Canada-EU Trade Deal: Little Effect on BC Wine

The full text of the Canada-EU Trade Deal (usually known as CETA) has now been released. As reported earlier (CETA Not Likely to Affect BC Wine Industry), it appears that the deal will have little consequence for the BC wine industry. Generally, existing distribution and pricing practices for BC wine are continued under the deal. Earlier leaked text indicated that BC would be allowed to operate up to 60 private retail wine stores that provided preferential treatment for BC wine (these are the current VQA stores and tourist wine stores). The leaked text was accurate and the final text provides the same thing. The limit does not apply to the vast majority of BC's private liquor stores which sell a range of products from various countries. The limit of 60 is, in fact, greater than the number of such stores that are currently operating (which is about 20). As such, CETA preserves the existing exclusive distribution channels for domestic wine in these private retail stores and it also preserves the ability of wineries to sell from their own tasting rooms (direct delivery). The agreement does contain an agreed objective of eliminating the "differentiation of provincial mark-ups applied on domestic wines and wines bottled in Canada in private wine outlets" ... however, this objective was contained in earlier agreements with the EU and contains no concrete implementation targets other than a review in 5 years time.

BC Unveils Some Supermarket Wine Sale Rules

The BC Government has unveiled some of the rules relating to the forthcoming sale of wine in supermarkets in BC, which is slated for a spring 2015 start. As reported earlier, there are currently two sales "models" that are proposed. The first model is for "store within a store" sales such that an existing private or government retailer would be able to move inside a supermarket's floor space so long as the liquor sales were conducted in a segregated area with separate cashiers. The second model is proposed to permit the sale of 100% BC wine on regular supermarket shelves, for sale through designated regular checkouts. The new announcement (BC Takes the Next Step Towards Liquor in Grocery Stores) indicates that eligible stores must be at least 10,000 square feet and must have approximately 75% of their sales coming from food products. These restrictions will mean that liquor sales may take place, for the most part, only in "traditional supermarkets". Convenience stores and smaller food stores will not be eligible for alcohol sales as they will not meet the square foot requirement. In addition, the 75% requirement would exclude Wal-Mart and Costco, both of which hold large chunks of the grocery market, but neither of which would meet the 75% figure (each is about 50-55% for food sales). In addition, and as noted earlier, the 1 km distance separation requirement will remain in place ... which will mean that BC supermarkets will only be able to sell liquor if they purchase and move the licenses of any existing liquor stores that are located within 1 km of their stores.

Also, the press release noted that grocery and liquor stores will be permitted to "co-brand" (this is currently not permitted), that there will be no minimum requirement for the space allotted to liquor sales within a supermarket, and that further details regarding wholesale pricing reform and the supermarket sales models will be released during winter 2014-15. The final reforms are expected to be implemented in spring 2015, including the launch of supermarket sales, a "level playing field" for government and private liquor stores, and a complete re-write of the Liquor Control and Licensing Act.

BC, SK open borders for DTC shipments

The BC and Saskatchewan governments have announced that their borders will open for direct to consumer liquor shipments (see: Dill Pickle Vodka for All, BC and SK open liquor borders). BC's borders were previously open for wine only. Saskatchewan's were closed for all liquor products. Wine DTC shipments between the provinces will be allowed by the end of this year with other liquor being added in 2015. In addition, as reported yesterday, Premier Wynne of Ontario has also indicated that she would like to implement a similar deal in the near future. This is obviously great news for BC wineries as progress is finally being made on the efforts to reduce interprovincial barriers for the wine business. Nevertheless, it remains unclear how these developments will affect FedEx's decision earlier this week to halt interprovincial wine shipments.

FedEx Restricts InterProv Shipping Amidst Rumours of InterProv Announcement

FedEx notified BC wineries earlier this week that it has stopped accepting interprovincial direct to consumer shipments of wine other than to destinations within BC or Manitoba. It is unclear whether this development is related to earlier reports of FedEx being charged in Newfoundland for shipping wine into that province (see: FedEx Charged in Nfld for Shipping Wine). In addition, media reports today have indicated that a deal may be close that would allow the interprovincial shipment of wine between Ontario and British Columbia: see Wynne, Clark Announce Ontario BC Wine Deal is Near. More details will be posted as they become available.

Ontario Report Calls for End to Liquor Monopoly

A wide ranging report from Ontario's CD Howe Institute is calling for an end to Ontario's monopoly based liquor distribution system. The report indicates that Ontario's current system does not serve consumer interests and actually prevents the provincial government from maximizing its liquor revenues. The link to the report is here (PDF): Uncorking a Strange Brew. The report has also garnered substantial media attention including these articles: Liquor monopoly keeping revenue from Ontario and Time to end retail alcohol monopolies. The provincial liquor monopolies are also preventing the free trade of wine and other alcohol between provinces by creating barriers to inter-provincial trade.