Canucks pay the 6th highest domestic wine prices in the world

Removing invisible regulatory barriers doesn’t necessarily change people’s behaviour. The comfort of familiarity often overrules the magnitude of new opportunity.

We have a front-row seat to such business theatre now: watch how the B.C. wine industry’s players handle regulatory changes around the flow of Canadian wine.

Most people have been shocked of late to learn that, until June, free trade of wine across Canada was illegal.

Major trade barriers – erected during 1920s Prohibition to regulate alcohol – ensured that 13 liquor monopolies could extract maximum revenue from consumers’ wallets, while restricting their access to Canadian products.

By amending archaic laws, Bill C-311 decriminalized interprovincial wine sales for personal consumption. The bill will receive Senate approval in time for the busy summer vineyard season, and the Canadian wine industry will join the 21st century.

“We’re ending a 1928 Prohibition law that everyone knows is ridiculous and doesn’t serve us anymore,” said Dan Albas, Okanagan-Thompson MP and architect of the member’s bill.

This sits badly with provincial liquor boards, which all derive major tax revenue by controlling wine flow and enjoy 40% net return on operations.

Sure, governments need tax revenue for our collective good, but this bloated pig was overdue for slaughter. Extortionate taxes and liquor markups mean that Canucks pay the sixth highest domestic wine prices in the world.

Consumers understandably balk at the grossly inflated prices inherent in our strangled Canadian wine trade, justifiably choosing cheaper offerings from South America, Australia and Europe.

Sadly, Ottawa has downloaded the issue to the provinces, and in Canadian tradition, the provinces won’t agree to co-operate.

Though C-311 has passed, there’s so much loot involved that provinces are sinking in their protectionist hooks and hampering private enterprises from doing the job faster, cheaper and better.

Outrage from consumers and the wine industry has been swift and fierce.

Clearly, the wave of change is unstoppable.

Consider this: if your business was suddenly freed of market constraints and opened to six times the addressable market, would you change your approach? You’d think so.

Yet, despite the momentum, most of B.C.’s 204 licensed wineries will almost certainly prefer to “wait and see” before seizing this market opportunity. Those who downplay the regulatory change’s impact are missing the point. The hidden treasure is people really want to buy differently. Recent changes were forced by consumer interest in high-quality, small-production wineries that don’t produce the high volumes needed to be sold at provincial liquor stores.

The opportunity goes beyond more sales volume. It’s about selling better to loyal customers in a profitable way that they value.

Clever Internet technology now allows the smallest wineries to sell on a par with their larger counterparts. All can “touch” loyal customers anywhere and extend the in-person winery experience online.

Internet-enabled “mass customization” to consumer preferences and needs is doing away with clumsy web stores, buggy online shopping and poor sales fulfilment that resulted from earlier e-commerce efforts.

Wineries can attune their marketing, packaging and fulfilment so it all aligns with their brand “feel,” delivering a rich user experience that (hopefully) stimulates online sales.

Noted Okanagan winemaker Bill Eggert of Fairview Cellars said that, along with refreshed business thinking, wineries need great e-commerce tools to sell directly to their best customers. “Wineries have to invest to let our fans buy online. We need to talk to customers, automate our sales desks and let customers easily place orders.”

Oh, and be ready to pour some B.C. wine, of course.

Source: Business in Vancouver