White wine grape prices rise three per cent

Wednesday, May 9, 2012

by DAVE PINK

A new wine-grape pricing agreement reached after three-party negotiations last month should ensure the continued growth of province’s wine industry, says Hillary Dawson, president of the Wine Council of Ontario.

The agreement reached by the wine council, the Grape Growers of Ontario and the Winery and Grower Alliance of Ontario will see the processor-to-grower price for red hybrid varieties rise one per cent this year and another one per cent in 2013, while the price for white hybrid varieties will rise two per cent this year and one per cent in 2013 and the price of white vinifera grapes will rise 1.5 per cent this year and one per cent next year.

Dawson says there is higher demand for the white hybrid grapes, accounting for the larger price increase, because they are an important component in blended wines — the low end of the wine market. Provincial regulations for blended wines, which are usually priced at below $10 a bottle, must contain at least 40 per cent Ontario wine, in addition to wine imported from other parts of the world.

“The 40 per cent requirement artificially lifts the demand for these hybrid grapes,” she says. “They’re cheaper and can be grown in great volume. And their taste value is very stable. It gives a stable platform, and that’s what they’re looking for.”

She adds: “No other wine region on the planet sets prices this way. Everywhere else it’s a free market.”

Debbie Zimmerman, CEO of the Grape Growers of Ontario, says the current system of settling prices works just fine. "We only negotiate the base price, then the wineries can add on to that whatever they want,” she says. "It's not a final price, just a minimum."
 
"Maybe they do things differently in other places,” she adds. "We've settled pricing this way for four years, and when people are willing to participate in something like this then good things get accomplished."

A representative from the Winery and Grower Alliance of Ontario could not be reached for comment.

Meanwhile, Dawson says the province’s wineries are continuing to show strong growth in their high-end specialty wines which are made entirely from Ontario-grown grapes and carry the VQA (Vintners Quality Alliance) label. “This is the fifth year of incredible growth for VQA wines. In terms of sales, they are the strongest performing in terms of growth.”

And the long-term potential for Ontario wine is very bright, particularly for the VQA wines, says Dawson. “It’s an industry that people want to be successful,” she says.

“We’re not that old an industry compared to other wine areas of the world. We’re something like 25 years young. We’re just in our adolescence and the growth potential is huge,” she says. “We’re already a permanent infrastructure in rural Ontario. It’s quite exciting.”

Ontario’s grape and wine industry registers more than $610 million in wine sales annually, and is particularly strong in the Niagara Peninsula, Prince Edward County, and along the Lake Erie shoreline in Essex County.

In all there are 482 growers in the province, and 183 active producers who buy the grapes.

Based on sales, the province’s wineries have about 28 per cent of the market, while imported products account for the remaining 72 per cent, according to figures from the Grape Growers of Ontario. BF