Cellared in Canada: changes in the stores and labels, but no help for Ontario growers

Note: I was originally hoping to post this article on Friday, but an overly busy schedule and a forgotten note pad with essential quotes are causing its publication to coincide with the beginning of the second Regional Wine Week, championed by Drinklocalwine.com. At first, I was disappointed about this coincidence, as I was planning to start with reviews of Quebec wines. But in the end, it seems more and more appropriate to me, as the whole issue of Cellared in Canada is central to what it means to drink local wine. Posts about Quebec and Ontario wines will follow this week.

Sheep mowing rows of 100% Ontario grapes for VQA wines at Tawse Winery, in Vineland, in the Niagara Peninsula

Sheep mowing rows of biodynamic, 100% Ontario grapes for VQA wines at Tawse Winery, in Vineland, in the Niagara Peninsula

Things are moving quickly to change the labelling and the shelving of Cellared in Canada wines, which had been generating growing controversy over the last few weeks in Ontario and British Columbia. Though this may be good news or fans of VQA wines, there seems to be very little chance that this will help resolve the grape glut that will mostly result in some 8,000 (maybe even 10,000) tons of Ontario wine grapes to be dropped to the ground by their growers.

Last week, Vincor and Peller moved to stem the growing turmoil surrounding Cellared in Canada wines, these mostly-foreign blends that have been insistently sold by their bottlers as Canadian products. Since then, things have kept on moving quickly. According to a Canadian Press article, British Columbia’s Agriculture minister, Steve Thompson, stated that CiC wines were to be moved out of the BC wine section of BC Liquor Distribution Branch store (where they had no business in the first place). The particulars of the repositioning are being left to the BCLDB, however.

The Ontario Wine Council launched a consultation process to discuss relabelling and rebranding of the Cellared in Canada wines, a review that should be completed by the end of the year. The Wine Council sent out a letter to “elite opinion leaders”, to get their feelings on how the blended wines should be sold and labelled. The letter states:

The Wine Council has formed the Industry Working Group on Label Clarity to develop industry-led improvements to the labeling of blended wines.

Our Board gave this committee a strict timeline for response - it has been mandated to report back by December 31, 2009 in order to ensure attention to this important review and to demonstrate that  we are serious about implementing improvements on a timely basis.  Neverthelessthe process will be comprehensive with a thorough examination of potential changes. Among the elements to be reviewed will be:

  • Wording on labels including use of CIC
  • In store signage and shelving – both at LCBO and WRS
  • Look alike labels/Look alike logos
  • Logo for CIC brands
  • Font size/typeface issues and location on labels
  • Measuring consumer reaction to demonstrate that clarity is present/has improved

Jancis Robinson, who did so much to put the issue to the fore, is among the elite opinion makers that the Wine Council has asked to take part in this consultation.

The National Vintners’ Association is also involved in the process, indicated Bruce Walker, Vincor’s Executive Vice President for Government Relations, in an interview with The Wine Case. ”It is our intention to resolve this at a national level”, he stated, confirming that the process exceeds the boundaries of BC, where Vincor and Peller made their first announcements last week.

This national perspective has a lot to do with labelling, as bottlers need to comply with Federal labelling standards, Mr Walker continued, stating that the question at hand for the makers of Cellared in Canada wines is: “What can we include beyonde the bare minimum of mandatory labelling?”. VQA products, he pointed out, correspond to the standards for “Product of Canada”, a category that requires virtually 100% of the contents of a particular product to be from Canada: 100% Canadian grapes will do the trick. As for “Cellared in Canada, made from a blend of foreign and domestic grapes”, Walker states that the wines are compliant with federal decisions regarding labelling that go back to 1996.

Indeed, despite frequent complaints regarding the small print and the minimal, back-label-only information about the origin of the contents, it is true that CiC wines are compliant with the “bare minimum” requirements of labelling. But in the same way that complying with the bare minimum of nutritional requirements in the food industry hardly creates health food, can we say that current wine labelling and shelving standards are enough to make things truly clear for and beneficial to consumers? Vincor and Peller are looking to “improve clarity”, but the final results of this operation “will have to be seen”, adds Walker.

Others are more enthusiastic about the fact that things are moving ahead: “We agree that more transparency in labeling would be incredibly beneficial, as the confusion surrounding the “Cellared in Canada” issue hurts all of us in the local wine industry!”, Mission Hill winery’ director of public relations, Lori Pike, wrote in an e-mail to The Wine Case. (An interview request with Andrew Peller has remained unanswered so far.)

