It is bottling season for wineries across Canada. Producers are pushing to empty tanks and barrels before August to make room for this year’s harvest, but face unprecedented challenges to source needed bottles, closures, labels, boxes and, even, pallets.
The retail price of Canadian wines has been a long-standing problem for consumers who struggle to understand why imported wines can be so much more affordable than wines made at home. Domestic prices are set to climb, along with the price of international wines as wineries struggle to absorb rising costs of labour, fuel and other associated goods.
Plus, there are the costs associated with growing grapes in Canada’s cool climate wine growing regions and making wine with the inherent taxes and various government levies and surcharges. These factors push prices beyond the cheap and cheerful bargain bottles from places such as Argentina, Chile, South Africa, Spain or Italy.
The immediate issues: Inflation, supply chain and fuel prices
“It’s been one situation after another,” explains Paul Speck, president of Henry of Pelham Family Estate Winery in St. Catharines, which was founded in 1984. “Sourcing glass bottles at any price was the first nightmare. Then we were held up for two weeks waiting for pallets. … Everything was ready to go, but we didn’t have any.”
Speck cites a common complaint for wineries – and many other industries – none of the necessary items are coming in reliably and they are much more expensive than they used to be. In the vineyards Speck runs with his brothers Matthew and Daniel, expenses associated with grape growing are also on the rise. The fertilizer bill is 40 per cent higher than last year. Fuel costs are tracking 45 per cent to 50 per cent higher than usual.
Continuing price factors: Taxes, vine-ready land and cool weather
The price of a bottle of wine is a complicated thing. For starters, it encompasses the costs of land and cultivating a vineyard and harvesting its grapes. The size of the operation will affect how fixed costs, such as wages and equipment, in the vineyard and winery are applied to each bottle produced.
Another important consideration is the amount of government support and subsidies available, particularly in European and South American countries that are actively promoting export businesses. Canadian wine growers don’t benefit from the same various agricultural, tax relief and marketing subsidies as producers working in established wine regions in the United States, the European Union and elsewhere.
For collectible bottles, the status and scarcity of wines from celebrated appellations, such as villages in the Burgundy’s Côte d’Or or Oakville and Rutherford in the Napa Valley, add to the expense.
Those factors stack up to make domestic wines relatively expensive on the world scene. The average price of a bottle of wine produced in British Columbia is $20 and predicted to go up as the industry deals with three short crops in a row due to variable weather conditions, which reduced the grape harvest. The 2021 harvest was forecast to be the lowest in nine years. Most wines made from Ontario grown grapes sell for between $15 and $20 a bottle.
“If you want those really affordable, everyday wines, you’d have to look somewhere else,” says Speck, whose family oversees an extensive portfolio of still and sparkling, red, white and rosé, dry and sweet wines made in Ontario. “Making wine in Canada comes with extremely high costs, but that isn’t the customers’ concern at the end of the day. It’s really our problem as producers. We need to make great wines that are beautifully packaged, that are priced appropriately and that stand up to the best in the world.”
Even before Canadian wine producers embraced European vinifera grapes, such as cabernet sauvignon, chardonnay and merlot, they struggled to compete against the fruity, commodity wines produced in warmer growing areas. Our shorter and cooler growing season means wine growers produce fewer grapes per acre, often with greater costs of farming per acre.
After taxes, Speck says Ontario wineries get 35 cents for every $1 earned through retail sales at the LCBO. “That’s the type of math we are struggling with at those low price points.”
The good news: Canada’s craft wine industry makes notable wines that are worth every dollar
Canadian winemakers have long known that they cannot compete on price. They must make sure that the quality in the bottle is seen as being worth the investment for consumers, says Darryl Brooker, chief executive officer of Okanagan Crush Pad. The Australian native came to Canada in 2003 to open Flat Rock Cellars in Jordan, Ont., followed by roles at Canadian wine companies including Andrew Peller Limited and Mission Hill Family Estate Winery.
“The Canadian wine industry is a craft industry,” Brooker says. Even Canada’s largest producer and marketer of wine, Arterra, “would not be large anywhere else in the world, they’re a medium sized business comparatively speaking.”
There are an estimated 31,001 acres (12,565 hectares) of vineyards providing grapes to Canada’s wineries. Ontario has the largest plantings with 17,000 acres, followed by British Columbia’s 11,000 acres under vine.
Chile’s Maipo Valley farms more grapes than all of Canada combined. The whole of Chile accounts for 212,000 acres planted. That kind of scale makes producing cabernet sauvignon and chardonnay to sell for less than $10 to Canadian consumers possible.
California’s wine industry is fuelled by 635,000 acres (256,975 hectares) of wine grapes. The Bordeaux region of France alone has more than 280,000 acres planted. Even New Zealand, a relatively small player on the world wine scene, sources from more than 98,000 acres (39,000 hectares) of vines.
“The model for Canadian producers has been New Zealand where the small scale of that industry set a focus on quality because they could never compete on volume,” Brooker says. “We need to promote buying local and supporting the local economies, but also recognize that consumers are willing to pay more for organic and sustainable products, including wine. But then again, we would need to walk that talk.” The wine industries in B.C. and Ontario have recently introduced sustainable wine-growing certifications to help market wines that have been sustainably made from vineyard to bottle.
Canadian wineries have never and will never be able to match the best value brands made by large producers working in warm and dry wine growing regions. They will never have access to a surplus of locally grown, affordable grapes that can be scooped up to introduce a cheap brand to sell to restaurants or grocery stores the way that larger producers in Spain, Portugal and other countries can often do.
The good news for this country’s winemakers, however, is that premiumization continues to be a trend. Vintners everywhere are looking to produce better quality wines that are sustainably made to keep their vineyards and bottom-lines healthy. Even countries, especially South Africa and Argentina, that are well known for their value-for-money selections are looking to export more premium priced wines.
Winemakers across the country have shown an ability to produce high-quality chardonnays, rieslings and sparkling wines as well as cabernet francs, gamays and pinot noirs that might not appeal to price driven consumers but attract the wine savvy who opt to drink less, but higher quality products.
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