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BC Wine Industry Report – Fall 2021

\"AGlobally, the wine industry has suffered through one of the most challenging years ever due to the continued effects of the pandemic, consequential supply chain disruptions and numerous extraordinary climate-related events. The BC wine industry has not escaped the turmoil and continues to face challenges on multiple fronts. This report summarizes and highlights some of the issues, particularly those related to harvest and grape prices.


Input Costs & Grape Prices


The cost of producing wine in BC continues to rise, posing challenges for producers. Input costs have risen considerably over the past year fueled by labour shortages, shipping cost increases and strong demand for grapes. As a result, prices have risen for everything from glass bottles to oak barrels. Grape prices continue to be robust, benefiting independent growers and rewarding wineries who own their own vineyards. 


Review of prices last year (in 2020-2021)


According to the BC Wine Grape Council, in 2020 the two highest volume red grapes produced in BC were Merlot and Pinot Noir. The two highest volume white grapes were Pinot Gris and Chardonnay. The average short ton price for Merlot in 2020 was just over $2900. The average short ton price for Pinot Gris was just below $2300. While prices will vary widely depending upon varietal, vineyard and farming practices, generally, the average prices for most red vinifera varieties was in the range of $2900-3200. For whites, the average price was in the range of $2200-2700. 


Anecdotal evidence 2021


2021 was a challenging year for grape-growing due to wildfires and labour shortages. In addition, the “heat dome” in early summer contributed to below optimal fruit set resulting in lower than average crop yields. Nevertheless, the weather was good and quality appears high. Producers are still assessing the manner and extent to which wildfire smoke in certain areas may have affected the vintage.  Anecdotal reports from the field indicate that this year’s grape prices will either be consistent with last year’s, or in many cases, higher due to demand. Indeed, for vintners dealing with smaller lot production (e.g. “esoteric” grape varieties or grapes farmed organically), their grape costs may be considerably higher than the averages noted above.


Average Bottle Price and Sales


\"AThe average retail price for BC VQA wine in 2021 is about $19.20 according to Wine Growers of British Columbia (based on an average wholesale price of about $16 and retail markup of 20%). However, this number would include a large amount of wine produced by the “big 3” major players who have significant vineyard holdings of their own and/or long term leases (and thus who would be less affected by grape price changes). 


In contrast, analysis by Paul Rickett (of VARketing!) indicates that the average current price for 100% BC wine produced by independent wineries is somewhat higher: $18.19 wholesale (estimated $21.28 retail with that same 20% markup). More specifically, it breaks down for BC red wine to $21.70 wholesale (estimated $26.04 retail). And for white wine it is $15.68 wholesale (estimated $18.82 retail). Paul has produced a detailed report on BC wine pricing which could prove invaluable to wineries who wish to delve into these comparisons in greater detail (contact:  


1% Rule


There is a “rule of thumb” in the North American wine industry that in order to recover production costs and generate a reasonable return for the winery, 1 ton of grapes ought to be priced at 100 times the retail price of the wine bottle that those grapes produce. So for example, a purchase of Pinot Gris grapes at $2300 a ton, should produce wine that retails for about $23 a bottle. If one uses that test on the grape cost averages above, it indicates that most BC reds should retail between $29-32 and whites between $22-27. Those projected prices are higher than the actual averages just noted. Even if one adjusts the retail margins upward to 30-35%, the numbers come closer but are still below the “100 times” metric. This would suggest that some, or perhaps many, BC wineries are not obtaining the pricing for their wines that would put them in line with North American winery average returns. 


Indeed, anecdotal evidence from some wineries confirms that production costs have risen to the extent that price adjustments may be necessary. At the very least, this would indicate that there is some considerable advantage for producers to own their own vineyards and control their production costs. We understand that, in many cases during this harvest, producers purchasing stock from growers received far fewer grapes than they were expecting. Presumably this may also contribute to decreased returns and additional cost pressures for some wineries.


