Madam Speaker, I am pleased to speak today in support of Bill C-311, An Act to amend the Importation of Intoxicating Liquors Act (interprovincial importation of wine for personal use).
Over the past years, as our former agriculture critic, I have been working with the Canadian Vintners Association, CVA, on behalf of wineries in my riding and right across the country to get some movement on this important issue.
At the request of local vineyards and the CVA, I have written a number of letters to the Minister of Agriculture and Agri-Food on this issue. For example, on September 21, 2010, I wrote the following letter to the minister:
Please find attached copies of letters that I have received from Mr. Tim Martiniuk, General Manager of Stoneboat Vineyards in Oliver, BC and Mr. Dan Pazkowski, President of the Canadian Vintners Association. These letters outline the need to modify the Importation of Intoxicating Liquors Act (IILA) to allow Canadian consumers more flexibility when purchasing wine at local wineries.
I concluded my letter by saying:
On behalf of our BC wineries I would like to thank you for the efforts you have already undertaken with the Provinces to improve the accessibility of our excellent wine among Canadians. I encourage you to explore other federal options that will facilitate a workable solution. Please be assured that you can count on my support on any initiatives that will advance this issue.
Yesterday I met with Mr. Pazkowski, as well as with Mr. Luke Harford, vice-president of the CVA, on another important matter that concerns our Canadian wine industry, that of the 21.2% excise duty that is paid on all wines sold in Canada that do not come under the VQA or Canadian-grown label. What this means is that Canadian blended wine producers pay an extra 10.78¢ per litre of excise duty which is hurting their industry. I will be following up with the minister on this issue.
As a result of yesterday's meeting, Mr. Pazkowski, at my request, has sent me the Canadian Vintners Association talking points on Bill C-311, hot off the press, which I would like to share with the House in the time remaining.
The first question that is often asked is:
Why is this important to Canadian producers?
According to the association, and I agree, this change would:
Facilitate better choice for Canadian consumers so that more Canadians can enjoy the full range of great Canadian wines.
Ensure that Canadians who have visited wine producing areas and tasted the products can continue to get the products they have enjoyed as tourists if the wine is not available at local liquor boards.
Help Canadian producers increase their market share at a time when imported wine products are increasing their portion of the market and dominating liquor board listings.
Will this undermine the current system of provincial liquor authorities?
A personal exemption is NOT intended to undermine or destroy the current system of liquor boards. Despite the best of intentions and the support of liquor boards in producing jurisdictions for the Canadian wine industry, liquor boards are not able to carry the full range of Canadian wines, due to supply requirements, space restrictions, etc.
Allowing a limited amount of 100% Canadian wines to be supplied directly to Canadian consumers from wine producers or to transport wine across provincial borders would represent a very small percentage of total wine sales. A personal exemption of 12-24 cases per year per adult consumer is not going to undermine the liquor board system.
For small wineries, these sales could represent an important revenue and profit stream they would not otherwise receive. The products likely to be traded are small volume but higher value wines which are not available in liquor boards and are of interest to premium wine consumers. Higher profits by wineries are shared with governments in the form of higher taxes.
Who would participate in an electronic direct delivery of wine across provincial borders if a personal exemption was put into place?
Such a system would respond to the desires of a “select group” of wine connoisseurs/consumers who want variety, quality and regional wines. This select consumer group has a shopping strategy and is willing to:
pay the transportation fee
order a set minimum quantity (e.g., 6-12 bottles)
order more expensive wines at a price point of at least $15 per bottle
consider both online and retail purchases
Yet another question that is often asked is:
How much 100% Canadian wines would be sold under such a system?
It is difficult to accurately measure the volume of wine sales from wineries that would be sold to tourists and wine enthusiasts. We anticipate that Canadian tourists are currently purchasing wine while on vacation at wineries and transporting this wine across provincial boundaries, without knowing they are violating the IILA.
US data shows that Direct Sales represents approximately 2% of total production in the US, of which approximately 1% is DCT shipments (tasting room delivery, internet, phone, wine club).
Based on the US model, approximately 1% of total 100% Canadian wine sales would take advantage of direct sales which could represent approximately 27,500 cases per year and would be drawn from wines that are not available at a local liquor stores via tasting room deliveries, internet, phone or winery wine club purchases.
This would also stimulate greater interest in retail sales at both wineries and liquor boards, resulting in greater market access across Canada and greater tax revenues and sales for both wineries and liquor boards.
The next question that is asked is:
Do Liquor Boards have a Meaningful Minimum Personal Exemption
According to the Vintners Association:
Liquor Boards have steadfastly opposed any amendments to the IILA to facilitate interprovincial trade in Canadian wine, even though total 100% Canadian wine sales across Canada represent a mere 6% of total wine sales.
With growing consumer pressure, liquor boards have further attempted to circumvent proposed amendments to the IILA by recently introducing small volume personal exemption limits.
For example, in Ontario the LCBO Board of Directors recently adopted a policy permitting Ontario residents of legal drinking age to transport 9 Litres of wine (equivalent to one case of 12 bottles) on their person from another Canadian province or territories, as long as it is for personal consumption. Other provinces have lower personal exemption limits [for example] Newfoundland (1.14 Litres) and PEI (2 litres) etc.
The Vintners Association would like to make two important points:
(1) Provincial personal exemptions are restricted to wine transported on your person, and do not permit the use of winery wine clubs, internet, phone, etc. This restricts the use of modern technology and limits the opportunity for Canadian consumers to access wines unless they travel to BC, Nova Scotia [or other provinces] which does not happen often in a country the size of Canada. Alternatively, you have the option to use the slow and expensive liquor board private order program.
(2) Provincial personal exemptions (e.g., the LCBO policy) are technically illegal since it contravenes IILA Section 3(1) that all alcohol entering a province be purchased by or on behalf of the Crown and Section (5) that anyone who contravenes the IILA is liable to penalties on summary conviction.
To ensure that liquor boards treat the issue seriously, it is important that Bill C-311 include a reasonable quantity. Industry fears that leaving the quantity to the provinces will provide limited benefits to Canadian consumers and would fail to address the spirit of Bill C-311.
I will continue with another question that is posed in this document, which is:
Are Provincial Private Order Programs effective?
The answer is:
Many liquor boards have introduced private ordering programs for wines that are not available at their provincial stores. This system requires consumers to request that liquor boards facilitate their communication with wineries, pay a premium for this service, and wait as much as 12 times longer for receipt.
In conclusion, I think Bill C-311 is a reasonable compromise. I would like to thank my colleague from Okanagan—Coquihalla for introducing this bill.