Postcard from a Troubled Wine Region

Posted by | Posted in Wine Where? | Posted on 03-21-2011

Greetings from Vancouver, British Columbia, Canada, judged for the fifth consecutive year by The Economist to be the world’s most livable city. What makes Vancouver so great? Lots of things might, but for the purposes of this blog I’ll argue its vicinity to one of Canada’s two winemaking regions.

The up-and-coming Okanagan region is a mere few hours’ drive from the city (just north of Washington State and the Canada/US border), where 190 wineries are producing fair-to-very-good-quality wines from mostly classic varieties. The region lacks a signature regional wine, but BC icewine is recognized as world class, and some Chardonnays have won international attention.

So, it’s a vibrant and thriving wine community…or is it? Not so much, according to a buzz-killing new research study conducted through Simon Fraser University and Genome Canada. Political scientist Andy Hira, Ph.D., conducted policy-motivated research on the Okanagan wine industry, and his report emerged with a laundry list of critical industry troubles.

The takeaway, both from the report and beyond, is that this still-nascent industry has grown too large too quickly (1000% increase in wineries in 20 years), lacks cohesion, coordination, innovation, and is meeting the limits of a market that has been limited by the regulatory protections that were created to help it grow.

Trade-and-export barriers and protections don’t help, either. Prohibition-era legislation barring interprovincial alcohol sales disable BC sales within Canada; and BC government protections currently contravene NAFTA and GATT in BC wine’s favor (a situation that can’t continue indefinitely). Plus, by creating an excessive dependence on the Vancouver market (and by extension its tourists), the BC wine’s export market is very weak.

Vineyards overlooking lake Okanagan in British Columbia Canada. Uploaded to flickr by Kelly Nigro.

Keep in mind that the global economic downturn was only mildly felt in Canada, which accounts for relatively few bankruptcies so far in a region where land purchase cost has risen 4500% in two decades. A spike in interest rates will certainly devastate newer and smaller operations. And a generally weakened economy would, again, hurt both tourism and Vancouver’s discretionary buying power since these markets represent the government’s marketing strategy.

Yet even amid all these warning bells, a sense of complacency pervades the BC industry, Hira recently told me. He describes a community largely ignoring a coming crisis, and contends that economic fallout is indeed beginning, pointing to the fact that up to 30 wine-related properties are currently up for sale.

Hira’s report received widespread local news coverage, but little secondary discussion emerged. He said he was disappointed by the terse response he received from the BC Wine Institute (BCWI), a 20-year-old government creation that bills itself as “BC’s lead wine trade association” but seems to have dropped some of the balls it was likely meant to have juggled.

Sadly, the BCWI took a purely defensive tone at the report instead of using Hira’s findings to champion necessary industry changes. But hey, the publicly funded BCWI can’t be in a position to spearhead changes to, for example, the price-and-supply regulations of the government’s own liquor board, whose monopoly-like structure is another part of the wine industry’s long-term problems. Alas, no other single industry body represents the wine industry as a whole; again, the result of a community apparently too disjointed to have created one.

Hira told me he feels that only a wholesale crisis will jolt the industry into action, and he may be right. The big, established wineries won’t suffer from any shakeout; only the new and small independents will disappear. The bigger picture is that without clear strategy, innovation, and concerted commitment the region will continue churning out drinkable bottles but never manage to thrive, let alone create the standout varietals that would finally put BC on the global wine map.

And the Vancouver consumer it depends on will not, as the government bodies believe, remain loyal to the still-weak BC brand…and I know, because I’m one of the consumers. Given the choice, I’ll buy a Washington Pinot Noir or a California Syrah because, even though their prices have been obscenely inflated by my provincial government, they’re better wines.

Hira told me that he plans to meet with some wineries and at least one grape grower’s organization next month, and I’m eager to follow news of how his report will be addressed as time goes on. This is an interesting story for a BC resident, a student of wine, and someone with a nose for bad wine news…and I’ll be following up.

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