Could a ‘virtual warehouse’ solve Canada wine battle?

A conflict between Canadian provinces British Columbia and Alberta is moving towards resolution, with a ‘virtual warehouse’ proposed as a solution to the six-month-long wine feud.

In January, Canadian province Alberta banned British Columbia (BC) wine producers from selling their wines directly to consumers living in Alberta. The reason? The Alberta Gaming and Liquor Commission claimed it was missing out on tax that would have been paid on bottles had they been purchased in Alberta stores.

In retaliation, and vowing to “maintain the integrity of Alberta’s liquor model”, Alberta told its retailers they were no longer permitted to stock wines from BC in their stores, effectively cutting off one of BC’s most important local markets.

At the time, Dan Albas, a local British Columbia MP, claimed the move was Alberta’s big liquor monopoly “picking on the little British Columbia wineries.”

Albas also highlighted an alleged hypocrisy in that BC allows Alberta breweries and distilleries to ship to BC “but Alberta will not give the same reciprocity for our wines.”

According to estimates by Wine Growers BC, direct-to-consumer sales account for less than 3% of total BC wine sales. However, one BC producer, Tony Stewart of Quails’ Gate Winery, told CBC News that the loss of income from the halted Alberta DTC sales has cost him around US$100,000 per month.

End to the stalemate

This week (on Tuesday 16 July), the ban on DTC sales was lifted, and a solution proposed to end the stalemate. Alberta plans to set up a “virtual warehouse” in order to collect fees from DTC wine sales, with the move expected to be implemented “within a few months”.

Until that point, Alberta will use a “paper-based system” to track sales of BC wine within the province.

“It’s a win for BC’s grape growers and wineries, as well as a win for Albertans who have excellent taste in wine,” said BC Premier David Eby in his joint announcement with Alberta’s Premier Danielle Smith.

“There are a lot of Albertans who love BC wine, so we were hearing that they wanted to have a solution,” Smith added. “We also heard directly from the vineyards, who I think are really struggling”.

The struggle began when British Columbia suffered a major frost in January, with temperatures plummeting to –30 °C, decimating crops and rendering much of the harvest unusable.

As the drinks business reported in May, growers in Washington are stepping in to supply grapes to BC to help plug the shortage, with the fruit expected to be supplied around October time. Washington growers will work directly with BC producers, with each winery having the opportunity to declare the exact tonnage of grapes it requires for its 2024 harvest production.

The arrangement has a dual-pronged benefit as not only will it help BC wineries to salvage their 2024 harvest, it will also contribute to “right-sizing” Washington’s business by reducing its current over-supply of grapes.