Bringing wine & hospitality back to life in BC
The liquor policy changes introduced so far in British Columbia are welcome but insufficient to provide a solid foundation for recovery.
In the face of the Covid calamity for the food and wine industries in British Columbia, a number of sensible, flexible and fast policy reforms (some labelled “temporary”) have been introduced by the Ministry of Attorney General Liquor & Cannabis Regulation Branch (LCRB). They are to be applauded.
Unfortunately, the curtailments of these sectors have not only skewed trade channels for wine sales (virtually no on-premise/dining, but sky-high volumes through off-premise/retail), they have also disrupted the livelihoods of people in many related businesses. Spare a thought for on-premise focused wine agencies - whether representing BC or international producers - for event planners, wine tour operators, and private wine club/hospitality coordinators. Spare a thought too for the loyal wine consumer, who has been opening her wallet to purchase at retail outlets or have BC wine directly delivered (apparently with great enthusiasm). But how many visits or special events in wine country have been postponed or cancelled in 2020? How many wine experiences will be foregone, perhaps for a year, perhaps for good?
The plight of restaurants and other dining establishments is well known by now. Revised policies including allowing BC restaurants to sell wine with take-out orders, and expand their patios (until October 31, 2020) may just mean the difference between survival and failure. However, will they provide a sufficient foundation for recovery in a 50-percent-capacity world?
The plight of BC wineries is perhaps less well known, given that they are still able to sell wine through their clubs and retail outlets. A survey by the BC Wine Institute of its member wineries illustrates part of the problem: taking account of the wide divergence in scale and capacity, almost 50% have experienced losses (to March 31, 2020) approaching $50,000. Many small BC wineries depend on visitors to their tasting room for a large portion of sales. Given the mandated closure of tasting rooms for two months, 2020 will be a make-or-break year for many producers. Adjustments to their on-site operations, particularly tasting room health and safety protocols, will need to be supplemented by creative ways to get their wines to market. (One obvious way is for other provinces to eliminate their barriers to inter-provincial direct to consumer shipments, which may just happen in Ontario as of July 1, 2020 – outside the scope of this WineDrops post, but discussed at length previously.)
Two additional liquor policy changes should be implemented by the BC Ministry of Attorney General as soon as possible, to aid the recovery of the wine and hospitality industries alike.
1. Allow secondary tasting rooms with off-site sales.
At present, BC wineries may not sell their wines at a winery-operated secondary or off-site location under the terms and conditions of their Manufacturer License (updated May 2020) and as set out in their Agreement with the BC Liquor Distribution Branch “Relating to the Direct Sale and Delivery of British Columbia Manufactured Product – Land Based Winery / Commercial Winery.”
The rationale for permitting BC wineries to operate off-site tasting rooms and stores is to reach as many consumers as possible, close to their target market(s). The concept is not new: it is operated to good effect in Washington and California. In BC the proposal was made by a number of BC wine stakeholders to the Liquor Policy Review undertaken by Parliamentary Secretary John Yap in 2013-2014. Not every winery will wish to open a secondary tasting room, nor will every winery have the resources to do so on its own. However, permitting the practice will give decision-making power to wineries to proceed if they wish and are able.
The LCRB can establish a sensible policy allowing secondary/off-site tasting rooms and stores by providing guidance (under the overarching principles of protection of public health and responsible service of liquor) but not prescription as to the model that may be employed by individual wineries or groups of wineries. What works for a large winery with sufficient financial resources may not work for a group of small to medium size wineries, and a concept that may be successful in urban centres may not work in smaller towns in BC’s wine regions.
If government were to change this policy in time for summer 2020, wineries may be able to quickly form creative alliances – with other wineries, through their regional producers’ association, and with local governments – to establish tasting rooms on a common site or in adjacent spaces, thereby holding out the prospect of salvaging their season and perhaps their livelihood. The devil of course will be in the details (from logistics to liability) but these can be worked out among operators and levels of government on a case-by-case basis. Haven’t we already witnessed examples of rapid regulatory changes that in the short term are working as intended?
2. Implement a wholesale liquor purchasing discount for on-premise establishments.
This long-standing “ask” of the restaurant industry indeed appears poised to come into effect. Premier John Horgan has reportedly asked Attorney General David Eby to implement this as quickly as possible. To hear the BC Restaurant & Food Services Association discuss the topic, it may even be a done deal. Let me add my voice (yet again – 2013 and 2018) to the call to bring this policy change into effect. The urgent setting in which BC restaurants and other on-premise establishments find themselves calls for the immediate levelling of the playing field so that they may purchase wine, beer and spirits at a comparable discount to that enjoyed by private retail operators since 2015. When restaurants can seat only half the number of their usual patrons, every reasonable means of reducing operating costs should be considered. In a future phase, on-premise operators should be allowed to purchase at wholesale prices from private retail outlets (i.e. there is more work to be done…).
This policy change should take place uniformly across all types of liquor, including BC wine. BC wineries are presently allowed to sell directly to restaurants (i.e. not via the LDB), at full retail price. While the mooted change could mean less revenue for cash-strapped BC wineries, in my view it is more vital that a wholesale discount gives more restaurants a fighting chance to survive. BC wineries already enjoy a favourable markup and distribution regime at home. Would they rather have a diverse set of customers for their on-premise trade channel, or see it shrink to fewer establishments who may or may not still afford to support BC wine?
On balance, if the Ministry of Attorney General brings in both policy changes in the near future, BC wineries and restaurants will each benefit. It will be some time before some of the ancillary wine and hospitality businesses are back to full operation, and before wine lovers will be permitted to return in significant numbers to BC’s winery tasting rooms (and when they are, it will be a more bespoke and distanced experience). In the meantime, these two significant policy changes should expedite the recovery of wineries and restaurants alike, and foster the next steps of a thriving wine and culinary culture in BC.
If you wish to receive all WineDrops posts, please join the mailing list here: https://winedrops.ca/contact.