Another winery bites the dust

Re: Another winery bites the dust

Postby twobits » Jan 16th, 2018, 7:43 pm

oneh2obabe wrote:Andrew Peller Limited purchased 3 Okanagan wineries at the end of last year.


Yeah, they sure did. Do you know the details of the financials of the wineries sold? You won't because they were not publicly traded companies. Which means you won't know how much of their wine in storage was leveraged to debt with AP's marketing reach. This is just the beginning of Okanagan Wine consolidation.
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Re: Another winery bites the dust

Postby twobits » Jan 16th, 2018, 7:51 pm

fluffy wrote:I know a couple who bought an existing winery with their retirement nest-egg, re-branded, won a few awards and sold at a tidy profit, just to turn around and start again with a new winery. I think there's a lot of horsetrading going on in the industry, a lot of it based on the strength of a label. There's also a lot of big corporation money moving into the valley, and has been for years. I think to assume that as winery is failing because it is for sale is a big leap of logic.


I think that game has passed and the couple you know will find their returns to be exactly the capital they put into the new venture plus 2% per annum. We''l have to wait 2 to 5 yr to find out if that is true but I would bet on it. Case of wine Fluff?
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Re: Another winery bites the dust

Postby oneh2obabe » Jan 16th, 2018, 8:16 pm

oneh2obabe wrote:Andrew Peller Limited purchased 3 Okanagan wineries at the end of last year.

twobits wrote:Yeah, they sure did. Do you know the details of the financials of the wineries sold? You won't because they were not publicly traded companies. Which means you won't know how much of their wine in storage was leveraged to debt with AP's marketing reach. This is just the beginning of Okanagan Wine consolidation.

I'm sure Andrew Peller looked into how much wine was in storage plus a slew of other factors. Doubt they'd pay $95M to acquire 3 wineries if they didn't think these acquisitions would be a good fit.

https://www.biv.com/article/2017/9/andr ... 5-million/
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Re: Another winery bites the dust

Postby twobits » Jan 16th, 2018, 9:47 pm

What was the debt? And truthfully, these three wineries do not represent the norm in the consolidation that is happening. Small wineries are toast. Quality grape growers will survive.
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Re: Another winery bites the dust

Postby Darkre » Jan 17th, 2018, 3:27 pm

twobits wrote:Y'all must have missed my post in the BC forum about the absurd amount of unsold BC wines in storage. There is a glut of it on the market. I see these winery sales as a sign of the writing on the wall of over investment and production being realized.

Hey twobits, I saw your comments in the other thread and am wondering if the wine is unsold or being put in to storage so it can age? It's seems likely to be a combination of both but you seem to more have information on the subject.

On a separate note, a few years ago I was at an event where I ended up seated next to, and speaking with, the owner of a local winery for quite some time. They were banking heavily on the trade barriers and regulations between the provinces being removed, opening up a market around 8 times the size of BC to their product. This hasn't happened yet but it could explain why there is a lot of wine in storage, and why quite a few wineries have been sold recently. Too many wineries may have made a bet on the huge market expansion for their products happening quicker than they have and weren't able to survive while waiting for these changes to finally take place.
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Re: Another winery bites the dust

Postby oneh2obabe » Jan 17th, 2018, 4:43 pm

Wine shipments between provinces has been opened somewhat but each province can create various barriers to interprovincial "direct to consumer" shipments.

http://winelaw.ca/cms/legal-info-indust ... hin-canada
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Re: Another winery bites the dust

Postby twobits » Jan 17th, 2018, 8:35 pm

oneh2obabe wrote:Wine shipments between provinces has been opened somewhat but each province can create various barriers to interprovincial "direct to consumer" shipments.

http://winelaw.ca/cms/legal-info-indust ... hin-canada


So you post an article from 2004 to support your argument? The reality today, 2018, fourteen yrs later, is that only two provinces are on board. And neither one has made a difference to BC Wine sales. Sure, people from those Provinces can buy BC wine now but they have to bring it in themselves or order it online and pay for the shipping. That is really going to help the small wineries here eh?
Dan Albas tried and succeeded to a point, but there still remains a protectionist attitude by Provincial Distribution Branches as well as logistics of how many skew numbers they can inventory and present for sale on a retail level.
Many of our own Okanagan Wineries cannot even get a skew number and distribution in our own Province's LCBC for lords sake. How are they going to get one in Ontario or Quebec??
You don't have a clue what's happening here.
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Re: Another winery bites the dust

Postby oneh2obabe » Jan 17th, 2018, 8:38 pm

twobits wrote:So you post an article from 2004 to support your argument?