Winery and Vineyard Prices


\"ADespite the pandemic, the North American wine industry has seen continued acquisition, consolidation and investment activity. South of the border, there has been some very significant activity including the sale of Ste Michelle Wine Estates and a successful IPO by Duckhorn Wine Co. In BC, the activity has generated less headlines but has continued (e.g. Wild Goose, Stoneboat, Joie, Unsworth). Al Hudec reviewed some of this activity during a recent AIDV Canada webinar (


Pricing remains strong, particularly for wineries with significant vineyard holdings. Recent activity indicates that planted vineyards in prime areas are fetching about $300,000 per acre. Prices have been consistently edging upward with growth of about 2% per month which is reflective of strong demand from existing producers and relatively new entrants, such as Frind Estate Winery which now has hundreds of acres of BC vineyard holdings, rivaling the established “big 3”.


We expect to see continued acquisition and investment activity throughout the remainder of this year and into 2022.


A PDF version of this report is available for download here.




Mark Hicken: 604 868 1375


Tania Tomaszewska: 250 220 1745


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BC Wineries: Register Your Water Well Now or Lose Your Water Supply


BC wineries that use groundwater in their operations should be aware that they need to register their water wells before March 1, 2022 … or face potentially disastrous consequences including a potential loss of their water supply (thanks to Al Hudec for reminding on this). The registration requirement is a result of the Water Sustainability Act, which originally became law in 2016. However, the new law\’s time extensions for registration run out in just over 4 months, at which point, those who have not registered could be severely disadvantaged. 

The basic structure of the registration system is as follows:

  • Non-domestic use of groundwater in BC is now required to be registered and licensed. For example, a winery using water from a well to irrigate its vineyards must register its well and obtain a license in order to keep using that groundwater supply.
  • A priority system will be created for water usage which will be based on time of first use and/or registration and which may come into effect in times of shortage or constrained supply. So, for example, if an aquifer\’s water supply was running low, water could be rationed to all users of that supply with priority going to those who established earlier usage (and who had registered that usage).
  • Those who used groundwater before March 1, 2016 are categorized as \”Existing Users\”. They can obtain priority for their water usage and can have the registration fee waived if they register before March 1, 2022. If they do not register by that date, they will lose their priority and the use of the water supply becomes illegal.
  • Those who used groundwater on or after March 1, 2016 are categorized as \”New Users\”. They should have already registered and obtained a license. If not, the use of the groundwater is illegal.
  • Water use amounts may be specified. Water use \”rents\” may become payable retroactive to March 1, 2016.

The failure to register by the deadline could have very significant consequences for a winery or vineyard business:

  • A winery or vineyard could lose its priority access to the water supply and \”end up behind\” a newer user of that supply even after registration. In times of shortage or if the supply is already constrained, that could result in the older winery or vineyard getting no water or less water than the newer one.
  • Any continued use of the water supply without registration would become illegal and could result in enforcement action.
  • The value of the winery or vineyard business could be significantly affected … because a winery or vineyard business that does not have legal water rights will become much less desirable to a buyer.

There is more information on the registration system in this PDF: Licensing Groundwater in BC. Additional information and the application process is here: New Requirements for Groundwater Users. There appears to be a lack of awareness of the upcoming deadlines. See this article for more detail: 15,000 Water Wells Could Be Declared Illegal in 2022.

Please contact me if you need any assistance with registration.

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New Public Health Orders Require Proof of Vaccination

BC\’s Provincial Health Officer has posted two new Public Health Orders which now require (as of September 13th) most wineries and liquor manufacturers to verify a customer\’s vaccination status before serving them: Food & Liquor Serving Premises Order and Gatherings and Events Order. I note that the orders make a distinction between manufacturer facilities that have seating (such as a tasting lounge) and those that do not (e.g. customers standing at a tasting bar for samples). The former are treated the same as restaurants and bars (and thus, proof of vaccination is required). The latter are treated like retail stores and are exempted from the order by the wording in paragraph M. I note that the requirement to provide proof of vaccination is necessary for the customer to be served … so it should be sufficient to ask for that proof once a customer is seated (i.e. not at the door) which may make logistics easier. More details on the vaccine card requirements are here: BC Vaccine Card