Mission Hill, or more precisely, its parent company, the Mark Anthony Group, has indeed gone to more pains than many other Canadian bottlers to make the distinction between its VQA wines and Cellared in Canada wines. Mission Hill, Ms Pike points out, is 100% VQA, while CiC wines are produced by a sister company, Artisan Wines. Also, she stated:

Artisan has taken an industry leadership position on the Cellared in Canada issue.  They do make some other brands with domestic and imported grapes, however they are one of the very few (only CIC wine?) that states quite clearly on the front and back labels the grape origin, with their Wild Horse Canyon wine.  It is comprised of grapes sourced from British Columbia, Washington and California, which they have termed a “west coast appellation”.  The winemaker makes the wines with a different percentage of grapes from each of these regions every year depending on the variability of grape quality and flavour each season so that she has consistency from vintage to vintage.

Whether or not an artificially created “appellation” aimed at “consistency” is a good thing for the wine world is a question in itself, but it must be said that in terms of branding, Wild Horse Canyon wines have the advantage of avoiding confusion created in other brands. Jackson-Triggs Cellared in Canada wines, for instant, sports a label design that is incredibly close to that of VQA wines (same typeface and design, except for the color), and the grapes’ country origin is not specified.

J-T Cellared in Canada labels differ only in color with those of their VQA wines

J-T Cellared in Canada label design differs only in color with those of their VQA wines

Vincor has certainly become conscious of the branding problem with Jackson-Triggs caused by the cohabitation of CiC and VQA wines within the same company. “J-T Cellared in Canada labels should go”, stated Bruce Walker. “We’ll see a change in the not too distant future”.

A planned change

The reason Vincor is able to start moving quickly is because the process of redefining Cellared in Canada actually “started 3 or 4 months ago”, when a Cellared in Canada subcommittee was created, explains Vincor’s executive vice-president. This is what allowed Vincor and Peller to come to the Vancouver Sun editorial meeting of October 1 with mock-ups for new label and a possible category name change (“International Canadian Blend”).

The fact that the industry was already at work also largely explains why the Ontario Wine Council consultation has been started so quickly after Peller and Vincor first came forward, and why the process deadlines are so short. This “high priority” process is to be completed by the end of December, with the consultation phase concluding by the end of November. Implementation will begin in the New Year, with a gradual phasing out of old labels. “At Vincor, we’ve stopped reordering labels” for the current CiC labels, says Bruce Walker, pointing out that the timelines for completing the change will vary, according to inventories and sales of the various products involved. Shelving will likely change more quickly than labelling, because of these production constraints.

In the case of British Columbia, where the Olympics have been presented as a deadline for clearing up the confusion surrounding Canadian and non-Canadian wines, as thousands and thousands of international visitors get ready to travel to the province, it is not clear that the labelling can be changed in time for the big event. At least, the Olympic-label wine Esprit, originally launched as a Cellared in Canada product, has been bottled with 100% VQA wine since July 1st. That way, the Canadian Olympic Wine, part of Vincor’s sponsorship of Vancouver 2010, is now being made with 100% Canadian grapes.

Ontario’s growing pains

While things are looking up in the labelling department, the change will do nothing to solve growers’ problems, for those who did not have a contract with a winery ahead of the 2009 harvest.

For Vincor, the current grape glut is due to “speculative growers” who decided to grow grapes without a contract in hand. Clearly, they are not in Vincor’s plans. “Can we buy all the grapes that don’t have a home? We can only buy what we can sell. So that can’t happen in the year we’re in”, says Mr Walker, who even went as far as saying that the Ontario governement “encouraged bad behavior” by bailing out growers who were stuck with 4,000 tons of unsold grapes last year.

Asked if growing purchases of foreign grapes by bottlers of Cellared in Canada products could be at least partly responsible, he insisted that “we have not been increasing our foreign content” in those wines, and that a lot of the CiC wines sold in Ontario by Vincor contain significantly more than the 30% minimum required by law. In the case of BC, Vincor CiC wines always hold some Canadian content, even though there is no minimum content: Mr Walker was unable to specify amounts for any of the BC bottlings, however.

The executive vice-president of the Constellation subsidiary went on to give a spirited defense of Vincor’s role in promoting Ontario wines and bringing them to market. A defense that also gives an idea of the weight the company carries in the Ontario industry: “We buy the most grapes in Ontario, and we are the largest producer of VQA wines in Ontario. We work on a long-term basis with 85 growers, and we buy a quarter of the total Ontario crop: two thirds for CiC, and one third for VQA.”