If you had looked at the dates, you would have noticed ...
Written by Mark Hicken Category: Shipping, Border, Import, Export Laws Published: 09 August 2004 Last Updated: 23 June 2017
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Re: Another winery bites the dust

Postby twobits » Jan 17th, 2018, 9:12 pm

Darkre wrote:Hey twobits, I saw your comments in the other thread and am wondering if the wine is unsold or being put in to storage so it can age? It's seems likely to be a combination of both but you seem to more have information on the subject.


I answered this in another post with a current link that supported it (that nobody has disputed BTW). The wine we produce here is 98% bottle ready for consumption. There is no need to bottle age it because it will not improve with age. It is intended for immediate sale. It actually will deteriorate with storage. Which begs the question...."why is it being stored?"
Darkre wrote:On a separate note, a few years ago I was at an event where I ended up seated next to, and speaking with, the owner of a local winery for quite some time. They were banking heavily on the trade barriers and regulations between the provinces being removed, opening up a market around 8 times the size of BC to their product. This hasn't happened yet but it could explain why there is a lot of wine in storage, and why quite a few wineries have been sold recently. Too many wineries may have made a bet on the huge market expansion for their products happening quicker than they have and weren't able to survive while waiting for these changes to finally take place.


This owner was hoping for changes that have not to date happened. They are making widgets in excess of demand in hopes that laws will change and they will be able to sell those widgets that are in storage. Hasn't happened yet. And those widgets in inventory have a serious cost accruing against them in cost of carrying the production cost, storage costs, and degrading product.
Quite frankly, the rubber has met the road here and that is why we are seeing and going to continue to see a consolidation of the BC wine industry and a significant devaluation in farm gate wineries. Gentleman farmers per se. That party is over.
The "big guys" of which AP are a part of, can buy the bulk production of wineries that have capacity and rather than bottle more that the local market can absorb for retail, send it to their consolidated mega plants as raw juice in tankers and rebrand it and skirt the trade barriers.
I pointed out the hundreds of thousands of bottles of wine here in storage. The big secret that few in the local industry will admit to. That doesn't matter though. All one has to do is tour the "golden mile" as they call it between Oliver and Osoyoos after harvest season is done and witness the hundreds of acres of grapes that are left to rot on the vine because there is no buyer for the fruit. And before anyone suggests it, no it is not for Ice Wine.
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Re: Another winery bites the dust

Postby Jhunter199 » Jan 17th, 2018, 9:19 pm

I cant say I agree with that wine in the Okanagan doesn't need to be bottled aged? There are numerous highly successful wineries and smaller family owned that as of right now are selling 2012, 2013 vintages. This would beg the question where do they put 10,000 cases of 2014, 2015, 2016 vintages? These need to be climate stored in facilities such as the one you've talked about, the new one David Enn's and company are opening in Naramata, and the ones in Kelowna and Oliver.

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Re: Another winery bites the dust

Postby twobits » Jan 17th, 2018, 9:31 pm

oneh2obabe wrote:[
If you had looked at the dates, you would have noticed ...
Written by Mark Hicken Category: Shipping, Border, Import, Export Laws Published: 09 August 2004 Last Updated: 23 June 2017


OK, my bad, I didn't notice the update. But it doesn't really change anything and in fact supports my argument given that it was dated 2017 and still says....

While the general prohibition remains in place, the Bill created a national personal use exemption for wine subject to applicable provincial laws. In June 2014, the federal government also amended the law to extend the personal use exemption to include the interprovincial shipment of beer and spirits. That amendment was effective June 19, 2014. However, the various provinces have not embraced the spirit of these changes and have created various barriers to interprovincial "direct to consumer" shipments.

So where and how have BC Wines achieved a greater market despite Dan Albas' efforts?? He tried to do the right thing and the other provinces just don't feel the need to skew and inventory our wine.
And all of that aside, while the wine made in BC is very very good, the reality is that consumers, even savvy wine consumers, realize that very very good wines can be purchased from Europe, Chile, Australia to name just a few for much less than a bottle of wine made here in BC 1000 yards from their house and they ask the obvious question when they look at the McMansion Home and winery on the property and say "WHY?".
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Re: Another winery bites the dust

Postby twobits » Jan 17th, 2018, 9:41 pm

Jhunter199 wrote:I cant say I agree with that wine in the Okanagan doesn't need to be bottled aged? There are numerous highly successful wineries and smaller family owned that as of right now are selling 2012, 2013 vintages. This would beg the question where do they put 10,000 cases of 2014, 2015, 2016 vintages? These need to be climate stored in facilities such as the one you've talked about, the new one David Enn's and company are opening in Naramata, and the ones in Kelowna and Oliver.


