Saskatchewan open for DTC shipments from BC

Saskatchewan is now open for DTC shipments of wine (and spirits) from BC. However, the customer must obtain an authorization permit from the SLGA which is valid for one year. The maximum quantity of wine per shipment is 9 litres (one case) but multiple shipments during the year are permitted. Upon receipt of a shipment, the customer must pay a significant markup to SLGA which for wine is $5.25 per 750 ml bottle. See the SLGA info page here: Direct Shipment of Wine.

Charges Dismissed Against FedEx in Nfld Wine Shipping Case

Charges against FedEx for shipping BC wine to Newfoundland were dismissed today by a court in St. John's. The charges had originally been laid against FedEx as a result of a shipment of BC wine to that province last year. FedEx's lawyer argued that there was no case against FedEx because: a) the federally regulated courier company was not subject to provincial liquor restrictions, and b) there was evidence that the Newfoundland liquor board had set up the case by having the wife of a liquor corporation executive order the wine in question. The prosecutor agreed that there was no case. The judge dismissed the charges before FedEx's counsel had an opportunity to make any constitutional arguments. FedEx's lawyer has asked that the Newfoundland liquor corporation pay FedEx's legal fees in the case (a decision on the costs issue will not be made until late September). See CBC report here: FedEx Accuses NLC of Set-up to Protect Wine Monopoly and this longer report from the St. John's Telegram: FedEx Contraband Wine Case Uncorked. Following the decision, FedEx Canada issued a series of tweets indicating that it believes that all Canadian provinces should remove interprovincial shipping restrictions. This case is interesting because FedEx argued that, because it is a federally regulated business, it was not subject to provincial laws affecting interprovincial transport. It appears that the Crown accepted that there was no reasonable likelihood of conviction, at least partly due to this. If this argument is correct, then provincial governments and liquor authorities would not be able to prevent couriers from transporting interprovincial shipments of wine or other alcohol. Unfortunately, there was no definitive ruling on this question ... but there appears to have been no real arguments made against FedEx's position.

Nova Scotia Open for DTC Wine Shipments

The Nova Scotia government has announced today that the province is now open for DTC wine shipments of Canadian wine purchased from a winery (retailer shipments and shipments of non-Canadian wine are still not permitted). See the press release here: Nova Scotia Opens Borders to Import Wine. As a result, Nova Scotia becomes the third Canadian province to publicly announce that it is open for interprovincial wine shipments. For a review of the situation in all provinces, see my DTC Shipping Update Page

Canada Threatens Tariffs on U.S. Wine

As reported earlier, a dispute over meat labelling, has resulted in the WTO ruling against the U.S. and in favour of Canada and Mexico. The next round of the battle involves the possible implementation of retaliatory tariffs. Canada has requested permission from the WTO to introduce a 100% surtax on a number of products if the U.S. does not comply with the ruling (the products are listed here and include U.S. wine). If those tariffs were actually introduced, they would obviously have a very negative effect on the sale of U.S. wine in Canada since prices would sky-rocket. However, the U.S. Congress has already introduced a bill that would repeal the meat labelling law which appears to have broad bi-partisan support as well as support from the U.S. meat processing industry which sees the labelling law as too costly. 

Supermarket Wine Sales Roll Out in BC Amidst Trade & Pricing Concerns

Supermarket Roll-Out. The BC Government's plan to roll out limited alcohol sales in supermarkets has now launched with a single Save-On Foods store in White Rock (Surrey) being the first location. This store has been appointed as a third party operator for a BC Wine Institute license that permits the sale of only 100% BC VQA wines (i.e no imported wines). These licenses (there are currently 21) had previously only allowed for the sale of wine through freestanding VQA wine stores. Recent changes in government rules permit the transfer of those, and other licenses, into supermarkets. The rules are complicated and, depending upon the license type, may result in liquor sales either using a segregated "store within a store" concept (for beer, spirits and imported wines) or for "wine on regular shelves" if the licence is restricted to the sale of 100% BC wines (see: BC Announces Supermarket Wine & Liquor Rules). A second supermarket location was slated for the Urban Fare store on Alberni St. in downtown Vancouver but that opening is currently on hold due to compliance issues with the City of Vancouver's liquor policy. It is currently unclear how many, if any, of the other VQA store licenses may transfer to supermarkets ... or how many other existing private retail or government stores will make the move into supermarkets.

The government has also recently passed and given Royal Assent to the Special Wine Store Licence Auction Act which contemplates the auction of an unspecified number of additional licenses that would permit the sale of 100% BC wine on regular supermarket shelves. It is rumoured that the number of licences to be issued under this Act will be 24, but that is not confirmed ... and there is no announced time line for the implementation of this plan.

The above developments have given rise to concerns regarding both trade agreement compliance and wholesale pricing. Both the California Wine Institute and Wine Australia have already written to the BC Government and expressed their views that the "BC wine on regular shelves" supermarket model is not compliant with Canada's trade agreement obligations under both NAFTA and GATT. It is my view, as noted in earlier posts, that this model creates a trade violation that could give rise to serious consequences. In addition, other private retailers have raised concerns about the fairness of the model including the wholesale pricing currently being provided to the supermarket. The VQA stores have historically received, and still receive, a 30% "wholesale discount" (of which 26% goes to the store operator) and also operate under a consignment sales model from the wineries (i.e. no cost for stock). All other private retailers have substantially lower retail profit margins under the new wholesale pricing system (about 15-16%) and have to pay for their stock up front ... which obviously provides the supermarkets with a significant advantage. 

Wine and Meat Labelling. In other news on the trade compliance front, a trade dispute relating to the labelling of meat products in the U.S. recently threatened to affect the import wine business in Canada.  The WTO has issued a final ruling that the U.S. violated their trade obligations on the meat issue and, as such, Canada was set to ask for the authorization of retaliatory tariffs on a number of products including U.S. wine. To its credit, the California Wine Institute supported Canada's position in this dispute and urged Congress to repeal the meat labelling law. Yesterday, Congress appeared to set the wheels in motion to do exactly that: see US Congress Starts Repeal Process for Meat Labelling Law.

New Liquor Statute for BC. Finally, the BC Government has also passed a new Liquor Control and Licensing Act, which will come into force by regulation at a later date.