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BC Wine & Spirits Summit Set for June 24th


A complimentary virtual conference for the BC wine and spirits industry will be held on June 24th at 230 pm. The \”BC Wine & Spirits Summit\” will include two mini seminars and a round table discussion. Topics of interest to be addressed will include recent liquor policy changes related to Covid, liquor licensing and compliance issues, ALC and zoning issues, as well as a general assessment of the current industry landscape. The event will wrap up with a round-table discussion. The event is sponsored by Rising Tide Consultants. Speakers will include Bert Hick of Rising Tide, Tania Tomaszewska and myself. Free registration and more info is here

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BC Celebrates 100th Anniversary of Repeal of Prohibition

Next week is the 100th anniversary of the repeal of Prohibition in British Columbia. The last day of Prohibition in BC was June 14th 1921. The next day, June 15 1921, the \”government control\” system for liquor distribution and sales began with the opening of the first government liquor store (now \”BC Liquor Stores\”). Prohibition had only lasted in this province for 3 years and was repealed after a referendum which asked citizens to choose between maintaining prohibition or the implementation of a government control system. The government control option won handily: the vote was 92,095 to 55,448. The only areas of the province that voted in favour of prohibition were Chilliwack and Richmond. Both Vancouver and Victoria voted in favour of government control by margins of two to one.


The government then set up a system of control which was initially very strict. Early government liquor stores did not have windows (see photo above) and all product was kept behind counters. In order to purchase product, customers had to buy an annual or one-time permit … and logs were kept of how much liquor was purchased by individual customers. One legal expert at the time warned that the switch to government control would create problems because a system that \”swell(ed) the profits of the government monopoly\” would lack \”any moral or popular psychological backing\”. Nevertheless, that is what the people had chosen and government control went ahead, becoming a significant source of government revenue from that point onward. Eventually, and over the decades, the constraints were relaxed but the legacy of the system lives on today. There is still monopoly control over the wholesale distribution of liquor in BC. A significant portion of retail sales is still made through government stores … and government collects large amounts of revenue from the liquor business. Indeed, it was only last year that government permitted hotels/bars/restaurants to buy alcohol at wholesale prices – almost a hundred years later. 

Of course, efforts continue to \”modernize\” the liquor system and to remove lingering aspects of the control system. Nevertheless, in the mean time, BC\’s citizens can \”celebrate\” the anniversary next week … by opening a nice bottle. Cheers!

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Australia-Canada Wine Trade Dispute \”Mutually Resolved\”

The WTO has announced last week that a \”mutually agreed solution\” has been found for the Australia-Canada wine trade dispute which involved challenges to various measures related to the sale of wine in British Columbia, Ontario, Quebec and Nova Scotia. As such, this long-running trade dispute has come to an end. The formal announcement is here: Report of the Panel.  The final \”report\” does not provide much information on the settlement of the dispute although aspects of this were discussed in my earlier post here: Federal Excise Tax Exemption & Certain Provincial Preferences for Canadian Wine To Be Eliminated. In addition, the EU has posted a lengthy submission that relates to this dispute and which sheds light on many of the issues and positions of the parties which is discussed further here: Uncorking Canada\’s Import Measures on Wine. As discussed in this article, it is possible that these long-standing issues may well reappear in future trade complaints involving Canada.

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BC Restart Plan Reopens Indoor Dining; Regional Travel Expected June 15th

The Okanagan wine industry is likely relieved after seeing today\’s announced \”BC Restart Plan\”. A phased reopening over the next few months will likely have the province back to normal by the fall … and will provide significant help to the wine and hospitality industries earlier than that. The gradual reduction of restrictions is summarized clearly in this BC Restart Plan Chart (downloadable from this site). The government news release is here as well as a link to the entire media presentation: BC Media Presentation on Restart Plan.

