Glass Half Full: B.C.'s wine industry is filled with challenges, and possibilities

August 20, 2020

In the 30th anniversary year of the VQA designation that validated B.C. wine, here’s a flavour of what the next decade could taste like

On a prime lakeside stretch of tony Pritchard Drive in West Kelowna, thousands of spindly grapevines take root along with the vision of Plenty of Fish founder Markus Frind: complete with a bakery-café, a wine-tasting room and a planned boat dock, Frind Estate Winery opens this summer. Across the water in Lake Country, Albertan Dennis O’Rourke, founder of Sureway Construction Group, is carving European-style caves from the rocky landscape, eventually for aging premium Burgundian-style vintages to complement current bottlings from his namesake winery.

To the south near Oliver, Vancouver-based industrialist Richter Bai is said to have spent $100 million building Phantom Creek Estates (see above photo), where top global consultants like France’s Olivier Humbrecht advise on making wine from some of the choicest parcels in B.C. As with any sector, when players this big make moves in one direction, it attracts attention—in this case, to the province’s next-generation wine industry.

Though global pandemic–induced challenges create some unknowns for the 2020 wine-growing season (see below), the business is almost unrecognizable from its roots in the modest enterprise of making sacramental wine, which started on a mission near today’s Kelowna in the mid-19th century. It now contributes a million visitors and $2.8 billion annually to the provincial economy. The province is home to seven wine regions beyond the famed Okanagan and next-door Similkameen valleys; from Lillooet to the Comox Valley on Vancouver Island (where Titanic director James Cameron bought Beaufort Vineyard and Estate Winery in 2014), we’re pushing the global boundaries of where fine wine can be successfully made.

To any businessperson, the B.C. wine industry tastes of opportunity—and of change. The British Columbia Wine Institute recently revealed a strategic vision that considers how consumers, growers, wineries and the tourism and hospitality industries will reshape the landscape over the next decade. Wine BC 2030 proposes to turn potential weaknesses and threats, from high costs and limited land and labour to climate change and the cannabis industry, into strengths and opportunities, with strategies like $30-a-bottle premiumization, global exports and a cutting-edge agritourism strategy.

In the 30th anniversary year of the British Columbia Vintners Quality Alliance (BC VQA), which changed the winemaking game in 1990 by verifying wine origins, grape varietals and vintages, the industry has new choices to make if it wants to keep raising the bar. James Lancaster, part of the second generation working a steep patch of Naramata at the boutique-sized Black Widow Winery, puts it succinctly. “It’s about deciding, do you want to be a small winery or a big winery?” says the sales and marketing manager. “Medium-sized is just not going to be viable.”

Sowing sustainability

On a sunny spring day, couples in casually expensive weekend gear sip rosé and snack on spicy gnocchi on the Home Block restaurant patio on Kelowna’s Lakeshore Road. Others rub cashmere elbows around the circular tasting-room counter, evaluating vibrant Syrah and smooth Viognier. It’s wine pickup day for cases ordered by CedarCreek Estate Winery’s Platinum Club members, Okanagan Valley VIPs living the dream wine-country life: golf courses, fitness clubs, organic markets.

The 2019 Canadian Winery of the Year, one of about a dozen in the valley to be certified organic under various programs, fits this modern lifestyle like a calfskin glove. Ecocert-verified organic in its 50-acre estate vineyards and winery with the 2019 vintage, CedarCreek plans to release an entirely organic range of wines by 2021.

“You can taste it. We have greener, more-vibrant vines, and better grapes with lower alcohol, because the sugar levels are in control,” says Darryl Brooker, president of Mission Hill Family Estate and Sebastian Farms, the prestige group within which CedarCreek operates. Organic means not only better wine but also stronger customer relationships. “When we start talking about organics and what we’re doing in our vineyards, you can see how interested they are,” Brooker says, a theory playing out at the buzzing CedarCreek tasting counter. “People ask so many more questions.”

