Cellared in Canada: changes in the stores and labels, but no help for Ontario growers

Note: I was originally hoping to post this article on Friday, but an overly busy schedule and a forgotten note pad with essential quotes are causing its publication to coincide with the beginning of the second Regional Wine Week, championed by Drinklocalwine.com. At first, I was disappointed about this coincidence, as I was planning to start with reviews of Quebec wines. But in the end, it seems more and more appropriate to me, as the whole issue of Cellared in Canada is central to what it means to drink local wine. Posts about Quebec and Ontario wines will follow this week.

Sheep mowing rows of 100% Ontario grapes for VQA wines at Tawse Winery, in Vineland, in the Niagara Peninsula

Sheep mowing rows of biodynamic, 100% Ontario grapes for VQA wines at Tawse Winery, in Vineland, in the Niagara Peninsula

Things are moving quickly to change the labelling and the shelving of Cellared in Canada wines, which had been generating growing controversy over the last few weeks in Ontario and British Columbia. Though this may be good news or fans of VQA wines, there seems to be very little chance that this will help resolve the grape glut that will mostly result in some 8,000 (maybe even 10,000) tons of Ontario wine grapes to be dropped to the ground by their growers.

Last week, Vincor and Peller moved to stem the growing turmoil surrounding Cellared in Canada wines, these mostly-foreign blends that have been insistently sold by their bottlers as Canadian products. Since then, things have kept on moving quickly. According to a Canadian Press article, British Columbia’s Agriculture minister, Steve Thompson, stated that CiC wines were to be moved out of the BC wine section of BC Liquor Distribution Branch store (where they had no business in the first place). The particulars of the repositioning are being left to the BCLDB, however.

The Ontario Wine Council launched a consultation process to discuss relabelling and rebranding of the Cellared in Canada wines, a review that should be completed by the end of the year. The Wine Council sent out a letter to “elite opinion leaders”, to get their feelings on how the blended wines should be sold and labelled. The letter states:

The Wine Council has formed the Industry Working Group on Label Clarity to develop industry-led improvements to the labeling of blended wines.

Our Board gave this committee a strict timeline for response – it has been mandated to report back by December 31, 2009 in order to ensure attention to this important review and to demonstrate that  we are serious about implementing improvements on a timely basis.  Neverthelessthe process will be comprehensive with a thorough examination of potential changes. Among the elements to be reviewed will be:

  • Wording on labels including use of CIC
  • In store signage and shelving – both at LCBO and WRS
  • Look alike labels/Look alike logos
  • Logo for CIC brands
  • Font size/typeface issues and location on labels
  • Measuring consumer reaction to demonstrate that clarity is present/has improved

Jancis Robinson, who did so much to put the issue to the fore, is among the elite opinion makers that the Wine Council has asked to take part in this consultation.

The National Vintners’ Association is also involved in the process, indicated Bruce Walker, Vincor’s Executive Vice President for Government Relations, in an interview with The Wine Case. “It is our intention to resolve this at a national level”, he stated, confirming that the process exceeds the boundaries of BC, where Vincor and Peller made their first announcements last week.

This national perspective has a lot to do with labelling, as bottlers need to comply with Federal labelling standards, Mr Walker continued, stating that the question at hand for the makers of Cellared in Canada wines is: “What can we include beyonde the bare minimum of mandatory labelling?”. VQA products, he pointed out, correspond to the standards for “Product of Canada”, a category that requires virtually 100% of the contents of a particular product to be from Canada: 100% Canadian grapes will do the trick. As for “Cellared in Canada, made from a blend of foreign and domestic grapes”, Walker states that the wines are compliant with federal decisions regarding labelling that go back to 1996.