He also stated figures according to which a 10$ bottle of Cellared in Canada wine brings 6.67$ in revenue to the local wine industry, while a foreign bottle only brings in 72 cents. Half the crop of Ontario wine grapes goes into Cellared in Canada.

For Mr Walker, another factor that makes buying more grapes difficult is the presence of a marketing board for Ontario grapes. The price paid for the grapes at harvest is a predetermined amount negociated between Grape Growers of Ontario and the Wine Council of Ontario (see here for details). That price has to be paid for any and all grapes, regardless of quality. Buying an oversupply of grapes at a lower price would be illegal, contrary to what has been going on in places like California.

Clearly, Vincor would like the marketing board and uniform pricing go, and be replaced by a “market driven pricing system”. Grape Growers of Ontario have proposed a two-tier pricing system (a higher price for VQA, a lower price for lower-quality destined to Cellared in Canada wines), but have been turned down so far by the Wine Council of Ontario. Bruce Walker doesn’t see any significant change happening before the next harvest, as long-planned purchases are already completed for 2009.

While a system that would encourage better price for better-quality grapes, and allow a more flexible supply management, do seem desirable in theory, Walker himself recognizes that a transition from controlled price to market-driven pricing “is difficult for suppliers”. With the weight of big players like Vincor and Peller, it’s hard to see how growers could achieve a strong negotiation position in an unregulated grape market.

Question marks

Though the lack of pricing flexibility in Ontario does seem like a significant issue, some questions remain. It is a little difficult to see how a 5 or 10% increase in Canadian content in the CiC wines, even at current prices, could result in a drastic increase in the price of those bottles. Certainly, it seems outlandish to claim, as Ontario Wine Council president Hillary Dawson apparently did, that the price of Cellared in Canada wines could shoot up to 18$ or more if the Ontario grape content was increased. There are, after all, VQA wines sold in Ontario for as low as 11 or 12$ at the LCBO – including Vincor’s OPEN brand.

Also, if Vincor is putting in “much more” than 30% Ontario grapes in CiC wines, why would it worry about seeing the minimal requirements rise?

Whatever the end result of the current efforts being undertaken by producers of Cellared in Canada wines, the current situation has clearly got to stop.  As Calgary blogger CDUB put it, the category, as it is now, challenges many areas of common sense that apply for a number of other products:

If a shirt is made in China but I’m wearing it, can the tag say “worn in Canada” and be offered for sale in a local-products store? Would it be allowed to dominate prime shelf space?

As we are in the middle of the LCBO’s Go Local campaign, where VQA wines are promoted… side by side with big signage for Cellared in Canada wines, that is indeed a very good question.

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5 Comments

  1. Posted October 12, 2009 at 1:14 pm | Permalink

    Excellent post, but try not to be distracted by any discussions about Ontario grape growers and Vincor’s pricing models. None of that has anything to do with the issue of labelling.
    Ontario VQA producers have developed a sophisticated place name or appellation system that clearly benefits producers residing within its boundaries and following the rules governing its use on labels. Guess who that includes: all Vincor VQA properties. Now remember the earlier quote: “We buy the most grapes in Ontario, and we are the largest producer of VQA wines in Ontario. We work on a long-term basis with 85 growers, and we buy a quarter of the total Ontario crop: two thirds for CiC, and one third for VQA.” Doesn’t that mean they have the most to gain by confusing consumers with labels and words that make one think the product is the same as the Canadian grown and produced wine we have been reviewing for decades?
    Wine has been the number one leader in labelling its source, appellation and or origin placing the important and mostly regulated information on the front label for decades. Long before the 100-mile diet, serious wine producers have discussed terroir and place as being at the centre of their work. Anyone in the wine business who tries to debase this notion, or take advantage of it should be subject to fines and penalties. Words like Canada and appellation should be more highly protected than VQA and they should apply to every producer with a license to make wine in the country.
    As for Artisan Wines and Estates and Ms. Pikes statement “We agree that more transparency in labelling would be incredibly beneficial, as the confusion surrounding the “Cellared in Canada” issue hurts all of us in the local wine industry!” Mark Anthony Brands gets no kudos from this writer for truthfully creating a fake “West Coast” appellation on its label. I see that as no better than using the term Cellared in Canada. Every one of Mark Anthony import suppliers is deeply committed to the notion of appellation, as is Mission Hill, so why debase the word.
    By the way the Wild Horse Canyon brand released a VQA chardonnay label this year under the same look-a-like label, so, “Wild Horse Canyon wines have the advantage of avoiding confusion created in other brands” is not a statement that holds any weight with me.
    Truth in labelling should be closely followed ethics and standards that are becoming of an estate wine producer, otherwise why should we believe anything you say about any of your wines.

