The case for a sub-GI in Naramata Bench

The Naramata Bench, to those who are unfamiliar with it, is located just north of the City of Penticton on the east side of Okanagan Lake. It is one of the most beautiful places to visit in British Columbia with a wide array of topography. It has a rich history as an agricultural region, and the Bench is dotted with micro-climates each with unique grape growing conditions.

Nestled within the Okanagan Valley, I see Naramata Bench as Canada’s most valuable yet-to-be-officially-designated wine sub-region. While the Bench thankfully maintains its pastoral ambience, the scale of the wine industry has grown by leaps and bounds since a handful of pioneering wineries began here about 30 years ago.

It is said that here on the Bench is the northernmost latitude where someone can successfully grow Syrah grapes to ripeness — and several lovely Syrah wines come from here. In the image of the Naramata Bench above that I took on a visit this month, you can view Nichol Vineyard in the lower right foreground where winemaker Ross Hackworth grows his Syrah. In the distance at the end of Lake Okanagan is Penticton.

What is a GI?

A geographic indicator or “GI,” also known as a DVA or ‘Designated Viticulture Area’ (“AVA” in the United States), and often referred to as an appellation, is established primarily to identify the origin of the grapes used to make wine. Where the grapes in that wine originate from should be accurately indicated on the bottle’s label.

B.C. has several GIs including Okanagan Valley, Similkameen Valley, Fraser Valley, the Gulf Islands and Vancouver Island. There are four new appellations in Thompson Valley, Lillooet-Lytton, Shuswap and the Kootenays.

When you divide a GI into smaller parts, these sub-regions are referred to as a sub-GI. Until recently, there was only one sub-GI in B.C. (Golden Mile Bench, near Oliver). A second sub-GI – Okanagan Falls – was recently approved. Other regions are seeking approval – including one for Naramata Bench.

A plebiscite vote conducted by the B.C. Wine Authority (BCWA) is taking place during the month of August over whether Naramata Bench should have its own sub-GI. It is in my view an important vote that will send a strong signal either way about how the B.C. wine industry sees its future.

If the vote fails, it would be a validation for the status quo. It will not stop other regions from applying for their own sub-GI designation, but it would certainly put the brakes on efforts to strengthen the authentication of labeling for wines coming from Naramata Bench-based wineries. Given the value wine consumers put in knowing the origins of wine, it could devalue the brand over time.

I have long admired our indigenous wine industry and think it has become an important symbol for our province’s diverse economy. I feel personally vested in the success of this industry, partly because I purchase a lot of B.C. wine, visit many of its wineries around the province, and regularly interact with many of its business leaders.

I should disclose that I have no direct interest financial or otherwise in the industry today, but I did work on a contract between February 2015 to June 2016 to help facilitate the Wine Appellation Task Group. You can read more about that group at the legacy website I host here. I would like to see the Task Group’s recommendations implemented because we worked hard to arrive at them, and I believe they will make the industry stronger.

Why a sub-GI?

Which brings me to the reason for this blog post. Not everyone on the Bench is convinced that the name Naramata Bench should be regulated as a sub-geographic indicator. Among the Bench’s wine producers, two individuals have been most vocal in opposition. They are Bob Ferguson (Kettle Valley Winery) and Jeff Martin (La Frenz Winery). Both are accomplished business people in their own right, and they produce pleasing wines.

Martin and Ferguson have circulated a co-signed letter that is now being shared on social media, triggering a fulsome debate.

History shows that people are inclined to be skeptical – even mistrustful – when their own economic interests are at stake. I believe that Martin and Ferguson are leading the charge for the “no to sub-GI” side for sincere reasons and not only self-interest. They genuinely think that approval will result in unnecessary costs and red tape.

However, I think there are points here that deserve a rebuttal. From my own research and understanding of the industry, I do not see the negatives as they have presented them in their letter. In fact, I am firmly in the camp that says you must embrace change, and continue to work to make not only the wine better, but also the systems put in place to regulate the sector.

What follows are the points made by Martin/Ferguson unedited and presented in italics, followed by my rebuttals. I will do my best to address their concerns, and argue the case for voting “yes” for a Naramata Bench sub-GI.

1. MARTIN/FERGUSON SAY: This committee was NOT an initiative of the Naramata Bench Wineries Association but rather a “self appointed” group of individuals who surprisingly own very little vineyard land in Naramata with some winery employees that do not personally have significant financial capital invested in the Naramata Bench wine industry.