Indeed, despite frequent complaints regarding the small print and the minimal, back-label-only information about the origin of the contents, it is true that CiC wines are compliant with the “bare minimum” requirements of labelling. But in the same way that complying with the bare minimum of nutritional requirements in the food industry hardly creates health food, can we say that current wine labelling and shelving standards are enough to make things truly clear for and beneficial to consumers? Vincor and Peller are looking to “improve clarity”, but the final results of this operation “will have to be seen”, adds Walker.

Others are more enthusiastic about the fact that things are moving ahead: “We agree that more transparency in labeling would be incredibly beneficial, as the confusion surrounding the “Cellared in Canada” issue hurts all of us in the local wine industry!”, Mission Hill winery’ director of public relations, Lori Pike, wrote in an e-mail to The Wine Case. (An interview request with Andrew Peller has remained unanswered so far.)

Mission Hill, or more precisely, its parent company, the Mark Anthony Group, has indeed gone to more pains than many other Canadian bottlers to make the distinction between its VQA wines and Cellared in Canada wines. Mission Hill, Ms Pike points out, is 100% VQA, while CiC wines are produced by a sister company, Artisan Wines. Also, she stated:

Artisan has taken an industry leadership position on the Cellared in Canada issue.  They do make some other brands with domestic and imported grapes, however they are one of the very few (only CIC wine?) that states quite clearly on the front and back labels the grape origin, with their Wild Horse Canyon wine.  It is comprised of grapes sourced from British Columbia, Washington and California, which they have termed a “west coast appellation”.  The winemaker makes the wines with a different percentage of grapes from each of these regions every year depending on the variability of grape quality and flavour each season so that she has consistency from vintage to vintage.

Whether or not an artificially created “appellation” aimed at “consistency” is a good thing for the wine world is a question in itself, but it must be said that in terms of branding, Wild Horse Canyon wines have the advantage of avoiding confusion created in other brands. Jackson-Triggs Cellared in Canada wines, for instant, sports a label design that is incredibly close to that of VQA wines (same typeface and design, except for the color), and the grapes’ country origin is not specified.

J-T Cellared in Canada labels differ only in color with those of their VQA wines

J-T Cellared in Canada label design differs only in color with those of their VQA wines

Vincor has certainly become conscious of the branding problem with Jackson-Triggs caused by the cohabitation of CiC and VQA wines within the same company. “J-T Cellared in Canada labels should go”, stated Bruce Walker. “We’ll see a change in the not too distant future”.

A planned change

The reason Vincor is able to start moving quickly is because the process of redefining Cellared in Canada actually “started 3 or 4 months ago”, when a Cellared in Canada subcommittee was created, explains Vincor’s executive vice-president. This is what allowed Vincor and Peller to come to the Vancouver Sun editorial meeting of October 1 with mock-ups for new label and a possible category name change (“International Canadian Blend”).

The fact that the industry was already at work also largely explains why the Ontario Wine Council consultation has been started so quickly after Peller and Vincor first came forward, and why the process deadlines are so short. This “high priority” process is to be completed by the end of December, with the consultation phase concluding by the end of November. Implementation will begin in the New Year, with a gradual phasing out of old labels. “At Vincor, we’ve stopped reordering labels” for the current CiC labels, says Bruce Walker, pointing out that the timelines for completing the change will vary, according to inventories and sales of the various products involved. Shelving will likely change more quickly than labelling, because of these production constraints.

In the case of British Columbia, where the Olympics have been presented as a deadline for clearing up the confusion surrounding Canadian and non-Canadian wines, as thousands and thousands of international visitors get ready to travel to the province, it is not clear that the labelling can be changed in time for the big event. At least, the Olympic-label wine Esprit, originally launched as a Cellared in Canada product, has been bottled with 100% VQA wine since July 1st. That way, the Canadian Olympic Wine, part of Vincor’s sponsorship of Vancouver 2010, is now being made with 100% Canadian grapes.

Ontario’s growing pains

While things are looking up in the labelling department, the change will do nothing to solve growers’ problems, for those who did not have a contract with a winery ahead of the 2009 harvest.