Iconic Wineries of British Columbia (a private company founded by B.C. wine pioneer Anthony von Mandl) is investing in converting all of its vineyards to organic—typically, at least a three-year process for land that’s been conventionally farmed. Cold winters and hot, dry summers engender the manageable disease and pest pressure that makes tracts of relatively pristine Okanagan and Similkameen valley land well suited for growing grapes without chemical pesticides and herbicides.

“The end game is if we can encourage more people in the valley to go organic,” Brooker says. That shift could create a powerful wine tourism brand that other prestige wineries are embracing. Kelowna’s Summerhill Pyramid Winery was the first in B.C. to be Demeter-certified biodynamic (a holistic farming method that embraces many organic principles); Phantom Creek in the South Okanagan is the first and only global winery to hire Humbrecht, a legend in organic and biodynamic winemaking, as a consultant.

With about 4 percent of Okanagan vineyards currently certified organic, Brooker says, large producers can significantly move the needle: when all of his company’s properties are converted, he estimates that organic vineyards could make up 17 percent of the valley. “In five years’ time, I believe [the Okanagan] could be 50-percent organic,” he adds. “It’s such a tiny valley that we can be known as the greenest [wine] valley in the world.”

For smaller growers, potentially expensive and time-consuming certifications may be luxuries that can help earn consumer and retailer confidence but don’t necessarily define their practices. “I applaud what organics are all about. But the truth is, we all know what we’re doing to the land,” says Will Hardman, the winemaker at family-owned Deep Roots Winery on the Naramata Bench. “We’re being as sustainable as we can be on the farm side and making low-intervention wine,” with as few additives and preservatives as each harvest’s conditions allow. “But I don’t blame the consumer for not knowing exactly what the Hardman family in Naramata is up to,” he says with a laugh. Sustainable Winegrowing British Columbia’s new 2020 sustainability certification process will put its stamp of approval on bottles soon, reflecting growing local and global interest in a common definition for wines that tread more lightly on the Earth.

Last year, when the 2015 Little Pawn Chardonnay from von Mandl’s premium CheckMate Artisanal Winery earned a rare perfect 100-point score, he called it a “climate change–enabled wine.” Presciently, Oregon climatologist Gregory Jones, a leader on the subject, had advised von Mandl’s team that as California gradually warms, the Okanagan will become prime terroir for premium grape varietals like Chardonnay. Of course, climate change also brings potential weather-related challenges, including wildfires. Between seizing the opportunities presented by ideal grape cultivation conditions migrating north and growing B.C.’s clean, green brand, the provincial wine industry sees a glass-half-full future.

Next-generation wine

Wine touring in many regions of B.C. still has a grassroots feel, with routes on Vancouver Island and in the Similkameen and Fraser valleys populated by modest tasting rooms where hands-on winemaking staff do the pouring. Increasingly, especially in the Okanagan, magnet wineries with spectacular architecture, restaurants and wine shops attract visitors by the busload. Besides Okanagan grand dames like Summerhill, Mission Hill and its five sibling wineries, plus the shiny new billionaire-built wineries, other major players in B.C. include eight-winery Arterra Wines (owned by the Ontario Teachers’ Pension Plan Board) and Andrew Peller, a publicly traded company that also owns eight Okanagan wine brands. Consolidation, as congomerates acquire B.C. wineries started by families and entrepreneurs, is one effect of a modern industry that is only now entering its second generation.

Jacqueline Downey

But succession looks different across the industry. Paul Brunner, a mining engineer and former CEO who bought the postcard-pretty Blue Grouse Estate Winery near Duncan on southern Vancouver Island in 2012, now guffaws at his original retirement plan, to split time between Peru and a rural B.C. “hobby business I’d fiddle around with from time to time, that wouldn’t make or lose a lot of money and wouldn’t make a lot.”

After a massive investment in infrastructure, acquiring more land and planting grape vines, Brunner has a “200-year plan” for what he hopes will be a sustainable, organic winery for generations. Famed Peruvian wine consultant Pedro Parra “has told us we can make very high-quality Pinot Noir here,” he says.

