As local wineries continue to struggle during the COVID-19 pandemic, the future won’t offer much relief for the industry if changes aren’t made as soon as possible.
“We’re facing some really significant challenges with the pandemic with sales at the wineries,” said Winery and Grower Alliance of Ontario president and chief executive officer Aaron Dobbin.
“We appreciate people coming out, but obviously through social distancing and other safety measures the number of people is lower than in previous summers. Export sales have just disappeared, our sales through restaurants are way, way down. It’s very challenging times for the wine industry.
“The last we needed was the WTO (World Trade Organization) complaint from Australia,” he said, referring to an agreement between the Canadian and Australian governments that would end a federal excise duty exemption on wine made of 100 per cent Canadian-grown fruit effective June 30, 2022.
He said the Winery and Grower Alliance agreed with the settlement, only because it was the “least bad of all the options.”
But the excise duty — adding 50 cents to a 750-ml bottle on top of other taxes wineries have described as “unfair,” such as a 6.1 per cent provincial tax on wine sold in private retail shops — will have a devastating impact on vintners as well as vineyards, said Grape Growers of Ontario chief executive officer Debbie Zimmerman.
“The loss of this program is going to be huge because many of these wineries have never known anything but this exemption,” Zimmerman said. “We have to come up with a replacement program first and foremost because this measure was something that we lost as part of the negotiations with Australia.
“We need change for the future. We need to work with our partners to make that change happen and we’re promoting opportunities for that change for the next few years,” she added.
Niagara Centre MP Vance Badawey said he and other Niagara members of Parliament have been working to address concerns.
“We’re 100 per cent behind the growers as well as the wineries with respect to resolving this,” Badawey said, while stressing the importance of the industry to Niagara and Canada.
He said he brought a recommendation forward to the Liberal cabinet that the excise duty exemption be replaced with an international trade compliant equivalent.
Badawey said federal ministers “recognize the concerns of the industry, and they’re working with us on a regular basis to come to a resolve to this.”
St. Catharines MP Chris Bittle said there are still several months before the exemption ends, “but I think everyone would like to see something sooner rather than later.”
In response to news about the WTO challenge, St. Catharines Mayor Walter Sendzik has taken to social media encouraging residents to boycott Australian wine when they visit their local LCBO store.
“So, Australia is one the largest exporters of wine to Canada — dominates shelves and then wins a trade battle that drives up costs of local wines,” Sendzik posted on Twitter earlier this week. “I say boycott Australian wines and the feds need to step up to support Niagara wineries in other ways.”
Bittle, however, said the focus should be on buying locally produced wine.
“I don’t know if I would go as far as to say boycott, because there are people who have their favourite wines. But I think people should have in mind that when you buy a bottle of Canadian wine you’re supporting Canadian jobs and Canadian farmers,” he said.
“Niagara residents may think back to what the wine industry used to be. It’s come a long way and there are so many award-winning wines in Ontario.”
Zimmerman said grape growers are also facing competition for their produce within their own industry.
She said international domestic blend (IDB) wines that contain 25 per cent locally produced juice and 75 per cent imported is placed on the shelves of LCBO stores, right beside wines that are 100 per cent Ontario wines.
For growers who are already worrying about much of their crops going to waste, watching tanker trucks filled with imported grape juice bound for Ontario wineries “is so disturbing,” Zimmerman said.
“Not only are we being challenged by Australia, the other challenge is in our own market,” she said. “We’re being challenged by these products — the blended products and imports on the shelves that outpace all of Ontario. We’re at 11 per cent. That’s the market share we have for Ontario VQAO right now. We need to change that.”
Dobbin, however, said those locally produced international blend wines give vintners a product that allows them to compete with imported wines.
“Depending on the year about one-third of the Ontario grape crop goes into international domestic blend wine,” he said.
“That IDB wine allows us to compete … with the cheapest heavily subsidized imports that are sold at under $10. That allows us to compete against imported wines at that price point … Those wines are an important component of a strong and healthy wine industry.”
Although the majority of juice used in IDB wines is typically imported, Dobbin said it still allows wineries to use as much as 30,000 tonnes of grapes.
“Those wines eat up a lot of Ontario grapes,” he said.
Niagara West MPP Sam Oosterhoff has been fighting at Queen’s Park to make it easier for wineries to sell their products during the pandemic, such as allowing restaurants to sell wine along with takeout orders as well as promoting Ontario wine sales at LCBO stores.
He’s hoping to address concerns that wineries are facing regarding taxes on the products.
“There’s no two ways about it, Canada is a high-cost jurisdiction and the reality is we have to try to make sure there’s margin on those bottles they’re producing, because you can produce a lot of wine but if you’re losing money on every single bottle then it doesn’t make a difference at the end of the day,” he said.
“I’m trying to work with the Ministry of Finance to see where some taxation issues can be resolved, recognizing, of course, that governments of all stripes are quite strapped for cash right now.”
Source : Grape Growers of Ontario