July 12, 2019

One of the consequences of the new USMCA trade agreement between Canada and the United States was that British Columbia committed to eliminating measures allowing BC wines only to be sold on grocery store shelves. As members will recall, this issue has been a long-standing irritant to the United States and several of Canada’s other international trading partners.

To address this commitment, the government today announced amendments to the Liquor Control and Licensing Regulation that eliminate regulatory measures that allowed sales of only BC wine on grocery store shelves.

This change means that the two types of licences authorized to sell wine in grocery stores—the 21 VQA wine licenses owned by the BC Wine Institute and the 12 Bill 22 Special Wine Licenses auctioned off by the previous government—will now be permitted to include international wines on their shelves should they wish to do so.

Our analysis: what does this actually mean?

Practically, in the short term we do not anticipate this will cause significant disruption in BC’s liquor retail market.The licenses currently operated by Save-on-Foods grocery stores are owned by the BCWI—a membership organization comprised of BC wineries. It seems highly unlikely that BC wineries would be incented to allow the BCWI to amend its third-party operating agreements with the Overwaitea Food Group to allow international wines to be sold alongside BC wines. Additionally, representatives from Overwaitea have stressed repeatedly and publicly—including in various city council meetings around BC—that they only wish to sell 100 per cent BC wines.

However, 10 of the Bill 22 Special Wine on Shelves licenses are owned by Loblaws. We fully anticipate these stores will be offering a broad range of international wines very soon. At the end of the day, the most likely scenario would therefore seem to be that 10 of the eligible 29 wine in grocery store licenses will begin selling international wines immediately.
We certainly understand and share member’s concerns about grocery expansion into liquor retailing. However, given the likelihood that only very few grocery stores will be impacted, and that government has been clear they not intend to release any more wine on grocery licenses, this policy change was the best-case scenario for resolving this trade dispute. We commend government for taking a balanced approach that will be minimally impactful on our industry.

We will of course continue to monitor this issue in the months ahead to advocate against any further expansion of liquor retailing in BC’s grocery stores.

If you have any questions or would like further details, please do not hesitate to get in touch at jeff@ablebc.ca or (604) 688-5560.

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