I guess I'll have to talk to the premier to see about getting that changed.

It doesn't seem right that I can't have the B.C. wine or Ontarian wine that I like sent to me. It does not make any sense to me. I'm a free trader, and I can't understand why in Canada we can't even have free trade amongst the provinces. It makes absolutely no sense. There are too many barriers.

I'd like your comments on that.

[Terry David Mulligan]

I couldn't agree with you more. If I were in the room I'd give you a hug.

I used to be a Mountie, so I do understand a small modicum of what's right and wrong and the truth and how the laws work. This law was written in 1928 at the time of Prohibition. The Americans did away with their version of that same law almost immediately after Prohibition. We're still trying to force this down the throat of people who only want to support the wine industry across the country.

Nova Scotia needs our help. There are 15 wineries there now and they're going to have 30 within a couple of years. They're really growing by leaps and bounds. Ontario is doing exceptionally well, in Prince Edward County. In B.C., there are now 40 wineries on Vancouver Island and the Gulf Islands. It's growing like crazy. The problem is that they have a speed bump in front of them and it's distribution—it's getting product out there. It is a food. It's juice. It's grape juice. It's a food product. Why can't it move across the country like all the other food products do? It's so frustrating.

I'm going to put the onus on the panel in the room I'm talking to today. It's people like you who can make this go away, who can bring this compromise and find common ground and hold them accountable. We can have an incredible industry here. I don't think we're ever going to make enough wine that we'll sell to the United States, because we only have certain areas we can grow in and they're getting tapped out.

The interesting thing that I wanted to say is that when the Americans finally did come to their agreements between states as to where and how you could ship, I think 38 or 40 of the states signed on. They each wrote their own version of the bill, but they wrote it and honoured it.

When Internet sales started to come into play a couple of years ago, surprisingly it was only 1% of wine sales. It's not like money is going to be taken away from the liquor control boards and government coffers; it's simply going to find another way of reaching them.

[LaVar Payne, Conservative, Medicine Hat, AB]

In terms of private versus provincial stores, in Alberta we do have basically private stores. I can go to any private store and buy beer, wine or spirits. Could I have your comments and thoughts about that process?

[Terry David Mulligan]

It's fantastic. I'm heading to Edmonton on Friday and the first place I'll go is to my local wine store because, first of all, I see brands there that I would never see anywhere else. It's astonishing how robust the wine shops are in Alberta. I applaud them wholeheartedly. It's the way B.C. should be. I think we'll all get there at some point—maybe not Ontario. But the fact remains that it's a great example of what you can do with an industry. That's why I cannot believe the Alberta government is saying no, that they won't honour Bill C-311. It's stupefying. We still haven't come up with an answer as to why they have done that.

I would like to congratulate the restaurants in Montreal, by the way, who are pouring more and more B.C. wines. It's a great combination, really good wine and really good food.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Allen.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you to our guests.

[Malcolm Allen, NDP, Welland, ON]

Thank you very much.

Mr. Mulligan, I greatly appreciate your advocacy on behalf of vintners across the country—obviously from a guy who lives in the heart of Niagara. It's an immensely important issue for all of us in that particular industry.

If we fix this piece—actually, when we fix it is more of the reality because I actually think this is attainable. It's slower than we'd all like, obviously, but it has been going on for a very long time. I actually think we can do this.

When we fix it, based on how you described new wineries to my friends across the way, which are quite small and may make only 3,000 to 5,000 cases a year, how do you see their getting into the chain to be able to move the product? If those restrictions are not there, how would they move their product across this country, because unfortunately and fortunately at the same time, it is a huge place to get across?

[Terry David Mulligan]

It's the Internet. It's now the age of the Internet and I think that is our future. We'll still have wine stores. We'll still have walk-in customers. We'll still have tasting rooms. But it's going to be the Internet that will move product across the country. By the way, we haven't touched on wine clubs. That's the latest catchphrase. All of the wineries are forming wine clubs. Apparently that's another way of moving product. You join the club. You will get a case of wine a year. It will show up at your door. It's a great way to move wines, and it's maybe the godsend the small wineries are looking for.

The big wineries are going to look after themselves. They're amalgamated. They're large. They're intercountry. But it's the small winemakers who are making sensational wines all across this country. Those are the ones I feel need our support. With Internet sales, it's a matter of a website and a credit card, and the wine is delivered to your door. Everybody is going to benefit from it including the couriers, the postal service, all of those folks.

[Malcolm Allen, NDP, Welland, ON]

I agree. I think the Internet is the thing. Smaller wineries have wine clubs or have small restaurants to bring customers in through a different means than just the wine, and they're doing both things at the same time at the retail end.

At Strewn Winery in Niagara-on-the-Lake you can buy half a barrel when it's been fermented. You can come in with friends and pick out a barrel and it becomes yours when it's bottled. You've actually bought it before it hits the bottle. You can do that in advance, which is a unique way they have of marketing themselves.

So you're right: the entrepreneurship of the smaller wineries across this country is quite outstanding. But I wonder about the Internet becoming the only portal to move the wine. If you're looking to buy six bottles of this and six bottles of that, but it's not all from the same winery, is there a way to collate it so that so you don't have to order from different wineries and raise your shipping fees?

[Terry David Mulligan]

It's coming. It's coming. It's all coming our way. If we have this discussion in a year or two from now, I believe it will be a reality. Certainly, the wineries are ready to go down that road. Bottles on shelves is an old-school way of buying wine, but that's what we all do. It's a free-market society. Once you get your bottles on the shelves, you're on your own. You have to market. You have to support. You have to tell your story. That is really what wine is about.

It's astonishing how many stories are behind each of the labels. People have reinvented themselves. Some of them were even politicians and Parliamentarians and bureaucrats. They left their lifestyle and went into wine. They had enough money that they could start a small winery or partner in it. It seems that half of the oil business owns the wineries in the Okanagan. It seems like it, but it's not quite true.

It's an organic process, like wine-making. It's going to work itself out. Today we're one step closer to our new reality. I applaud you for what you're doing and ask that you stay the course. That's all.

[Malcolm Allen, NDP, Welland, ON]

Thank you.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Zimmer.

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

I'd like to thank you for appearing at the committee today.

Mr. Alger, I'm definitely familiar with The Pop Shoppe brand. A lot of us grew up drinking Pop Shoppe or Pick-a-Pop. I remember it was a fun process picking out the different pops for a good price.

I see what you're trying to do: you're trying to produce a healthier soft drink. I just don't know if the public is there yet. When one buys a sugared drink, one just assumes they're all the same. Maybe that's a branding thing too. People need to catch up to where you're at.

For the record, where are your company headquarters and where are you manufacturing? Where do you manufacture your drinks in Canada?

[Brian Alger]

It's based in Burlington, Ontario. Our bottling facility is in Toronto.