Free the Wine
I’m not the type to sit still for long, so after I retired from my real-estate career in 2011, I immediately looked for a new project to keep me busy. At the time, my daughter, Jordan, was working as an assistant winemaker and wanted to start her own thing in the Okanagan. I thought, Why not see if she wants to make it a family affair, with her dad as the owner? By 2017, Jordan, her now-husband and I were stomping, harvesting and bottling grapes on 10 acres in Summerland, B.C. We called our operation Lightning Rock Winery after lightning literally hit a rock on our property. It turned out to be a good omen: during our first few years in business, we were producing more than 1,000 cases annually.
In 2020, I started exploring the logistics of expanding Lightning Rock’s sales beyond B.C. I knew exporting internationally came with hefty tariffs; what I didn’t expect was similar barriers within Canada. Here, alcohol sales and distribution are tightly controlled by provincial liquor boards, which slap steep markups on any booze coming from outside their borders. It’s a real cash cow. The numbers shocked me: if I wanted to get Lightning Rock stocked in Ontario, for example, the LCBO, or Liquor Control Board of Ontario, would apply a 71 per cent markup to my base prices. That’s before the addition of storage fees and sales taxes like HST.
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Lightning Rock also welcomed lots of visitors from Quebec who’d ask why they couldn’t buy our products back home. The answer was the SAQ, or Société des alcools du Québec. If we sold our wine through its wholesale system—our only option—the markup was 130 per cent. A $28 Pinot Noir in B.C. would cost roughly $64 in La Belle Province. A few other provinces, including B.C., Manitoba and Nova Scotia, allow direct-to-consumer shipping, which gives wineries a modicum of flexibility. But even that system penalizes interprovincial trade. If an Ontario winery wanted to sell its wares in Vancouver, by the time markups and provincial and federal taxes were folded in, customers would still be paying markups of close to 100 per cent.
Canada’s setup looks extra ridiculous when you zoom out to international markets. Less than 12 per cent of the wine consumed here is produced domestically. That’s because, even with shipping factored in, foreign bottles are often cheaper for Canadian drinkers to buy than our own out-of-province products. Meanwhile, in places like France, Italy and Spain, roughly 75 per cent of the wine consumed is produced within their own borders. France and Italy, in particular, heavily subsidize their wine industries; French winemakers can produce a case for as little as $10. My glass costs alone amount to $10 per case. For years, I refused to raise my prices out of fear that consumers would automatically reach for a cheaper imported option.
One potential solution has been floated for a long time: the federal government needs to amend the Canada Post Corporation Act to allow the Post (and other delivery companies, like ATS, FedEx and UPS) to ship wine directly to consumers across the country. This amendment would create a single national market for direct-to-consumer Canadian wine, provinces could still collect sales tax and, as a bonus, the struggling Canada Post would gain a new source of revenue. It would be a clear win for everyone involved.
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Just before COVID, I reached out to Dan Albas, my local MP in the Okanagan, who soon sponsored a private member’s bill supporting the amendment in Parliament. We also launched an online petition that gathered more than 4,000 signatures from Canadians experiencing similar wine woes. But in 2021, Justin Trudeau dissolved Parliament and called an election. When that happens, all private members’ bills die; ours was no exception.
I mentally shelved my advocacy efforts until 2024, when B.C. was hit by a devastating cold snap that wiped out entire crops; it killed all of my Syrah and Viognier grapes. To save Lightning Rock’s season, I had no choice but to look south for more grapes—and customers. That year, I registered to sell in Washington State, working with a local distributor to ship our products across the U.S. from there. We were able to sustain that American revenue stream through the trade war, while other Canadian sectors suffered. Donald Trump’s tariffs on Canadian imports didn’t apply to our wine, thanks to CUSMA.
Still, the hypocrisy of our provincial governments backing the big Buy Canadian push while continuing to penalize our wineries with markups was incredibly frustrating to me. So, last year, I reconnected with Dan Albas, who agreed to sponsor a nearly identical new version of his past bill. It received its first reading in Parliament this past March. Canada Post recently announced it would end home delivery and focus on community mailboxes. But that decision won’t affect our petition: wine shipments can still be delivered to post offices. And carriers like Purolator, FedEx, UPS and ATS will still be able to make home deliveries.
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Our resurrected petition has so far received lots of support from other winery owners, but there’s fatigue and skepticism in the mix too. They say, “Ron, we’ve been down this road before.” I understand that it feels like we’re banging our heads against a wall, but my employees depend on Lightning Rock staying afloat, so I’m not prepared to give up the fight. I’ve got direct evidence that advocacy can make a difference. Last year, the Alberta government introduced a 15 per cent value-added tax that resulted in markups of between 28 and 42 per cent on wine bottles shipped in from outside the province. That led to a sharp drop in Lightning Rock’s direct-to-consumer sales in Alberta. But after sustained pressure from industry advocates—including me—the province reversed course, returning to a flat, volume-based tax model. Then, in early March, Ontario Premier Doug Ford and Nova Scotia Premier Tim Houston signed an agreement to allow direct-to-consumer sales of beer, wine and spirits between their provinces. Just a few more to go.
Even with all the financial barriers, wine is close to a $4-billion industry in B.C. I can’t help but think about how much bigger that figure would be if Canada’s trade system didn’t make it harder to succeed at home than abroad. I understand why fewer and fewer young winemakers are entering the Canadian market—and why more established wineries are looking even farther afield than the U.S. for customers. Some Canadian wineries now export more than 50 per cent of their product internationally, and I don’t blame them. I’ve received some interest from South Korea, where I’m looking to distribute Lightning Rock nationwide. The worst-case scenario is that I end up exclusively shipping abroad and tell my fellow Canadians, “Sorry, we just can’t get our wine to you.” But I’m a glass-half-full kind of guy, so I’m optimistic it won’t come to that.
Ron Kubek is the founder of Lightning Rock Winery in Summerland, B.C.