Jacqueline Downey

 

On West Kelowna’s wine trail, just down the road from Frind, Mt. Boucherie Estate Winery was putting finishing touches on a gleaming new winery building and hip Modest Butcher restaurant this past spring. “We don’t like pretension here,” says the amiable vice-president, Craig McCulloch, a onetime produce executive. “People can come and spend $200 on wine and $100 on steak, or they can sit on the patio after a round of golf and have a glass of wine.” The winery languished in receivership for years after a dispute in the founding Gidda family, major regional grape growers. Its happy ending and contemporary vision are courtesy of a new ownership group headed by president and Richmond-based businessman Sonny Huang.

Other farmers are turning their expertise and success into new wineries, sometimes by luring back second-generation family members. Three Sisters Winery, a Naramata Bench vineyard that Rebecca Mikulic’s father, John Lawrence, named for his trio of daughters, is now the label under which her husband, Matt, makes bold wines like a peppery, licorice-tinged Tempranillo. Rebecca is vice-president of EarlCo Vineyards, the vineyard management company her father founded. “It’s a really tricky industry because of the cash flow,” she says as her two young daughters snack on crackers in the DIY-chic tasting room. “But it works because we have the viticulture company, too.”

At Deep Roots, a former orchard that’s been cultivated by the Hardman family for 100 years, fourth-generation farmer and winemaker Will is now his father’s best customer. “About five years ago you couldn’t give away grapes,” Brian Hardman says. “Now it’s a seller’s market.” Wines like the 2017 Deep Roots Syrah, which won the 2019 Lieutenant Governor’s Award for wine of the year, have turned grapes from a fickle commodity crop to a potentially lucrative value-added business.

If you build it

“This is not an agricultural industry; it’s an agritourism business,” says Tony Holler, wearing a crisp linen shirt the same tint as the Poplar Grove Winery rosé in his glass. “We need tourism to make this a viable valley.”

From a perch in the glass-fronted tasting room of Holler’s Naramata winery and restaurant, with a golden-hour view of vines and valley stretching out beneath us, the tourist appeal is obvious. But accommodations in many pockets of wine country remain limited to a small guest houses and B&Bs. “The demographic of our customer is changing, and we’re not changing fast enough,” says Holler, a medical doctor who grew up on a local orchard and co-founded Vancouver vaccine company ID Biomedical Corp., now a Quebec-based subsidiary of GlaxoSmithKline.

Holler’s luxe 20-room boutique hotel proposal is creeping through Agricultural Land Reserve and other approvals. Summerhill founder Stephen Cipes has announced plans for a Napa-style Culinary College for Humanity at his Kelowna property, where wine-country workshops, courses and retreats could take root. New owners, including celebrity chef Ned Bell and former A&W Food Services of Canada CEO Paul Hollands, recently took over the Naramata Heritage Inn & Spa, a charming but faded 12-room property with potential to elevate the hospitality scene.

For entrepreneurs with vision, new developments like these could help turn the long, hot wine-touring season into year-round tourism. Hugh McClelland of the Naramata Bench Winery Association (NBWA) says, “One of the things we have to do is convince wineries that unless you’re open in winter, we’ll never have a winter business.” NBWA marketing director Tina Baird’s prediction: “Four-season tourism will be part of the whole region going on to the next chapter.”

Squint and you can almost see people flocking here all year. Once-tiny Kelowna International Airport has become the 10th-busiest in Canada by passenger traffic, with a $240-million investment in everything from parking and runways to a sophisticated instrument landing system expected by 2029. The airport “serves as a bridge between the North and South Okanagan for business in general, including wine business—many of our clients and partners describe it as the perfect midpoint at which to meet,” says Bobby Bissessar, marketing manager for Argus Properties.