The new Public Health Order (dated May 24, 2021) is here: Food & Liquor Serving Premises Order. Related guidance for the industry is located here: Province-Wide Restrictions. I note that at the time of writing this the earlier Gatherings & Events Order (dated May 7, 2021) had not been properly updated to reflect the updated restrictions indicated by government below.

In summary, the major changes that affect the industry are:

  • Today: indoor dining is permitted with the same rules that were in effect prior to the \’circuit breaker closure\’. In other words, physical distancing requirements and a maximum of 6 people to a table. Note: the recommendation that the 6 should be from the same household has been removed. Travel is still restricted but now permitted within your health region (so travel from the Lower Mainland to the Okanagan is still NOT permitted). Organized gatherings are now permitted with up to 10 people indoors and up to 50 people outdoors. 
  • June 15th (earliest expected date): Liquor service is expected to be extended until midnight. Organized gatherings are expected to be expanded to allow up to 50 people indoors. Travel between health regions is expected to be permitted (i.e. travel from the Lower Mainland to the Okanagan will be allowed).
  • July 1st (earliest expected date): Indoor dining group limits are expected to be removed. Organized gathering limits are expected to be expanded even further and to permit \”fairs and festivals\”. Canada-wide travel is expected.
  • September 7th (earliest expected date): Expectation is a return to \’normality\’ or something close to that. 
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Does Air Quality Science Provide a Way Forward on Covid Restrictions?

A couple of recent articles (one mainstream media, one academic) provide interesting perspectives on recent Covid-Related Public Health Orders as well as providing a potential way forward for the hospitality and liquor sectors in terms of limiting Covid transmission during reopening. The first article is from the Washington Post. It describes how a California restaurant is using the latest scientific research on Covid transmission to create a safe dining environment by implementing ventilation and air quality technologies (How One Restaurant\’s Experiment May Help Diners Breathe Safely – also reprinted here at the SFGate site). The second is an academic study on Covid transmission from MIT (Covid19 Indoor Safety Guidelines – which includes an academic paper, supporting info, and even a web-based app to calculate risk) in which researchers provide fascinating models of Covid transmission risk – again based on ventilation and air quality. 

The articles are \’related\’ in that they are both premised on the ability of Covid19 to travel via aerosol particles in the air, which makes the virus more easily transmissible. Both also conclude that ventilation, good air quality and mask use are the best ways to restrict transmission risk … and to make it safe for people to gather again in appropriately ventilated spaces. 

The methodology in the articles provides some interesting context for the current Public Health Orders affecting the liquor industry and hospitality sectors in BC (and other places). For example, if this reasoning is correct, then:

  • Restrictions that make a distinction between indoor and outdoor gatherings would appear to have a scientific basis, except for the fact that they may be over-reaching or under-reaching depending upon how well ventilated the particular space is.
  • Restrictions that make a distinction based upon the time that someone spends within a space would also appear to have some basis, since shorter times would lead to less exposure. 
  • For example, in BC, our current Public Health Orders prohibit all indoor dining and permit patio dining. While basically sound, this would seem to be an overly simplistic approach since some \”indoor\” spaces are probably as well ventilated, or almost as well ventilated, as outdoor spaces. For example, in the Okanagan, I can immediately think of two restaurants whose \”indoor\” spaces are extremely well ventilated: anyone who has eaten at the Hooded Merganser in Penticton will know that when the patio doors are open, it is breezy, if not windy, given the restaurant\’s proximity to (above) the lake. Similarly, the Miradoro restaurant at Tinhorn Creek is perched high above the valley and when the patio doors are open, it is extremely well ventilated. There are similar examples in Vancouver (e.g. Ancora at False Creek) and, no doubt, elsewhere in the province. Indeed, in many places, the ventilation for a guest sitting \’indoors\’ next to an open window is probably as good as if the guest was sitting \’outdoors\’.
  • A new BC \”Guideline for Outdoor Dining\” document creates a complicated set of rules for qualifying spaces … which partly reflect the above principles, but which are not precisely focused on ventilation and which could still exclude well ventilated outdoor or indoor spaces (including spaces that were previously ok). I note that the most recent PHO Order on Liquor Serving Premises includes some of these new guidelines. By contrast, I note that new rules for \’open air\’ dining in WA state are specifically focused on air quality level measurements so they \’follow the science\’ more closely. 
  • BC\’s current restrictions on wine tasting pose similar issues. Under the current rules, it is permissible for customers to taste inside if they are standing, but not if they are sitting. They can taste outside either standing or sitting. Given the reasoning above, there may be some justification for the distinction because tasting outside is relatively safe and those customers who are standing inside might spend less time within an indoor space than those who are sitting … but again the restrictions are probably overly simplistic … because with indoor spaces, it is the time spent indoors that matters along with the ventilation. The virus does not care whether the customer is sitting or standing.
  • Another relevant factor, which is not mentioned in the articles, is whether or not customers and staff have been vaccinated. This would also obviously affect safety and risks (i.e. indoor seating is for those who have been vaccinated??).