For Vincor, the current grape glut is due to “speculative growers” who decided to grow grapes without a contract in hand. Clearly, they are not in Vincor’s plans. “Can we buy all the grapes that don’t have a home? We can only buy what we can sell. So that can’t happen in the year we’re in”, says Mr Walker, who even went as far as saying that the Ontario governement “encouraged bad behavior” by bailing out growers who were stuck with 4,000 tons of unsold grapes last year.

Asked if growing purchases of foreign grapes by bottlers of Cellared in Canada products could be at least partly responsible, he insisted that “we have not been increasing our foreign content” in those wines, and that a lot of the CiC wines sold in Ontario by Vincor contain significantly more than the 30% minimum required by law. In the case of BC, Vincor CiC wines always hold some Canadian content, even though there is no minimum content: Mr Walker was unable to specify amounts for any of the BC bottlings, however.

The executive vice-president of the Constellation subsidiary went on to give a spirited defense of Vincor’s role in promoting Ontario wines and bringing them to market. A defense that also gives an idea of the weight the company carries in the Ontario industry: “We buy the most grapes in Ontario, and we are the largest producer of VQA wines in Ontario. We work on a long-term basis with 85 growers, and we buy a quarter of the total Ontario crop: two thirds for CiC, and one third for VQA.”

He also stated figures according to which a 10$ bottle of Cellared in Canada wine brings 6.67$ in revenue to the local wine industry, while a foreign bottle only brings in 72 cents. Half the crop of Ontario wine grapes goes into Cellared in Canada.

For Mr Walker, another factor that makes buying more grapes difficult is the presence of a marketing board for Ontario grapes. The price paid for the grapes at harvest is a predetermined amount negociated between Grape Growers of Ontario and the Wine Council of Ontario (see here for details). That price has to be paid for any and all grapes, regardless of quality. Buying an oversupply of grapes at a lower price would be illegal, contrary to what has been going on in places like California.

Clearly, Vincor would like the marketing board and uniform pricing go, and be replaced by a “market driven pricing system”. Grape Growers of Ontario have proposed a two-tier pricing system (a higher price for VQA, a lower price for lower-quality destined to Cellared in Canada wines), but have been turned down so far by the Wine Council of Ontario. Bruce Walker doesn’t see any significant change happening before the next harvest, as long-planned purchases are already completed for 2009.

While a system that would encourage better price for better-quality grapes, and allow a more flexible supply management, do seem desirable in theory, Walker himself recognizes that a transition from controlled price to market-driven pricing “is difficult for suppliers”. With the weight of big players like Vincor and Peller, it’s hard to see how growers could achieve a strong negotiation position in an unregulated grape market.

Question marks

Though the lack of pricing flexibility in Ontario does seem like a significant issue, some questions remain. It is a little difficult to see how a 5 or 10% increase in Canadian content in the CiC wines, even at current prices, could result in a drastic increase in the price of those bottles. Certainly, it seems outlandish to claim, as Ontario Wine Council president Hillary Dawson apparently did, that the price of Cellared in Canada wines could shoot up to 18$ or more if the Ontario grape content was increased. There are, after all, VQA wines sold in Ontario for as low as 11 or 12$ at the LCBO – including Vincor’s OPEN brand.

Also, if Vincor is putting in “much more” than 30% Ontario grapes in CiC wines, why would it worry about seeing the minimal requirements rise?

Whatever the end result of the current efforts being undertaken by producers of Cellared in Canada wines, the current situation has clearly got to stop.  As Calgary blogger CDUB put it, the category, as it is now, challenges many areas of common sense that apply for a number of other products:

If a shirt is made in China but I’m wearing it, can the tag say “worn in Canada” and be offered for sale in a local-products store? Would it be allowed to dominate prime shelf space?

As we are in the middle of the LCBO’s Go Local campaign, where VQA wines are promoted… side by side with big signage for Cellared in Canada wines, that is indeed a very good question.