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Is disaster fermenting in Ontario’s Greenbelt?

NEWS HIGHLIGHT

Is disaster fermenting in Ontario’s Greenbelt?
Despite the
various changes underway in Ontario’s wine regions, the 2010 harvest threatens
to yield an even greater grape surplus than in the two previous years combined.

May 18, 2010 – Despite the
various changes underway in Ontario’s wine regions, the 2010 harvest threatens
to yield an even greater grape surplus than in the two previous years combined.

Unlike other wine regions,
where surpluses were a result of over-enthusiastic planting, Ontario’s surplus
is driven to a large degree by the needs of large factory wineries. In 2009,
those wineries purchased nearly 14,000 fewer tons of Ontario grapes despite
strong sales of Cellared in Canada (CIC) wines. In 2010, the problem will
likely worsen as CIC producers weigh their options and decide in favour once
again of purchasing fewer Ontario-grown grapes. They have said as much in memos
to grape growers.

There are a number of
forces that contribute to a lack of market for Ontario wine grapes:

1. The Ontario government has announced an infusion of $57 million over the next five years,
   to go almost entirely to maintain the status quo by channeling this money only
   to VQA, WCO and Grape Growers of Ontario members.
2. The reinstated VQA
   Margin Enhancement Program benefits only VQA wines and only wine sold through
   the LCBO. VQA wine sold through winery stores, fruit wines, meads and other 100
   per cent Ontario-grown wines are excluded.
3. 
   The Margin
   Enhancement Program provides less actual money per bottle than previously.
4. The new minimum
   domestic per-bottle content for CIC wines has been lowered to 25 per cent from
   30 per cent, which will result in CIC producers purchasing fewer Ontario
   grapes.
5. CIC producers can now
   credit their VQA production toward the domestic content in their blended wine
   products, which also reduces their need to purchase Ontario grapes.
6. The new tax on CIC
   wines further reduces the incentive for these producers to purchase Ontario
   grapes in 2010 and beyond.
7. The push to enhance
   Ontario’s vinifera grape production will result in more vinifera grapes on the
   market even though these are the very grapes that have created the surplus. CIC
   producers would rather purchase less expensive hybrid grapes for blending.
8. There has been no
   effort to address the issue of low-priced imported wines. Ontario wineries can
   compete in the under $10 market if given the means to do so, such as the option
   to grow high quality hybrid grapes (which are generally better suited to
   Ontario’s climate) and recognition of Ontario-produced non-VQA wines.
9. There has been no
   change to rules that restrict the amount of raw material small wineries can
   purchase. For example, so-called fruit wineries can produce no more than 20 per
   cent of their wine from grapes, whereas traditional wineries can make as much
   fruit wine as they wish and CIC producers can increase their CIC production as
   much as they please. Many smaller wineries would be happy to purchase more
   Ontario grapes if given the opportunity.

Given that a litre of 100
per cent Ontario-grown wine contributes $11.50 to the Ontario economy, a single
tonne of grapes left to rot is a loss to the province’s economy of $8,050 (2008
KPMG study), 1,000 tonnes hitting the ground would cost us all over $8 million,
and 16,000 tonnes means in excess of $128 million in lost opportunity. (A tonne
of grapes yields 700 litres of wine.)

The Ontario Viniculture Association (OVA) calls on the
Ontario government and Greenbelt authorities to act while there is still time.
The government must give Ontario wineries better access to Ontario grapes and
to the marketplace by any or all of the following:

• Require that all wineries
  be included in beneficial payouts of government funds.
• Give all wineries the same
  rights and privileges in purchasing grapes.
• Encourage increased grape
  purchases in abundant harvest years.
• Allow fruit wineries to
  purchase grapes without arbitrary limits.
• Allow wineries in
  non-designated viticultural areas the opportunity to purchase more non-local
  crop in good years.
• Recognize (and help the public
  to recognize) non-VQA, 100 per cent Ontario-grown wines by allowing them to use
  the Foodland Ontario logo.
• Help wineries find ways to
  compete in the under $10 category.

OVA is a group of 104
Ontario winery members, with a further 67 associate member wineries throughout
Canada.