In respect of the above, and more broadly in respect of \’following the science\’, perhaps the Public Health Orders should be drafted so as to target ventilation and/or time indoors more precisely, rather than relying on categorizations such as \’indoors/outdoors\’. The \’science\’ now seems to point to ventilation and time as the key factors … if this is correct, then a more focused order might be framed such that outdoor dining or tasting is permissible … and that indoor dining or tasting can also be permissible if time limits are imposed on customers for remaining inside or if that particular space can be demonstrated to have good air quality and ventilation characteristics. According to these articles, such characteristics are not that difficult to measure … and relatively simple steps such as mandating that doors and windows are kept open could make a significant difference as to whether or not a space is \’safe\’.

Regardless of the above, and for the near future at least, these are very interesting scientific studies. If nothing else, and if only to protect both customers and staff, it would seem wise for all hospitality and liquor businesses to maximize ventilation … keep the doors and windows open whenever possible!

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Federal Budget Allocates $101M for Canadian Winery Support

Today\’s Federal Budget included a spending announcement directed at Canadian wineries. Page 217 of the Budget Document indicates that the federal government proposes to provide $101 million over two years starting in 2022 to \”implement a program for the wine sector that will support wineries in adapting to ongoing and emerging challenges, in line with Canada\’s trade obligations\”. The program will be run by Agriculture and Agri-Food Canada. Details of the program were not provided … but it appears likely that this program may be designed to  address the concerns of the Canadian wine industry surrounding the loss of the federal excise tax exemption, which is scheduled to occur in June 2022.

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BC Hospitality Sector Severely Restricted by New Health Orders

New Public Health Orders were issued yesterday which place severe restrictions on the business operations of the hospitality sector including wineries and liquor manufacturers. The new Orders were made verbally at a press conference by the Provincial Health Officer. They have now been published in a written Order located here (Food & Liquor Serving Premises Order) and are summarized here: Province-Wide Restrictions. The new Order is effective until April 19th (or perhaps longer, if it is extended). The major effects of the Order are as follows:

  • Restaurants and Bars can no longer permit inside dining. Operations are restricted to outdoor (patio) dining or take-out. For many businesses, this will dramatically reduce their operations or cause them to shut down.
  • Manufacturer tasting rooms may continue to operate but customers cannot be seated indoors. They may taste indoors if standing (there is an exception for those unable to stand). Customers may be seated for tasting if they are doing so outdoors. 
  • There can be no interaction between groups of patrons. There are various distancing rules and safety protocols set out in the Order.
  • Winery (and other manufacturer) retail stores may continue to operate. 
  • The restrictions apply to the entire province, including areas where there is a lower incidence of Covid.

As a result, the latest versions of the most applicable Public Health Orders for the hospitality and winery sector are as follows: 

  • Food and Liquor Serving Premises Order issued on March 31, 2021. Applies to the hospitality sector including wineries and liquor manufacturers.
  • Gathering and Events Order issued on March 24, 2021. Applies to many situations and sectors. Parts of it will affect winery and manufacturer operations.
  • Workplace Safety issued on December 16, 2020. Applies to all workplaces including wineries and manufacturers.