Open Letter to Premier Wynne and Ed Clark
Re: Today's Announcement of Wine in Grocery Stores
Dear Premier Wynne and Mr. Clark;
I wanted to follow up on our previous discussions around the need to bring our beverage alcohol retail rules out of the 1970s and into the twenty-first century. As you know, I feel strongly that we should start treating Ontarians as the adults they are by making it easier for them to purchase beverage alcohol where they shop. I also believe that more points of sale will mean greater market access for Ontario grown products including VQA wine, craft beer and spirits.
Thank you, Mr. Clark, for the courtesy of the briefings you did for me in your capacity as Chair of the Premier's Advisory Council on Government Assets. I enjoyed our meetings and appreciated the opportunity to give my advice as an MPP whose riding is home to so many wineries, two distilleries and, soon, several craft brewers in addition to a great number of farmers who supply the beverage alcohol sector.
As you may recall, I had entered this debate previously on a number of occasions: as Ontario PC Leader when I wrote my 2013 White Paper "A New Deal for the Public Sector" that called for open beverage alcohol sales; as a Cabinet Minister and MPP with legislation to create VQA Wine Stores across Ontario and as the Consumer Minister who authorized more than one hundred Agency Stores that allowed for individual privately-owned businesses like convenience stores to sell spirits, wine and beer in rural and northern communities.
Let me start by saying I am pleased to see the Government's commitment to more open sales of wine and beer. Today's announcement that 70 grocery stores will be able to sell wine by the end of the year and an additional 90 stores will sell wine by 2019 is a welcomed start. You had previously announced that 150 grocery stores will be able to sell beer by 2017. I commend you for opening up new channels that will be more convenient to Ontarians and will give greater exposure to VQA wine and craft beer than existing channels do.
However, I want to strongly encourage you to go much further. Your announcement means that only one in twenty food stores will be licensed for beer and wine. For example, only one beer sales license has been allocated in the entire Niagara Peninsula - a solitary Food Basics in Niagara Falls. We can do better.
As an MPP with so many wineries and vineyards in my riding, here's what I recommend:
The 150 grocery stores that are now licensed to sell beer should also be able to sell wine immediately. I know you want to auction off new licenses to sell wine over the next four years. However, selling the licenses to the highest bidder over a four year period will further delay the option to buy Ontario wine with groceries. Furthermore, a separate auction for the license to sell wine may result in a strange world where some grocery stores have wine, some have beer, some have both wine and beer and the vast majority of grocery stores have neither.
It is confusing. It is unfair. And it looks like the kind of retail system only a government could create. A far better approach - that I'm confident consumers would prefer - is to simply place wine on the shelves next to the beer in already licensed grocery stores.
Next, I would skip over the government's commitment to allow beer in 450 grocery stores eventually and instead immediately extend the option to sell beer and wine to any grocery store that has passed basic licensing requirements.
If a goal is to create jobs and grow the economy, Ontario VQA wines - those containing 100 percent domestic grapes - should have prominence on the shelves with at least the same deal as Ontario craft brewers. Media reports indicate this is a theme you intend to follow and I want to encourage it.
The Ontario wine industry's share of the LCBO's wine volume is just 20 per cent. A number that is unchanged in the past 25 years, despite the fact that the number of Ontario wineries has grown more than 20-fold in the same time frame. Given that the contribution from the wine industry to Ontario's economy is $3.3 billion with enormous growth potential, I believe this government is obligated to do more to support and promote growth in Ontario's wine industry.
The economic benefits are clear. From the vineyard to the table, including taxes, one litre of VQA wine generates more than $85 in added value over and above foreign wines.
There are also significant upfront investments. Grapes need to be planted years in advance. As the saying goes, a good wine takes time, up to nine to 10 years for a good red vintage. The sooner Ontario wineries know the retail landscape, the sooner they can invest in the local economy.
As we seem to agree, once available at grocery stores, VQA wines will be exposed to new markets, and newly converted VQA wine fans become future tourists as well, adding to the significant investment the industry already brings to hospitality and tourism in Niagara and across Ontario.
Finally, the Government needs to go a step further than offering wine in grocery stores. The Wine Council of Ontario has called for the creation of independent wine retail stores to bring VQA wine closer to customers. The government should listen. While breweries and distilleries are able to open in busy urban areas such as downtown Toronto and retail their products, wineries (except the handful of wineries with licenses grandfathered before NAFTA) are restricted to selling their product where the grapes are produced. That needs to be fixed.
Independent retail stores, specializing in wine, beer or spirits, will mean more sales of some of the great products made in our province, allow Ontario producers to grow their business and industry, and have a positive impact on our economy and job creation.
I will be further communicating with you both with what we can do to support distilleries and my proposed Microdistillers Act shortly.
To conclude, the significant capital investment and economic return of the wine industry to Ontario deserves better than the tentative steps currently at play in Ontario. I encourage you to reconsider the recently reported wine sales plan so that it more fairly aligns with the sale of beer in grocery stores. I also ask you to consider the recommendation and input from the wine industry experts at the Wine Council; develop independent wine retail stores; and support the potential for growth in the wine industry.
Sincerely,
Tim Hudak
MPP Niagara West - Glanbrook