DISTRIBUTION: POTENTIAL CHANGES AND NEW OPPORTUNITIES WINE LAW IN BC, FEB. 2013

Frank Haddad, Modernize Wine Assoc. of BC

About MWA

  Non-Profit Society Registered in BC   Board of Directors: Wineries, Restaurants, Retailers,

Lawyers, Consumers   Executive Director

  MWA advocates for a modern food and wine culture in BC. Our goal is to modernize BC’s liquor laws, regulations and policies.

BC Distribution Environment

  In Theory …   Mixed Government/Private Retail   Government Wholesale Monopoly

  $2.8 billion annual sales 2010/11   $891 million liquor “markup” revenue to Govt

BC Retail Environment

  195 Govt Liquor Stores (GLS)   672 Licensee Retail Stores (LRS) – 16% “Discount”   221 Rural Agency Stores (RAS) – 10%   12 Independent Wine Stores (IWS) – 30%   257 Onsite Manufacturer Stores (Wineries etc…)   35 Offsite Manufacturer Stores (VQA)

BC Retail Statistics

  GLS: 41.3%   LRS: 33.8%   RAS: 8.4%   Licensees: 16.5%

BC Wholesale Delivery Methods

  LDB Wholesale: Private Warehouse LDB Warehouse Licensee

  LDB Retail: Private Warehouse LDB Warehouse GLS Store Licensee

  Direct Distribution: BC Winery Licensee

BC Wholesale Delivery Chart

BC Distribution Statistics

  Overall Sales: GLS 41% - Private 59%   Overall Distribution: LDB 67% - Direct Dist. 33%

  Wholesale Dist. to Private Licensees (59%) …   From LDB Wholesale: 28%   From LDB Stores: 16%   From Direct Distribution: 56%

BC Liquor Revenue Statistics

  LDB Revenue: GLS Operations   Gross: 606M. Op. Costs: 193M. Net: 413M

(Blended Retail & Wholesale)

  LDB Revenue: Private Licensees   Gross: 556M. Op. Costs: 79M. Net: 477M

(Wholesale)

  Total $891M to Govt.

Potential Changes

  Thorny Issues ¤ Wholesale Pricing Structure & Discounts ¤ Privatization – Labour Issues ¤ Privatization – Effect on Other Private Stores ¤ “Special Deals”

  Revenue Neutrality = Critical for Govt

Potential Changes

  Discussion   Four Revenue-Neutral or Revenue-Positive Ideas

¤ Reform “Spec” System ¤ Secondary Tasting Rooms ¤ Wine at Farmers’ Markets ¤ Educational Wine Tastings

Reform “Spec” System

  Thousands of products have “Spec” listing   Are “stuck” in liquor warehouse program   Licensees must order by case, no mixed lots   No direct access to product in warehouse   No easy way to monitor inventory/find product   2 week delivery time from Richmond to Vancouver

Secondary Tasting Rooms

  Other jurisdictions permit secondary tasting rooms for wineries

  Healdsburg, CA. Walla Walla, WA. Revitalized small towns with wine tourism. Walk from winery to winery.

  Contrast with BC. Oliver, Okanagan Falls … imagine with tasting rooms.

Secondary Tasting Rooms

Wine at Farmers’ Markets

  Many jurisdictions permit wineries to sell product at farmers’ markets, few if any problems

  In BC, currently not allowed   Out of sync with growth in local interest

Educational Wine Tastings

  Current LCLB policy is that wine education events cannot be licensed at all (and thus no tasting at all) unless the school is non-profit. This means no wine tasting at a wine education course such as WSET or ISG (!!).

  Difficult to expand responsible food and wine culture in the absence of proper education.

Contact Us/Support Us

  Frank Haddad, Executive Director   Web: www.modernizewine.ca   Email: frank@modernizewine.ca

  Donate! www.modernizewine.ca   Twitter: @modernizewine   Facebook: modernizewine