A coalition of B.C. wineries will be asking the provincial government to impose a six-month moratorium on wine sales in grocery stores.

The group — the B.C. Alliance for Smart Liquor Retail Choices — feels that the sale of B.C. wines in grocery stores will eventually force small to medium-sized B.C. wineries out of business.

The group also believes that grocery store sales will eventually open up the way for cheaper, mass-produced wines from outside of Canada to dominate sales in the province.

"Grocery stores are just starting wine sales in B.C.," said Kim Pullen, president of Church and State Winery. "If the model expands, small B.C. wineries will be in trouble, not only because they would favour cheaper wines produced by large B.C. wineries, but the international wines from the U.S., Australia, Chile and the European Union won't be far behind.

"What we hope government will do is take a breather for six months and just look at all of these changes that are happening and if we're actually doing the right thing, because once we move forward, there's no going back.

"Nobody has really sat down and looked at what effect these changes will have. Will the price point drop so that only the strong will survive? Or what's happened in other countries where this has been done?"

The dynamics of grocery store sales, the group maintains, will drive down prices and favour big wineries with lower production costs.

In the U.S., for example, as much as 70 per cent of all wine sales occur in grocery stores. The experience there, the group maintains, favours large producers that have sufficient economies of scale to work on low profit margins and that can produce bulk quantities to dominate grocery shelf space. Smaller wineries simply can't produce their wines cheaply enough.

"Food stores," states the group's press release Tuesday, "will always want to sell the lowest priced product with the highest gross margin. This is how they run their operations. To think they will change their model for wines is naive. Only the larger wine producers will benefit."

The group also sees grocery store sales here eventually being challenged by other wine-producing countries as a violation of NAFTA and GATT trade laws. This, it believes, would lead to sales of international wines in B.C. grocery stores.

"One of the member associations," the press release continued, "obtained a comprehensive legal opinion prepared by a leading international trade lawyer at Fasken Martineau. It concludes that the 'B.C. wine on regular shelves' grocery model is a violation of both NAFTA and GATT. It also concludes that the issuance of any new licenses for B.C. wine sales would also be in trade violation."

Said Pullen:

"What's the repercussions of a trade challenge, especially if we lose?

"As far as we are aware, there are no jurisdictions in the world that have successfully restricted regular shelf grocery sales to local wines. The reason for this is simple. It is not permissible under international trade agreements."

If international wine producers are eventually offered for sale in B.C. grocery stores, Pullen believes private liquor and wine stores that sell only B.C. wines will be forced to offer international wines, too, just so they can compete with the larger grocery stores. Pullen sees that as a death knell for B.C.'s small wineries.

"Two years down the road, we're going to wake up and ask, 'Holy cow, what just happened?' So all we're saying is, wouldn't it be a great idea to slow it down, and we all sit down and look at the repercussions of these things three or five years down the road."

The coalition is comprised of ABLE B.C. (Alliance of Beverage Licensees), the B.C. Private Liquor Store Association and a group of 80 small to medium-sized B.C. wineries.

pmcmartin@vancouversun.com

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