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Thursday, March 23, 2023

Artisan wineries call on Ontario to drop extra restaurant fees for non-VQA vintages

A group of small Ontario wineries says a levy for selling non-VQA bottles to local restaurants goes against the Ford government’s “open for business” mantra and is calling on the province to place their 100 per cent Ontario grape wines on equal footing with VQA ones.

While artisan wineries can hold tastings or sell bottles at their farm stores, once that bottle gets into the hands of a restaurant, they’re charged an extra 28 per cent above what a VQA Ontario winery would pay.

“If you sold that $20 bottle of wine in a case …  the VQA winery is going to receive $173.64 in revenue and we’re going to receive $113.40,” said Craig MacMillan, co-owner of Stonehouse Vineyard in Alexandria, Ont.

MacMillan is the interim chair of Ontario Artisan Wineries, which represents farmers selling fewer than 2,000 cases per year and is mostly made up of vineyards in eastern Ontario.

That $60 difference may not seem like much, MacMillan said, but when looking at multiple cases, those numbers add up quickly. If an artisan winery chose to sell all 2,000 cases to local restaurants, they would pay $120,000 more in taxes than a VQA winery, he said.

“Legally are we allowed to sell to local restaurants? Absolutely. But you can’t when you’re paying those types of charges,” he said.

Craig MacMillan, co-owner of Stonehouse Vineyard in Alexandria, Ont. calls the markup for non-VQA wines when selling to restaurants “not sustainable.” He’s been lobbying municipalities and local MPPs to call on the province to remove the fees for non-VQA wines made from 100 per cent Ontario grapes. (Kimberley Molina/CBC)

VQA Ontario is a provincial regulatory authority that sets standards for wine made in the province. Its mark on a bottle indicates the wine is made entirely from grapes grown in Ontario that have also been approved through a quality assurance program.

MacMillan said it doesn’t make sense to have a different policy for artisan wineries that also use 100 per cent Ontario grapes.

We work too hard to give our wines away for barely anything, so it doesn’t make financial sense for us to go that route.– Jan-Daniel Etter, owner of Vignoble Clos du Vully in Navan, Ont.

The only difference is the type of grape many of his group’s members use, as most VQA Ontario-approved grape varieties can’t be grown outside southern Ontario. 

In 2019, the province did add hardier Marquette grapes to the VQA Ontario’s approved list, but other varieties haven’t made the cut.

Jan-Daniel Etter sees selling local wines to local restaurants as a natural next step for his Navan winery Vignoble Clos du Vully, about 35 kilometres southeast of downtown Ottawa.

“[Restaurants are] showcasing the best of what’s being grown and produced in the area and the wine is part of that culture and so I think it would be a perfect complement,” he said.

But the tax structure is prohibitive, Etter added.

“We work too hard to give our wines away for barely anything, so it doesn’t make financial sense for us to go that route,” he said.

A man with a red sweatshirt stands in front of a shelf of wines, holding a bottle of red wine.
Jan-Daniel Etter holds an Etter Réserve Anne he vinted at his Vignoble Clos Du Vully, an artisan winery that produces between 750 and 800 cases per year. (Kimberley Molina/CBC)

MacMillan and the Ontario Artisan Wineries have been lobbying local municipalities to support their call for a review of what he calls an unsustainable markup and wine levy.

Last Wednesday, the City of Ottawa passed a resolution supporting the elimination of the extra fees for 100 per cent non-VQA wines and calling on the province to remove them.

Eastern Ontario municipalities call for markup removal

Orléans South-Navan Coun. Catherine Kitts believes it’s time for the provincial legacy legislation to be revisited.

“Wineries are a really big contributor to our local agri-tourism sector,” she told CBC, admitting even she couldn’t get a clear answer from the province as to why the tax discrepancy exists.

“That [legislation] needs to be revisited.”

Several other municipalities in eastern Ontario have supported similar motions in the past weeks.

A graph showing a bottle of wine with provincial markup fees for VQA and non-VQA wines.
If a winery sells a $20 non-VQA bottle of wine directly to a restaurant, it would only receive $9.45 from that sale, whereas a winery selling a VQA wine would get to keep $14.47 from the sale. (Ontario Artisan Wineries)

In a statement, Ontario Ministry of Finance spokesperson Scott Blodgett said the wine sector is “an important part of our province’s economy” and the government is “committed to seeing it grow and thrive.”

Blodgett also wrote that wineries have access to a range of government supports, although he did not specify them.

“The government will continue to work with our industry partners and ensure there are more opportunities for businesses,”  he wrote.

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