Agriculture Committee on Feb. 24th, 2015

[Dan Paszkowski]

Yes. Our estimate would be, as was referred to earlier, in terms of the 11% growth. If we were successful in direct-to-consumer delivery with some domestic market promotion to educate consumers, we honestly believe that we would be able to grow the premium side of the business by 11% per year. And it will be only the premium lines that will flow through this sales channel.

[LaVar Payne, Conservative, Medicine Hat, AB]

I think 11% is not a bad number.

[Dan Paszkowski]

No, not at all.

[LaVar Payne, Conservative, Medicine Hat, AB]

If you could get that up every year, certainly that would have a huge impact right across the country for tourism.

[Dan Paszkowski]

It would. Imports over the past decade have captured 80% of wine sales growth in this country. If we can do a little bit better job in terms of opening up opportunities for Canadians to drink Canadian wine, we can capture some of that growth. There is a significant interest in wine in this country.

[LaVar Payne, Conservative, Medicine Hat, AB]

I do have a special wine from Ontario that I like.

Anyway, the other thing is you made some recommendations, including to establish multi-year federal funding for a Canadian domestic wine market development program. Are you looking for federal funding for that? Is there any sort of investment that would be made by the Canadian vintners as part of this whole process? What are your thoughts on that?

[Dan Paszkowski]

Every wine-producing country in the world has their eyes on the Canadian marketplace, and their governments are providing them millions of dollars, tens of millions of dollars, to support their wines in this country. Here's an example of Chile, an example of New Zealand, the types of activities that they're doing in this country. They're having white tablecloth tastings across the country. They're influencing liquor boards. New Zealand wines have grown 97% in the past five years in terms of sales volume.

What we're looking for is to partner with the federal government through the agrimarketing program to take some of that money that was previously dedicated only towards export development and is now allowable for domestic promotion to help us at a fifty-fifty cost-shared basis, whatever the breakdown is, to support domestic market promotion across this country.

What we've put into our pre-budget recommendation is $35 million over five years, reviewable at the end of five years so that we can put our money where our mouth is and show that we've been successful and achieved the 11% growth that we have identified to be able to take some of that market share back to Canada. We were at 50% market share prior to the free trade agreement. As you mentioned, our quality is better. We're a much stronger business now than we used to be, but our market share has dropped due to the growth of imports. We have to capture some of that back. Domestic market promotion and direct-to consumer delivery will help us to that.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Payne.

Now we'll go to Madam Brosseau, for five minutes please.

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

Actually, LaVar asked some questions that I was hoping to ask the Canadian vintners. I represent a riding where we do have some great wine, and it is actually known internationally. Recently, a winery in Lanoraie, Quebec, had their wine displayed to the Queen of England when John Baird was there. The Canadian wine that was showcased was a wine from my riding.

Actually, when the Duchess and...I forget his name.

[A voice]

Will.

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

Yes. Will. I'm sorry. Pardon me, but I'm not a big follower.

When they were in Canada, this wine was actually represented and was shared with them. This small winery in Quebec is known across Canada and internationally as well. It's really good that we're talking about interprovincial trade and what is being done to work with the provinces to get the ball moving.

You talked a lot about the multi-year funding for wine tourism. I know that the Province of Quebec does a bit on that. What would be the impact of the fifty-fifty sharing? Is there a study that's been done about how much of an impact provincial tourism promotion would have for our local wineries?

[Dan Paszkowski]

First of all, the Carone winery is a fantastic winery.

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

I agree.

[Dan Paszkowski]

They're one of our members. I served the same wine to my wife at the cottage two weeks ago, and now it's her favourite wine.

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

It's the best, one of the best.

[Dan Paszkowski]

It is spectacular.

In terms of tourism, we currently are bringing in three million tourists per year. We're contributing $1.2 billion to the economy in terms of individuals who are visiting our establishments. We believe that we can grow that to 3.5 million over the next five years with some of the federal support through the agrimarketing program, as well as direct consumer delivery, to ensure that these tourists who are coming to our wineries and loving our wine can actually have that wine shipped back to their homes and then reorder that wine once we've built that relationship, especially if they're driving a motorbike.

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

Have you been able to estimate the economic impact of interprovincial trade barriers on the industry?

[Dan Paszkowski]

We haven't done any analysis in terms of what the economic impact would be. We know that we're looking at roughly 1% to 2% of total production that would enter into the direct delivery stream. We're looking at about 60,000 litres of wine to start, but we do believe that will grow.

It will never be a panacea for individuals buying the wine, because there is going to be a cost to have that wine delivered to your home, a premium that you're going to have to be willing to pay to receive it. Nonetheless, it will be extremely important for the small wineries.

The big concern we have is that direct consumer delivery in the United States has been extremely successful, and that represents 1% to 2% of total production. As these small wineries are entering into direct consumer delivery, their profitability is increasing, so they're able to reinvest in their businesses, and they're going to start exporting. Where are they going to export to? They're going to export to Canada, and then they're going to start eating our cake as well. Unless we can remove these barriers to trade and allow our small wineries to grow so they can enter the export market and also capture more of the domestic economy, it's going to slowly start eating away at our business.

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

Could I have one more question?

[The Chair, Conservative, Bev Shipley]

Yes, quickly.

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

Chapter 17 of the AIT defines the dispute resolution procedures. However, witnesses before the committee said that the binding nature of the agreement remains a weakness since there is no real penalty system in place. How would you improve the dispute resolution system of the AIT? What kind of penalty system would you recommend?

That's for both witnesses, if applicable.

[The Chair, Conservative, Bev Shipley]

You may not get time for both.

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

Maybe Patty, then, since she hasn't spoken.

[Patty Townsend]

I really can't answer that because we don't have the kinds of trade barrier issues that we would take to a tribunal.

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

Okay.

Dan, can you add something?