B.C.'s VQA: Quality Control

Peter Mitham

| February 3, 2010

Image by: Brian Howell

B.C.’s VQA program is a much-lauded effort to create  standards for B.C.’s wine industry. But does VQA spell  trouble for retailers?

This month, as B.C. entertains the thousands of international visitors who have come to watch and celebrate athletic achievement, many local businesses are strutting their stuff, showing the world what the province has to offer. On tables around town, B.C. wines are being uncorked with all the pride one would expect of a province home to one of the New World’s hottest wine regions: the Okanagan Valley. 

Wines from the valley have been winning scores of international awards in recent years, and B.C. residents have been buying in, purchasing $165-million worth of wine bearing the Vintners Quality Alliance (VQA) seal last year alone – two per cent more than in 2008, even as the value of wine sales trended downward in the face of tight economic times. VQA wines, made from 100 per cent domestic fruit, have received an additional boost over the past year as an increasingly savvy consumer recoiled from “Cellared in Canada” wines: those sold in the local section of B.C.’s liquor stores made from a blend of domestic and imported juice. According to advocates of local product, the VQA seal is the best guarantee of wines made solely from the juice of B.C. grapes. 

All of this has been good news for  operators of B.C.’s 19 VQA wine stores, which the province began licensing in the late 1990s and whose collective mandate is to make B.C. wine available across the province, from Kelowna to the Kootenays. Consumers are buying more wine than ever before, according to Jeff Wong – owner of one of the newest VQA stores, Mud Bay Wines in White Rock – and B.C. wines are delivering flavour and quality rivalling many foreign wines. 

“It’s just convincing them to drink B.C. wines as opposed to Australian, Californian, French or Italian wines,” he says. “It’s been great for business because you can tell consumers about these new wines.” 

Unlike other store licences, licences for VQA stores are held not by the store owner but by a third party: the B.C. Wine Institute (BCWI). In exchange, store owners have access to a supply of product that wineries supply on consignment (reducing stores’ investment in inventory) and benefit from the marketing and promotion activities of the BCWI. The arrangement effectively gives store owners a leg up in the competitive retail sector, which is especially tough for shops specializing in a single kind of product. But while the principle behind the VQA stores is widely lauded, the practices of the VQA’s governing authority have proven highly contentious. 

Legislative changes two years ago stripped the BCWI of most responsibilities save for promotion and marketing. Its new focus led to a revamping of relationships with store owners such as Jim Ruhland, former operator of Oliver’s Wine Country Welcome Centre in Oliver, B.C. The wine store closed at the end of May 2009 after the BCWI recalled its licence on the grounds that it wasn’t meeting the $600,000 annual sales target the BCWI required. While the original purpose of the VQA stores was to serve industry, Ruhland believes the BCWI has become more interested in using the stores as a profit centre than a promotional vehicle. He thinks that approach threatens the very mandate it seeks to fulfill. 

“We are not supposed to be just a retail outlet; we are supposed to be an information centre,” he says. “Now it’s just about hard-core business numbers. They even raised the quota for all the stores right in the middle of a recession – it’s ridiculous.” 

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Grape expectations ... that

Submitted by Yves (not verified) on Fri, 2010-05-07 09:54.

Grape expectations ... that was the mandate of the VQA program & given the serious quality of the majority of the top B.C Wines from Black Hills, Mission Hill, etc ... the work at the level of the vines is doing well. What has been an unqualified cluster has been the neo-socialistic tampering of the government that refuses to follow the success of the Alberta de-regulation of their liquor distribution. Instead, we the public get perpetual tampering with a system where VQA stores can't set their own pricing, have wild sales targets to meet, and cannot include a selection of U.S. or European wines. Was it so hard to give your stores SOME flexibility like allowing 20% of "foreign" content to the stores? I would argue that Toronto is more foreign than Seattle to Vancouverites, but that point is moot. The B.C. government handing over a VQA store licence with all its restrictions and straight-jacket regulations is Goldman Sachs-like where you are selling a concept that is doomed to failure. Certainly the upcoming NDP government - at the behest of the powerful unions in the Government liquor stores - will use those restrictions to strangle the VQA stores, or simple force them to overpay of their labour cost and go out of business that way. Here's an idea: "free market" ... allow any store of a certain size or smaller sell B.C. wines without any restrictions except for not selling to minors. Two years later let the chain stores in on the game. This would give B.C. retailers a shot in the arm economically while providing B.C. wineries with a larger customer base.