The Kelowna company acquired the venerable Eldorado Resort and opened new Hampton Inn & Suites and Four Points by Sheraton properties across from the airport, where the nearby UBC Okanagan campus helps drive year-round business. Both new hotels have accessible rooms, a feature that helps attract diverse travellers. Thompson Okanagan Tourism has engaged a universal access tourism specialist, former Paralympian Sonja Gaudet, with a goal of making the region a world-renowned accessible destination.

John Perrott sees another opportunity to grow year-round wine tourism: through Indigenous experiences. The economic development and tourism manager for West Kelowna, which incorporated as its own municipality in 2007, takes pride in its reputation as a business-friendly, red-tape-cutting place to operate.

Indigenous World Winery

It borders the self-governing, business-savvy Westbank First Nation, so it makes sense that tastings at Indigenous World Winery and distillery or its Red Fox bistro, plus discovering First Nations history and culture at the Sncewips Heritage Museum, give tourists reasons to linger, in addition to anchors like Mission Hill and a trail of 13 other wineries and a cidery. Osoyoos’s Nk’Mip Cellars (the first Indigenous-owned winery in North America) and the Nk’Mip Desert Cultural Centre, along with neighbouring Spirit Ridge Resort, have a similar chance to fill a need: Destination British Columbia statistics show that one in four visitors to our province seek authentic Indigenous experiences.

Growing human capital

Some vineyards display quaint renderings or topographical maps of their land, showing the crucial aspects of the sun-facing slopes, elevations and geography that make their specific terroir special. In the history room where tours begin at Phantom Creek Estates, a massive bronze-slab sculpture, a cross-section of the Similkameen and South Okanagan valleys, highlights its prime Golden Mile Bench, Black Sage Bench and Similkameen Valley vineyards in glittering metal.

“This is the famed Phantom Creek vineyard,” says CEO Santiago Cilley, pointing to the award-winning golden triangle of land, just one of the parcels that owner Bai has purchased since 2016. The massive winged Terra Natura sculptures fronting the winery are as symbolically monumental as Mission Hill’s bell tower or Summerhill’s pyramid were decades ago.

“This is a place where it’s all about the wine,” Cilley says, walking us through the nearly-open restaurant and winery, with massive patios facing a natural amphitheatre sloped toward achingly beautiful southwest vineyard views. Its opulence—dozens of large-volume French oak maturation foudres of the sort that most wineries can’t afford or fill, a domed inner-sanctum tasting room glowing under the canopy of a Dale Chihuly glass chandelier, a shop featuring wines up to $100 a bottle—seems designed to level up to VIP tier quickly.   

“But none of this matters if we do not have a seamless visitor experience,” explains Cilley, an Argentinian recruited from Napa who’s part of an international team that includes a New Zealand winemaker and team members from Austria, Portugal and France. “We’ve looked all over the world for talent,” he says. “That is part of the need here: for technical knowledge, vineyard workers, tasting-room staff. I wish there was a single college, one program I could go to, but there is not.”

Remote areas like Vancouver Island have their own struggles attracting talent. “The Okanagan has all kinds of infrastructure because of the sheer volume of wineries there—a network of winemakers, tasting-room employees, marketing expertise—that we don’t have,” Blue Grouse’s Brunner says. In the competitive Interior, where talented workers can relatively easily bounce from winery to winery, employers like Mt. Boucherie are adding smart amenities like bike parking, a big staff room and cool uniforms to retain the right staff.

B.C. could be not just a magnet for global wine experts but an incubator for talent. That starts with having a concentration of people and facilities. UBC, which has long based its Wine Research Centre within the faculty of land and food systems in Vancouver, is building a brain trust of chemistry, biology and business researchers at its 15-year-old Okanagan campus near YLW. And on the Penticton campus of Okanagan College, manager Wes Peterson oversees a series of bright white chemistry and microbiology labs, offices and meeting and event spaces that form the new BC Beverage Technology Access Centre (BCBTAC). It’s one of a dozen federally funded centres designed to help small and medium-sized companies in various industries with everything from technology and equipment to business planning and product research and development.

