CIC Discord Rumbles On
Written by Davet Pichette   
Tuesday, 18 May 2010 19:20

Wine importers are upset that the British Columbia Liquor Distribution Branch (BCLDB) gives “cellared-in- Canada” wines, which are made from 100% foreign grape juice, what they say is preferential treatment over equivalent-grade imported wines.

Critics have eliminated some of the advantages of cellared-in-Canada (CIC) wines, but they remain angry about the controversial entry level products.

“Cellared-in-Canada wines are at a huge price advantage because they’re  distributed as a domestic wine,” said Bacchus Group Inc. principal Jim Marion.

He said BCLDB regulations allow Mark AnthonyGroup, Constellation Brands Inc. (NYSE:STZ) subsidiary Vincor Canada  and Andrew Peller Ltd.(TSX:ADW.b) to warehouse their CIC wines at their  facilities. Imported wines  must all go through what  Marion calls his “forced distribution network,” which involves storing wine at a bonded warehouse such as Containerworld Forwarding Services Inc. facility. 

“Cellared-in-Canada wines can avoid Containerworld,”  he said.  Marion sells the products  from Containerworld to the  BCLDB, which either draws  on that supply for its stores or  resells the product to private wine stores.  Marion said CIC producers  can avoid paperwork by shipping directly to stores. 

“This disparity gets  people drinking bad wine,”  said Marquis Wine Cellars owner John Clerides.  Clerides said the dollar or  two in cost savings that CIC  wine producers reap per bottle  is significant given that  the wines cost approximately  $10 per bottle.  “If someone only has a  budget for a $10 wine, they’re  forced to drink that [cellared-in-  Canada] stuff,” Clerides  said. “If the rules were different,  they could afford a much  better import wine for $10.”

CIC critics succeeded in  getting Vincor Canada to  stop using foreign juice in its  Jackson Triggs Esprit brand,  which also bore the Olympic  rings and the Vancouver 2010  Games’ Inukshuk logo.  They then got the BCLDB  to remove all cellared-in-  Canada wines from the B.C.  section of liquor stores. 

But Andrew Peller COO  Anthony Bristow  critics are now going too far.  Unlike Mark Anthony  Group, for example, Andrew  Peller stores its  CIC wine  at Containerworld because  Bristow believes it’s more  affordable than leasing  other Vancouver warehouse  space. 

He added that Canada  has a more level playing field for imported wine than  any other wine-producing  country. That’s why 56% of  the dollars spent on wine in  BCLDB’s stores last year were  for imported products.  He said only 2% of his  sales are exports because  protectionist practices of  other countries give their  producers huge advantages. 

Bristow pointed to two  examples of cheap foreign  wines that disguise their  grape-juice origins.  “If you go into a liquor  store and buy a bottle of  Barefoot Cellars  you’ll see something  that says, ‘For Canada only,’ Bristow said. 

“It says California on the  label. If it was produced and  sold in California, it would  have to be 100% California  juice. But if it’s a product for  sale in Canada, that juice can  be mixed with less-costly  ingredients and be sold with  75% California wine.” 

In order for a producer  to call a wine a product of  Canada, it must have 100%  Canadian juice.  Federal regulations allow  foreign wines to be labelled  as a product of a country or a  region where a minimum of  75% of the juice is sourced. 

Bristow then picked up a  bottle of Kressman-branded  wine that was in his office.  It’s commonly found in  the French section at liquor  stores. 

The label notes that the  wine is a product of France,  but Bristow pointed out that  the label also says it’s a “wine  of the E.U.”  He said that means as  much as 25% of the wine’s  juice could come from less prestigious  winemaking  countries in the E.U.  Added Bristow: “Cellared-in-  Canada products use local  labour, local everything. They  can have incredible value to  the province and the country.  A KPMG study found that  Cellared-in-Canada wines  have about 12 times the value  of an import when it comes  to the economic value to the  country.”