What Okanagan Wineries Can Do To Become More Profitable
Okanagan wine writer John Schreiner says the number of Okanagan wineries grew five-fold in a decade, and that a slowdown in growth could already be here—as evidenced by reduced harvests (as low as less than half of previous harvests) last year.
Okanagan wineries are still profitable though. However, like any business they must plan to ensure they stay that way.
Quoting a report by Simon Fraser University political scientists Andy Hira and Alexis Bwenge titled “The Wine Industry in British Columbia: A Closed Wine But Ready for Harvest,” Schreiner pointed out several vulnerabilities for Okanagan wineries that can cause major problems.
Potential Vulnerabilities For Okanagan Wineries
- Astronomical rise in the cost of land – which could affect most Okanagan wineries, who are mostly small hobbyists especially if interest rates are increased.
- All-eggs-in-one-basket marketing – Wines only sold in British Columbia—and mostly to tourists. Many wine producers do not look at sourcing markets outside BC either because of, or lack of, government policies:
• Local wine having Vintners Quality Alliance (VQA) seal escapes the heavy markups imposed by the Liquor Distribution Branch (LDB) on imported wine. Even BC wine sold in government stores gets markups back as rebates.
• It’s hard to develop wine markets outside British Columbia because of a 1928 federal law prohibiting direct shipping to consumers and restaurateurs—a remnant of prohibition. Hopefully this is changing as the BC Wine Institute has said there is now activity in Alberta and that there is interest in international markets that are wanting to sell BC wines abroad.
• There’s no clear government policy and initiative for exporting that leads to lack of reputation and branding in Canadian wines.
- Disunity – winemakers keep to themselves. Although there are many local industry associations, no association represents the entire industry.
- Not enough training – Many Okanagan winemakers do not have formal training in viticulture and oenology. In addition, training in business development and marketing is so important to the success of any business.
- Short-sighted and territorial academic funding – the British Columbia Wine Institute has insufficient funding and many Okanagan wineries are not BCWI members. Collaboration between BCWI and the Summerland research station (PARC) is next to impossible due to 100% IP control policy by PARC.
The researchers concluded that Okanagan wineries need an organization capable of developing the “collective institutions and policies needed to address the vulnerabilities of the industry.” Without it, many Okanagan wineries could just be waiting for a crisis to happen.
Increasing Profitability of Okanagan Wineries
Increasing profitability either means reducing expenses or increasing output. This would mean addressing all the issues identified in the research before a crisis strikes. Such as:
- Small wineries—which is the majority in the Okanagan—should be able to survive an economic crunch.
- Laws and policies should be implemented that would encourage export of Canadian wine to markets outside British Columbia—major policy changes at the LDB (which holds liquor monopoly in British Columbia) is to be expected.
- Research on improved grape cultivars should be encouraged. Summerhill Winery set an example last year by giving $30,000 to UBC for developing drought-resistant rootstock varieties and to create a portable molecular water stress detection kit.
- Create a university-led institute for training in oenology and viticulture serving the whole Okanagan region.
- Okanagan wineries should cooperate and form an association that would represent all of them in the making of growth policies and strategies.
Whatever they do, they should also aim to address this one spot not mentioned by the study but which Wikipedia put in no uncertain terms: “The continued growth and operation of the agricultural industry in the Okanagan absolutely depends on the employment of temporary migrant workers.” And perhaps, for Okanagan wineries, that is their greatest challenge.
Last 5 posts in Okanagan Wineries
- 6 Great Okanagan Wineries - November 28th, 2011