With at least 220 wineries, 24 craft breweries, 19 cideries and 16 distilleries in the region, Peterson has already shepherded projects from recycling winemaking byproducts to testing wine-can liners to conducting consumer taste research. “For wineries that have an idea but they are resource-constrained, we can help them with that,” he says. “That’s really where I see the new innovation coming into the valley.”

Developer Greyback Construction is building a different kind of South Okanagan incubator, near Gallagher Lake in Oliver. “I call them incubator wineries,” says wine industry veteran and director of development operations Mike Daley of District Wine Village’s units, containing a crush pad (an equipped contract winemaking facility) plus a tasting-room storefront and patio, as well as common spaces for everything from culinary pop-ups to weddings and events. Models from Vintner’s Village in Prosser, Washington, to Tin City in Paso Robles, California, have shown that adding local entertainment and food to wine makes a potent agritourism draw—and a launchpad for fledgling wineries, breweries and distilleries. “What we wanted to do is make it a low-capital investment,” Daley explains.

In a recent Town & Country article, author Jay McInerney wrote that a visit to the Okanagan felt like touring Oregon’s Willamette Valley 25 years ago. Legendary wine writer Jancis Robinson has said that the valley’s spirit reminds her of Napa’s pioneers. Part of a global market valued at more than US$300 billion annually and expected to grow by more than 5 percent a year, the B.C. wine industry is putting on rosé-coloured glasses.

Grape Strides

To mark the 30th anniversary of the Vintners Quality Alliance (BC VQA) designation, the BC Wine Institute shares some key numbers highlighting the provincial industry’s growth:

Licensed grape wineries

1990: 19

2020: 282

Acres planted

1990: 1,293

2020: 10,499+

Vineyards

1990: 115

2020: 929

BC VQA market share

1990: 3 percent

2020: 19.2 percent

BC VQA–certified wines

1990: 157

2020: 2,127

Corked

COVID-19 may have driven people to drink, but it also created a host of problems for B.C. wineries heading into what is usually peak season

Perhaps not surprisingly, many British Columbians sought solace from the pandemic in a bottle. Wholesale alcohol sales during March and April shot up around 20 percent over the same period for the past two years, according to the BC Liquor Distribution Branch. So for winemakers, COVID-19 should go down like a nice Pinot, right?

If only it were so simple. First, there was the issue of farm labour. Most vineyards use temporary foreign workers to tend their crops. Unlike most brewers and distillers, they typically grow their own inputs, and the growing season was upon them. At first, TFWs were shut out of Canada altogether. Then they were allowed in (if they could find transport), only to spend two weeks in quarantine. Eventually the federal government offered assistance to help feed and shelter them while sequestered.

Then there were the lockdown measures. Restaurants closed. So did tasting rooms. “Right away we’ve lost half of our sales channels,” recalls Miles Prodan, president and CEO of the BC Wine Institute.

Those outlets are set to reopen–gradually–over the summer. Still, consider the impact of the decline in travel, especially the international kind. B.C.’s wine output may be a drop in the barrel in global terms, but thanks to its natural beauty, the province is a rising destination on the wine tourism map.

“The winery is where we make the most margin,” Prodan says. “That’s why tourism is so important to us.” So whatever the weather and the quality of the vintage, 2020 will be remembered as a remarkably tough year in the western Canadian wine patch.

On a brighter note, Ontario might start allowing direct-to-consumer wine shipments from other provinces, opening a big potential market. But the Ontario government recently delayed that reform until July 1, 2021.

For the small operators without LDB contracts and export sales, which account for four out of five B.C. wineries, there are two strategies to survive, Prodan says: boost your direct sales online and, when it comes time to reopen tasting rooms, “really engage your customers.” Tour groups won’t be coming by the busload for the foreseeable future, so wineries should consider a reservation system, take the time to tell their story, let visitors share it with friends and family, and keep the relationship going digitally as well as in person. –Michael McCullough

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Originally posted on bcbusiness.ca