  2. winecase
    Posted October 12, 2009 at 6:36 pm | Permalink

    Thanks for the post-like comment. I realize the labelling and the grape-buying are two different issues, but they both come into play in Cellared in Canada wines. As your own take on Bruce Walker’s quote suggests, the fact that Vincor does everything from Le Clos Jordanne’s single vineyards to the J-T Proprietors Series does nothing to simplify either issue.
    As for Wild Horse Canyon, I am surprised – or I should probably say appalled – to find out that the label is used for VQA as well. Difficult to see such things from the other end of the country, so thanks for that. If so, they are just as guilty about blurring the distinction between the two categories. I’ll have to follow up on that. *sigh*
    You’re absolutely right that there should be much, much higher standards in labelling. The ongoing process launched in BC and Ontario should be followed closely, to make sure that it doesn’t lead to a different situation that would be just as confusing.

  3. Rick VanSickle
    Posted October 12, 2009 at 7:25 pm | Permalink

    Anthony is correct. Labelling is only one small part of the problem. Once CIC (or whatever it will be called in the future) is refined, relabelled and the intense media focus no longer pointed its way attention will turn to the real crisis in the industry — at least in Ontario. The bickering between grape growers and the wine council and where the ridiculous notion of a wine marketing board fits into the equation. As it stands, grape growers (remember, 70% of vineyards in Ontario are owned by growers, 30% by wineries — the opposite of which is true in B.C.) want to be rewarded for growing grapes at the low end of the quality scale because they aren’t adequately paid at the high end unless you have a special deal with a winery. As a bargaining unit, they are comfortable at the low end of the Brix scale because it pays the best according to antiquated conditions set out by an antiquated marketing board. All that and a government-run monopoly liquor board that excludes most Ontario wineries from its stores, doesn’t react well to criticism, and doesn’t really get what all the fuss over CIC is all about. Political will, public pressure, new leadership at the very organizations that have thrown up their hands is surrender are the only basis of hope for all of us who love this industry and want to see it move forward.

  4. Posted October 12, 2009 at 7:54 pm | Permalink

    Maybe we should form a Canadian Wine Writers Marketing Board. I wouldn’t mind some guaranteed income. Seriously, the day BC abolished the grape marketing board, grape quality increased over night. Wine quality jumped exponentially and the price paid for those grapes is much higher than anyone could have imagined. Regulating the market price is the single biggest reason Ontario grape growers and ultimately wineries forced to buy the stuff are facing the challenges they are. There is no incentive to get better. But as I said earlier this has nothing to do with truth in labeling. Let’s not get distracted. It might be useful to discuss words that should not appear on a bottle of wine that contains foreign and domestic juice processed in Canada. I would not vote for any words that mislead the consumer or draw upon label terms reserved for estate bottle wines such as Cellared or even Made in Canada. Product of Canada should be out to. I would be happy with International Wine Blend processed at a Canadian winery.

  5. winecase
    Posted October 12, 2009 at 10:13 pm | Permalink

    The ownership of vineyards in both provinces is an important question. It explains a lot about the dynamics that have built up in Ontario, in particular.

    The system clearly needs to change, one way or the other. If the bickering doesn’t stop, I think decisions will be made at another level. Decisions that will make no one happy.

    When I was in Long Island, last May, for a gathering of bloggers called Tastecamp, one of the producers we met told us how much of a transition it was to have gone from being a grower to being a winemaker. In one case, he explained, you’re looking to produce as much as you can, and in the second, you’re looking to produce the best wine you can. It’s difficult to take that step if you don’t see your grapes from the vine to the bottle. I’m wondering if part of the issue doesn’t have to do with that type of dynamics.

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  1. By Conversations with winemakers on Twitter on December 31, 2009 at 12:16 am

    [...] debated the virtues and vices of wine monopolies, the importance (or lack thereof) of the whole Cellared in Canada debate and much more with the likes of Shea Coulson, Anthony Gismondi, Bill Zacharkiw, Rod [...]

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