Evidence of meeting #51 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wineries.
A recording is available from Parliament.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
The Canadian market is hugely dependent on imports. Do you not get the unpleasant impression that opening this door nationally would also open a door to the entire international production, given that we really are giving an advantage to Canadian producers?
Conservative
The Chair Conservative James Rajotte
Unfortunately, we have time for about one comment. Who would like to comment? We'll take Ms. Zimmerman and Mr. Hicken, very quickly, please.
Chief Executive Officer, Grape Growers of Ontario
I think we've raised some of the concerns about opening up the Importation of Intoxicating Liquors Act. Obviously, there has to be some careful scrutiny about that, and we've raised the concern about imports in our marketplace. It's already being done in Quebec right now, so we've raised the concerns, but I think it can be addressed appropriately through the bill.
Vintage Law Group, Winelaw.ca
The one comment I would make on that is that this bill does not affect and will not affect the situation at the international border. Any imported wine will still come in exactly the way it does today. The only difference would be that there would be some ability for consumers to move wine back and forth between provinces. So I think the effect would be extremely minimal. As Shirley-Ann and others have said, it's likely to get half a per cent.
Conservative
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair, and I also would like to thank the witnesses. As you can see, we have many extras on our side of the bench just because they have such enthusiasm for seeing this move forward.
First I want to quickly remember and clarify. In Canada, what is the percentage of the consumption of international bottles versus our domestic product?
President, Château des Charmes
About 17% of the national market is imported.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you.
I want to go back to where Dean was going in terms of the capacity. I think we heard from Ms. George that there wasn't a lot of change in terms of revenue to the provinces, so you have to assume that a few things were happening. Were people drinking more wine, were they drinking less international wine? In practice, what do you think would happen if this bill comes into place? Are you thinking there's not going to be an impact in terms of provincial sales, or a very modest impact?
President, Alliance of Canadian Wine Consumers
The potential exists for Canadian wine consumption to increase. Paul and Mark might have better data on that than I do. But we expect that the pie will grow bigger.
Vintage Law Group, Winelaw.ca
Certainly, as Paul said, the experience in the United States has been that the main effect is on the premium and ultra-premium sector of the marketplace. I think there would be definite growth in that segment of the market for the Canadian wineries.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
If there's going to be growth, does that mean that some of those wineries will be increasing capacity? We heard that a few years ago there was an issue of grapes not getting utilized. Do we have a lot of product or some product currently having a struggle getting to the market?
Chief Executive Officer, Grape Growers of Ontario
We certainly have the capacity, from the grapes perspective. Hillary can comment on the wine. We have the capacity. As I've outlined, one of our concerns is obviously a bill that would open up the opportunity for more import wines. We don't even own our own market share right now in the province of Ontario. Three-quarters of our marketplace is owned by imports. So there is opportunity for growth.
One of the cautions, again, is that the bill does not address 100% Canadian grapes.
President, Wine Council of Ontario
I think the important thing to understand is that, certainly in Ontario, when we're building our premium brands, they are sold primarily, right now, at your cellar door or through the Ontario Liquor Board through Vintages.
They release so few SKUs of Ontario VQA wine every year, under 200, and that's across 130 commercial wineries. If you think of 130 commercial wineries and you have five or six or ten SKUs competing in the Vintages market, there's a lot left out there.
You could appear in Vintages one year and not be in for the next two years. But your vineyards are still producing and the premium wine is still there. That's why we're always out there trying to seek new markets for this wine so that we have a more consistent ability to sell it, because we're making it every year.
Executive Director, British Columbia Wine Institute
I could speak to B.C. We're in a very similar situation with our VQA-producing wineries. We're fortunate that the great majority being produced is being consumed. Yet we still have only 19% of that market in B.C. So there is lots of room for growth for us there.
We're seeing that start to cap out. It is starting to plateau, yet more grapes are being planted, so we're going to see more product coming on stream.
It's about opening up the market. We talk about export markets and looking over to China and Asia, but really, the export market for us in B.C. is Alberta and Saskatchewan and Manitoba. That's really where we want to be able to grow to.
The similar limitation, as Hillary expressed, is with the liquor control boards in those provinces. They just have restricted shelf space. They don't physically have the room to carry the product, whether it's from Ontario or B.C.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
I guess it's fair to say that this particular bill will probably work to enhance production and market share. That's the general thinking from the best expert advice.
Thank you.
Conservative
NDP
Jinny Sims NDP Newton—North Delta, BC
Thank you very much.
First of all, I want to say that over the last 30 years, I've been impressed by the growth of our winemaking industry, specifically in B.C. The quality of wine coming out is truly amazing and I would say very competitive in the international market. You are hearing from a person who is not a great connoisseur, but I have found quite a few of what I call my favourite B.C. wines.
The question I have has more to do with the Agreement on Internal Trade, the AIT. Are there remedies under the AIT for wine producers whose products encounter barriers within Canada?
Vintage Law Group, Winelaw.ca
I am not an expert on that particular agreement, but I believe that it excludes the alcohol market completely. I think there's an exception in that agreement for access to alcohol markets in the other provinces. Unfortunately, I don't think that agreement solves the problem.
NDP
Jinny Sims NDP Newton—North Delta, BC
It's been a few years since I read that agreement. Maybe it has been a year and a bit. I did read it thoroughly at the time. But I must admit that I was paying more attention to the education factor than to the impact on wine. Thank you for that answer.
Does anybody have any more information on that? Obviously it is not your bedtime reading either, which is always good to know, right?
Here's another question. How would Bill C-31 benefit provinces or territories in which, at present, wine grapes are not grown and/or wine is not produced?
President, Alliance of Canadian Wine Consumers
If I can just clarify a point, wine is actually produced in every province. It might not be grape wine, but I've had communications with a winery in Newfoundland that was producing a wine from a local fruit there. There is a potential for growth with saskatoon berry wine and every other type of wine, including grape wine, in the country.
Chief Executive Officer, Grape Growers of Ontario
Certainly. You were asking about the impact that it would have. As Hillary has identified, our future is in the growth of VQA, or 100% Canadian wine, obviously because of the direct economic impact.
If we can balance out what is Canadian versus what may be imported, there will be growth. It's not going to be significant, but it is getting consumers access to a product that is Canadian, we hope, for the majority. There will be some growth opportunities between provinces, there is no doubt about that.
On the other side, the liquor boards can maybe come up with their own analysis of what they may lose in terms of tax benefits. We think the economic opportunities are there, as long as they are going to outweigh the number of imports that may potentially take advantage of the bill.