Small B.C. wineries fear grocery store wine sales could wipe them out

Owners of some small- and mid-sized wineries in British Columbia fear they will be hurt rather than helped by the provincial government's decision to allow supermarkets to sell alcohol.

They worry grocery stores will tend to stock wines from large wineries because bigger volumes and lower unit costs will deliver fatter profits.

"Grocery stores are just starting wine sales in British Columbia,'' Kim Pullen, president of Church and State Winery, said Tuesday. "If the model expands, small B.C. wineries will be in trouble.''

Three Kelowna grocery stores are about to offer wine sales and two others are able to do so because existing zoning covers their properties, city officials say.

Consumers may be surprised grocery stores will only be able to offer VQA wines, not lesser-quality wines, beer, spirits or any other alcohol product said Kelowna city planner Ryan Smith.

"The roll-out of these changes probably isn't going as smoothly as many people expected they would,'' he said.

Kelowna supermarkets preparing to sell wine are located within one kilometre of a privately-owned liquor store, so are restricted to selling only VQA wines— which must be made from B.C. grapes and which are generally more expensive than many other foreign and domestic wines.

The government imposed the restriction to protect the financial viability of the private liquor stores.

But even if they're limited to selling only VQA wines, supermarkets could soon grab a big share of overall wine sales.

In other countries, such as the U.S., where supermarkets can sell alcohol, up to 70 per cent of all wine is sold in grocery stores, says a group representing B.C. pub owners, private liquor store operators, and small- and medium-sized wineries.

The group, called the BC Alliance for Smart Liquor Retail Choices, says supermarkets will naturally place most of their wine orders with a handful of big wineries, and do relatively little business with small and medium-sized producers, who make up the vast majority of B.C.'s 250 wineries.

"The grocery store channel favours large producers who have sufficient economies of scale to work on low profit margins,'' the alliance says. "Only the larger wine producers will benefit.''

The group is calling for an immediate moratorium on new licences permitting B.C. grocery stores to sell wine.

The group also expects that the restriction allowing only B.C. wines on supermarket shelves will not survive legal challenges because of international trade agreements. It predicts grocery stores will eventually offer only cheaper foreign-made wines, further harming the province's small and medium wineries.