Geoff McIntyre

Does the B.C. Government’s Proposed Opportunities for the Wine and Liquor Industry Have Any Legs?

by Geoff McIntyre

 

The Third Annual Seminar on Wine and Liquor Law in British Columbia, held in late February, was one of the best attended years yet – and it should come as no surprise why. Given the provocative promises in the 2012 Provincial Budget announced just a week before event, those stakeholders --from lawyers, winery owners, members of the retails sales and hospitality industries to regulators and advisors of the B.C. Liquor industry -- came together to discuss the “proposed opportunities”.

Promises from the 2012 Provincial Budget

In their February 21, 2012 Budget Announcement, the B.C. Liberals indicated that in the coming months they will “review the rules that govern liquor sales to modernize liquor standards and create more opportunities for growth”. B.C. Minister Coleman has hinted that he would like to see the myriad of licensee discounts phased out in order to provide a level playing field for all liquor distributors. The experts at the seminar (such as Industry Consultant and former BCLDB senior official Bert Hick, Ian Tostenson of the B.C. Restaurant & Food Services Association and Randy Wilson of Liquor Plus) agreed that broad fundamental changes are unlikely. They felt that B.C.’s current liquor control and distribution regulatory framework is an incoherent piecemeal of regulations and policies created from the vested interests of various government and non-government industry players over the years. The seminar panel agreed that we may see some “tinkering”, but that sweeping changes are unlikely.

The second tidbit thrown out by the Provincial Government in the 2012 was the inclusion of the B.C. Liquor Distribution Branch’s two-bonded warehouses on a list of government assets to be sold off in the coming year as a measure to assist in controlling the deficit. This plan seems a little confusing as the warehouses actually make money for the Province by holding a monopoly over the importation and distribution of imported liquor in B.C..

Federal Bill C-311

The Seminar panellists pointed out that any private buyer of the warehouses would inherit the current unionized workforce. They did express some hope of improved levels of service, specifically the possibility of shorter delivery times, from the process of privatization. Bert Hick suggested that, in order to be effective, industry changes need to extend to the full privatization of liquor stores and the removal of the current confusing system of mark ups and discounts (as has been implemented in Alberta).

The most promising regulatory change on the horizon for the B.C. Wine Industry continues to be the progress of Federal Bill C-311. Bill C-311 proposes to introduce a personal use exemption for wine to Canada’s current Prohibition-era law which makes it illegal for private parties to import alcohol across provincial borders. Bill C-311, if enacted, would make the importation of wine for personal use legal, setting the stage for each province to implement their own limits around personal use.

The Private Member’s Bill, which was introduced in Parliament by B.C. MP Dan Albas, has enjoyed the unanimous support of all parties and has passed second reading. The Bill is expected to pass third reading this spring and proceed to the Senate. Bill C-311 should be law by the end of the year, perhaps as early as June.

Although Bill C-311 is a limited fix to a horribly outdated and restrictive law, it could prove to be a significant opportunity for many smaller wineries and for the BC wine industry as a whole. Wineries will now be free to fully exploit their wine clubs and internet sales. Canadian visitors to B.C. wineries will now have the ability to have wine from their favourite wineries shipped directly to them at home, where they can share that wine with their friends and family, thereby creating a second level of loyal customers and Canadian wine industry supporters. The result, hopefully, is that the growing community of wine enthusiasts across the country will embrace our world class B.C. wines, and that this beautiful region of our country will no longer be one of Canada’s best kept secrets.

The industry experts at the Wine Law Seminar did express some concerns that the provinces, fearing a loss of revenue from their current monopoly on liquor importation, might impose a very restrictive interpretation of personal use, thereby limiting the effectiveness of Bill C-311. Mark Hicken, a B.C. lawyer specializing in liquor law, feels government concerns over lost revenue are unfounded. He points to the experience of other North American jurisdictions that have recently relaxed the regulations surrounding wine importation. He points out that the vast majority of Canadian wine drinkers purchase relatively inexpensive wines and almost all the wines are consumed within 48 hours of purchase. Hicken just does not see significant numbers of these same customers choosing to pay anywhere from $4 to $6 per bottle and waiting to have wine shipped to them. It would just represent too drastic a change in consumer behaviour.

Clearly, this should be an interesting year for the B.C. Wine Industry. Hopefully, next year at the Fourth Annual Seminar on Wine and Liquor Law in British Columbia we can focus less on the same structural problems in the industry and more on new opportunities created by real change.

Geoff McIntyre, CA, is the Food & Ag Processing Leader for MNP’s Okanagan Region. To find out what Geoff can do for you, contact him at 250.763.8919 or geoff.mcintyre@mnp.ca

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