BCWINELOVER RESPONDS: This first point expresses the view that only those who own substantial amounts of vineyard land have the best interests of the Naramata Bench in mind. As anyone with knowledge of the people and progress of the Bench will know, owning land is not a prerequisite for passion for this place or its wine. Thank goodness we have people who care deeply about the Bench’s future, and not just those who were lucky enough to buy a vineyard here.

I gather the “committee” mentioned above is made up of several prominent wine producers took the initiative to kickstart the plebiscite process because of delays in getting stakeholder buy-in.

2. MARTIN/FERGUSON SAY: What is preposterous about this GI proposal is only wineries that are BCWA/VQA members are being surveyed or counted for its approval. All legitimate stakeholders are NOT being asked for input but rather only the members of the BCWA and their participants of the VQA program. They will in effect monopolize the use of the term Naramata Bench, preventing non BCWA and VQA participants from using it in the future. Wineries on the Naramata bench that have chosen not to belong to the BCWA and vineyards that have chosen not to register with the BCWA, a voluntary organization, are not allowed to vote in this referendum. Therefore, those most affected by this proposal do not get to vote!Currently all wineries can use the term Naramata Bench on their labels provided they do not place that term directly under the varietal name and the term Okanagan Valley. If the referendum is successful only BCWA members, having submitted and had their wines approved for the VQA program will be able to use the GI. There is significant cost to participating in the BCVQA program not to mention the additional paper work and bureaucracy that comes with it.

BCWINELOVER RESPONDS: Lots to consider in these claims but let’s start going through them.

“All legitimate stakeholders are NOT being asked for input…”

The plebiscite only goes to members of the BC Wine Authority (BCWA), who can either be wineries or vineyard owners. BCWA members represent the vast majority of licensed wineries and grape production on the Naramata Bench.

Plebiscites require a list of “voters” in order for them to be conducted. If you are registered then BCWA can conduct the plebiscite vote in an orderly manner, and not spend time trying to contact individuals or organizations that have not registered. A recent exception to this practice was the June 2016 plebiscite on the Wine Appellation Task Group recommendations, where the BCWA attempted to contact the all wine producers. Vineyard owners were not a part of that vote.

“They will in effect monopolize the use of the term Naramata Bench, preventing non BCWA and VQA participants from using it in the future.”

Though the Wine Appellation Task Group recommended that both VQA and non-VQA wines (“Wines of Distinction”) be allowed to use the geographic indication, it did not get the required double majority in the plebiscite. That decision may someday be put to another vote if the industry wants it, but for now if someone is going to use the GI on their label they are required to send their wines to the tasting panel.

The taste panel is the source of controversy behind many producers’ objections to the way GIs are regulated. Taste panels are mostly criticized for the cost, and sometimes for the delays they can cause in getting wines on the bottling line. However, the industry just conducted a plebiscite that is bringing significant changes to the taste panels (I will address the cost to VQA wines below). The results of that plebiscite could fill up a separate blog post on their own. The changes that have been approved (and will be officially rolled out soon) include allowing using tank samples for the taste panel.

I am not going to defend or criticize the taste panels. They are used for determining VQA status, which is the industry’s standard for testing for “faults” in wine until the sector decides otherwise.

Today more than ever, wine consumers are compelled to learn where their favourite wines come from. Failing to establish a standard to authenticate a wine’s origin will devalue the wine and the associated brand over time. There have been numerous scandals over the mislabeling of wine over the years. Some regions struggle to ever regain their reputation as a result.

In the recent Okanagan Falls approved sub-GI, the local producers have agreed voluntarily to limit the use of the phrase “Okanagan Falls” with respect to identifying the wine to only those wines that use the approved quantity of grapes harvested from within the boundary of the OK Falls sub-GI. Wineries can still identify their location as being in Okanagan Falls.

With Naramata Bench, if the sub-GI is approved wineries will still be able to identify the location of their winery as being from the Naramata Bench. It will be up to the local producers to decide how they will use that place name. The BCWA will likely encourage the use of variations such as “Naramata” or “Naramata Road” to allow consumers to know where the winery is located.

“There is significant cost to participating in the BCVQA program…”

There are significant costs involved in running a winery. However, being a member of the BC Wine Authority is not one of them.

