It’s bottling season for wineries across Canada. Producers are pushing to empty tanks and barrels before August to make room for this year’s harvest, but they face unprecedented challenges getting the required bottles, seals, labels, boxes and even pallets.
The retail price of Canadian wine has long been a problem for consumers who struggle to understand why imported wine is so much cheaper than home-made. Domestic prices are set to rise, along with international wine prices as wineries struggle to absorb rising costs of labour, fuel and other associated goods.
Additionally, there are costs associated with growing grapes in Canada’s cold climate wine growing regions and making wine with inherent taxes, various government fees, and surcharges. These factors push prices beyond the cheap and cheerful bargaining chips from places like Argentina, Chile, South Africa, Spain or Italy.
Urgent Issues: Inflation, Supply Chain and Fuel Prices
“It’s been one situation after another,” explains Paul Speck, president of the Henry Pelham Family Estate Winery in St. Catharines, which was founded in 1984. “Getting the glass bottles at any cost was the first nightmare. Then we were suspended for two weeks waiting for pallets. … Everything was ready to go, but we had nothing.”
Speck cites a common complaint of wineries – and many other industries – that none of the necessary items come reliably and are much more expensive than they used to be. On the vineyards that Speck runs with his brothers Matthew and Daniel, the expenses associated with growing grapes are also increasing. The fertilizer bill is 40 percent higher than last year. Fuel costs track 45 percent to 50 percent higher than normal.
Continuous price factors: taxes, vineyards, cold weather
The price of a bottle of wine is complicated. For starters, it includes the costs of land, vineyard cultivation, and grape harvesting. The scale of the operation will affect how fixed costs, such as wages and equipment, at the vineyard and winery are applied to each bottle produced.
Another important consideration is the amount of government support and subsidies available, particularly in European and South American countries that are actively promoting export business. Canadian wine growers do not benefit from the same agricultural subsidies and various tax and marketing credits as producers operating in established wine regions in the United States, the European Union, and elsewhere.
For collectible bottles, the status and rarity of wines from famous labels, such as villages in Burgundy’s Côte d’Or or Oakville and Rutherford in Napa Valley, add to the expense.
These factors add up to make local wines relatively expensive on the world stage. The average price for a bottle of wine produced in British Columbia is $20 and is expected to rise as the industry deals with three consecutive short crops due to changing weather conditions, reducing the grape yield. The 2021 crop was expected to be the lowest in nine years. Most wines made from grapes grown in Ontario sell for between $15 and $20 a bottle.
“If you want those really affordable everyday wines, you have to look elsewhere,” says Speck, whose family oversees a wide selection of sparkling, red, white, rose, dry and sweet wines made in Ontario. “Making wine in Canada has very high costs, but that’s not a customer concern at the end of the day. It really is our problem as producers. We need to make great wines, beautifully bottled, reasonably priced, and in line with the best in the world.”
Even before Canadian wine producers adopted European vinifera grapes, such as Cabernet Sauvignon, Chardonnay and Merlot, they struggled to compete against fruit wines produced in warmer growing regions. Our shorter, cooler growing season means wine growers are producing fewer grapes per acre, often at higher planting costs per acre.
After taxes, Speck says Ontario wineries charge 35 cents for every $1 collected through LCBO’s retail sales. “That’s the kind of math we struggle with at these low price points.”
The good news: Canada’s artisanal wine industry makes great wines that are worth every dollar
Canadian winemakers have long known that they can’t compete on price. They have to make sure the quality in the bottle is seen as a worth the investment for consumers, says Daryl Brooker, CEO of Okanagan Crush Pad. The Australian of origin came to Canada in 2003 to open Flat Rock Cellars in Jordan, Ontario, and roles in Canadian wine companies including Andrew Peller Limited and Mission Hill Family Estate Winery followed.
“Canadian wine is an artisanal industry,” Brocker says. Even Arterra, Canada’s largest wine producer and marketer, “wouldn’t be as big anywhere else in the world, it’s a relatively medium-sized company.”
There are an estimated 31,001 acres (12,565 ha) of vineyards that supply grapes to wineries in Canada. Ontario has the largest plantations at 17,000 acres, followed by British Columbia with 11,000 acres under the vine.
Chile’s Maipu Valley grows more grapes than all of Canada combined. The entire area of Chile is 212,000 cultivated acres. This kind of scale makes it possible to produce Cabernet Sauvignon and Chardonnay for sale for less than $10 to Canadian consumers.
California’s wine industry is fueled by 635,000 acres (256,975 ha) of wine grapes. The Bordeaux region in France alone has more than 280,000 cultivated acres. Even New Zealand, a relatively small player in the global wine scene, sourced more than 98,000 acres (39,000 hectares) of vineyards.
“The model for Canadian producers was New Zealand where the small scale of that industry focused on quality because they can never compete on size,” Brocker says. “We need to encourage buying locally and support local economies, but we also recognize that consumers are willing to pay more for organic and sustainable products, including wine. But then again, we will need to walk that talk.” The wine industries of British Columbia and Ontario recently introduced sustainable grape-growing certification to help market sustainably made wines from vineyards to the bottle.
Canadian wineries have never and will never be able to match the best value brands made by major producers operating in warm, dry wine growing regions. They will never have access to a surplus of affordable, locally grown grapes that can be collected to offer a cheap brand to sell to restaurants or grocery stores in the way the big producers in Spain, Portugal, and other countries often can.
However, the good news for winemakers in this country is that the premium is still a trend. Brewers everywhere are looking to produce better quality wine that is made sustainably to preserve their vineyards and their bottom line. Even countries, especially South Africa and Argentina, famous for their value-for-money selections, are looking to export more premium-priced wines.
Winemakers across the country have demonstrated an ability to produce high-quality Chardonnay, Riesling, and sparkling wines as well as Cabernettes Francs, Game Games and Pinot Noirs that may not appeal to price-driven consumers but do attract connoisseurs of wine who choose to drink less but higher volumes. High quality products.
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