Wine in Grocery Stores: Ontario becomes more civilized
Coming soon to your local grocery store -- first beer, and now wine!
The new initiative from the Wynn government will provide more options and convenience to the consumer and another channel for wineries to use in selling their wine.
Did you know that in most jurisdictions, roughly 80% of the wine sold is local wine, with 20% coming from imports? In Ontario, that rule is reversed. We have a love affair with imported wines, and have a uneasy relationship with local wines.
As winegrowers, at Broken Stone Winery we see the sparse penetration of Ontario wines as both a challenge and an opportunity. Indeed, if we could increase VQA market share to 80% from the 6% share it currently holds, then fledgeling businesses like ours could have a huge tailwind. To grow, we'd have to invest significantly in vineyards and equipment. We'd create more jobs, and spend more in our communities.
Ontario is now producing world class cool climate wines like chardonnay and pinot noir. With the small steps being made towards liberalization and equitable market access for local producers, the industry will potentially become a little more profitable, justifying private investment in growth.
Will grocery store wines create that opportunity? The classic grocery store model would seem to be a low margin, high volume business. To supply that sort of business with enough product requires scale. Whether family-owned wineries with premium products will be able to supply this channel, or whether the stores will even want to deal with the additional SKUs remains to be seen.
There is also the open question as to how the new channel will be taxed. As it is, the greater portion of each bottle's price doesn't go back to the winery, but ends up in government coffers one way or another. So taxation policies to be announced in the provincial budget will be the deciding factor in the success or failure of the new iniative.