For your reading pleasure. Please debunk it if you can. And even if you can find an argument in favour of some special varietals that benefit from bottle aging besides champagnes, please explain why hundreds of thousands of bottles of ready to drink wine are being stored other than a cpl of people have realized that there is unsold wine to be stored and think they can make a buck by storing it.......without improving the actual wine!!


Storage Needs for the Average Wine Drinker

At the risk of losing potential customers, let's be frank. The vast majority of wine out there today (95%?) is "ready-to-drink". Manufactured for immediate consumption, they will NOT improve with time. In fact they will start to degrade from the day they're corked - even if properly cellared. Proper cellaring will maintain your "ready-to-drink" wines much longer, but it will not improve them.

Someone once did a study of all the wine purchased from the LCBO shelves, and determined that the average length of "cellaring time" for all wines sold was something in the neighborhood of 14 hours! Producers know this, and develop most of their wines for this purpose. In general it is far less expensive to make "ready-to-drink" wine, so why not?

Not to say that "ready-to-drink" wine means low quality - far from it. There are very high quality and very expensive "ready to drink" wines (and grape types) that are simply not designed to be age-worthy. (i.e. The pot roast tastes great on the 5th day, but the leftover trout will not). Bottom line: if kept for only short periods, (i.e. few months) specialized storage is not an issue for the average wine drinker, the average wine, or any wine for that matter.

Most "ready to drink" wines can be safely stored up to 8 or 12 months or so without significant loss of quality as long as it is kept in an area with the following minimum conditions:

away from direct sunlight, between of 4°C and 18°C (40°F and 65°F), temperature does not fluctuate more than about 2 to 3°C (5°F) - at least not too frequently?! and relative humidity levels are greater than 50%.

Store it outside of these limits, and all wine is subject to passing their prime or spoiling in just a few months. Although the first two conditions can be easy to provide (if you have a basement), most people find it very difficult to provide the last two without some type of cellar or wine cabinet. So drink up folks, or better yet, call us!

So Okanagan wineries are storing both red and white wines for several years why? High end market? Or it just can't be sold before the next crop is processed?

https://www.finewinereserve.com/facts.php
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Re: Another winery bites the dust

Postby Jhunter199 » Jan 17th, 2018, 10:00 pm

That article seems to be all over the map, from proper storage and transport, to conditions, to "ready to drink" produced wines. The thing is not many if any in the Okanagan make ready to drink wine as the grape quality here is very different from that of the Ontario wineries and more than likely the wine tested by the LCBO. I know personally right now we are selling 2012/13 reds and 2016 whites. We don't have the storage capacity to bottle cellar our 2014, 2015, 2016 reds so we rely heavily upon climate controlled storage facilities. Whites we do not bottle cellar, just barrel age and then bottle for consumer sales. I know some winemakers in the area like to take certain varietals of white and 12-month bottle age also.

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Re: Another winery bites the dust

Postby twobits » Jan 17th, 2018, 10:44 pm

Jhunter199 wrote: The thing is not many if any in the Okanagan make ready to drink wine as the grape quality here is very different from that of the Ontario wineries and more than likely the wine tested by the LCBO.


You are kidding right? Pretty much of all wine produced here is bottled and ready for sale by the next crush season. Just because you are buying wine that is a cpl of yrs old does not mean anything.
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Re: Another winery bites the dust

Postby Jhunter199 » Jan 17th, 2018, 11:01 pm

twobits wrote:
Jhunter199 wrote: The thing is not many if any in the Okanagan make ready to drink wine as the grape quality here is very different from that of the Ontario wineries and more than likely the wine tested by the LCBO.


You are kidding right? Pretty much of all wine produced here is bottled and ready for sale by the next crush season. Just because you are buying wine that is a cpl of yrs old does not mean anything.


Im not really sure what your argument is now, is it that wine is drinkable right away? is it that wine doesn't need to be stored? Or is it that it should be sold right away?
I'm giving you the insight into an industry i've been apart of for many years, but you seem to be hung up on the fact that wineries like to bottle age wines. Have you made wine before? Are you a winemaker? What is your experience in the industry?
I'm not sure why an industry storing bottled wine for future sales is so bad in your opinion?
Does this indicate that this industry is in major trouble? No, I don't think so at all. Are there wineries going up for sale? Yes absolutely, but just because businesses are for sale doesn't mean an industry is dying. Look on realtor.ca right now and see how many Restaurants are for sale in the Okanagan... Does that mean the food and beverage industry is dying also?
Yes I get that you've seen inside a storage facility and it seemed overwhelming, but honestly, that is how 90% of wineries age bottles nowadays (simple because it is more cost-effective than using vineyard land to build storage facilities)

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