LETTER: Comeau decision bad news for wine

LETTER: Comeau decision bad news for wine

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As a result of a unanimous decision of the Supreme Court of Canada, Canada remains the only nation in the world in which its citizens cannot readily consume their own domestic wines.

Canadian fine wines are receiving international recognition but are not readily available to Canadian consumers outside of the province of production.  Efforts by the federal government to liberalize rules governing inter-provincial trade in wine were thwarted by provincially imposed prohibitions.

 In Comeau, the court upheld provincial laws designed to create liquor monopolies with the power to impose exorbitant markups both to raise government revenues and for temperance purposes. The fact that this results in silly rules disrespected by most Canadians that prevent consumers from shipping wines for their own consumption across provincial boundaries was held by the court to be a mere incidental effect.  

The decision does fundamental damage to the Canadian wine producers. Most Canadian wineries are small, agriculturally based producers of premium or super-premium wines. They are effectively denied access to the entire Canadian market by restrictions on inter-provincial trade and by the high markups and volume requirements of the provincial liquor retail monopolies. Absent access by direct delivery to consumers across Canada, their growth is effectively limited to their local market as well as international exports. 

In the United States, where a 2005 decision by the US Supreme Court in Granholm, upheld the right of producers to ship inter-state to customers  national direct, consumer delivery is a key market for small and medium size wineries. Inter-state direct to consumer delivery is now close to a $3 billion market (about 10% of all off premises domestic retail sales). About 46% of this market is medium sized producers between 5,000 and 50,000 cases annually (with average bottle price of $38.75) and 23% is small producers under 5,000 cases annually (with average bottle price of $64.37).

In the  Comeau decision, the court simply upheld precedent from 1921 reading down the free trade provisions of the Constitution Act as prohibiting only inter-provincial tariffs, not other non-tariff barriers to inter-provincial trade. It failed to recognize that Internet sales and direct shipment to customers is the essence of modern retailing. It failed to come up with creative solutions to uphold provincial laws created for valid purposes while striking down silly laws such as those prohibiting an Okanagan tourist from Alberta taking home a case of Okanagan wine. 

It becomes even more critical for premiers to resolve this through the inclusion of domestically produced wine in the new Canada Free Trade Agreement.

Al Hudec, Oliver

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