Membership in the BC Wine Authority for wine producers is $50/year plus an additional $65/year to cover the cost of an audit that happens once every three years. (The total cost of the audit is $195, regardless of where the audit takes place in the province. It is unlikely BCWA recoups the full cost of the audit). The $50 membership fee assumes that the wine producers will submit no wines to the tasting panel.

Vineyard owners can join the BCWA for no charge.

Thanks to the recommendations of the Wine Appellation Task Group there is now a low-cost “flat fee” for producers in two categories listed below. Many producers many not be aware of this as it has only been recently implemented.

The majority of small producers are under 20 tons (Imperial measure) of grapes. The second category with the greatest number of winery licenses is under 40 tons of grapes. Then there is the third category – wineries above 40 tons of grapes.

The fees for these categories are as follows:

Level 1 (20 tons or less) Cost: $300/year. For this fee you can submit five wines to the taste panel, and the cost of your (every 3^rdyear) audit is included. To be clear, this is not five labels, but five submissions. So, if the wine fails the taste panel (a very low percentage do, and new rules will reduce that even further) a re-submission will use up one of those 5.

Level 2 (40 tons or less) Cost: $650/year. Allows for up to eight wine submissions to the taste panel. Cost for audit also included.

Level 3 (over 40 tons) Cost: Wineries are charged $10/ton of grapes, and $100/submission.

As mentioned above, any winery can join the BCWA and not have their wines submitted to a taste panel. At present the $50 annual fee and $65 audit charge remain, though the BCWA is reviewing whether to eliminate the membership fee.

“…not to mention the additional paper work and bureaucracy that comes with it.”

To be clear, a BCWA audit is simple. You just have to show the records for one wine (presumably chosen at random) to prove where the grapes were purchased.

Secondly, you have to show your label to make sure it is not presenting any inaccurate information (i.e. the mis-use of a GI), or misrepresenting the alcohol content.

To be sold to a consumer all wines must undergo a lab test. The typical charge for a lab test is $90 for a wine sample. Many wineries have established their own certified labs, and therefore can do the tests in-house instead of using a third party. Vancouver Island wineries that were frustrated about the cost of shipping samples to the Okanagan now have a local option for lab testing at a lower cost.

What should be pointed out is that in order to establish the new low-cost flat fees for small producers, the wineries who produce at 40 tons+ will be subsidizing the costs for the small producers. The flat fee structure does not recoup the cost to run BCWA or the taste panels, and the Authority must remain revenue neutral.

As a final thought on this section of the letter from Martin/Ferguson, I think it is surprising that wineries would not want to have some basic level of self-regulation in place to protect themselves and the reputation of the region. We hope there is never a scandal involving labeling or misrepresentation of products in the B.C. wine industry. But if there was, you can be sure that the government would be quick to impose a solution with a potentially significant cost attached.

3. MARTIN/FERGUSON SAY: Firstly some history is in order.The NBWA was established some 15 years ago because Naramata didn’t exist in the eyes of the wine buying public. It was a backwater on the wrong side of the lake between Kelowna and Oliver. At that time there was the BCWI which ran the VQA marketing program of which most small wineries in the Okanagan felt didn’t serve their interest whatsoever, but the interest of larger wineries who sat on most of its boards and committees. Government marketing funds never reached the Naramata side of the lake and as a result small wineries established on the Naramata Bench at that time got very little recognition at all.The Naramata Bench founding wineries Kettle Valley, Poplar Grove, Hillside, La Frenz, Nichol, Lake Breeze and Lang got together with the intent that we correct this situation and get on with business free from the politics that was stifling the small producers. We pooled our marketing resources, showing a united front and that we play well together. Our neighbouring winery wasn’t seen as our competition but rather our ally in attracting wine consumers to the Naramata side of the valley.The term Naramata Bench was coined as a banner to promote this agenda. At first every other region in the valley scoffed at the audacity of this, but today its success is well proven. Every other area has or is implementing a clone of the original idea and the fact that Naramata Bench is recognized internationally.If this GI is approved the term Naramata Bench will be copyrighted and owned by the British Columbia government. Its use will only be available to members of the BCWA for use in the VQA program which is clearly divisive and a retrospective step backwards contrary to why it was created in the first place.Many wineries that originally put equity into creating the “Naramata Bench” brand will be unable to use the GI unless they join the VQA program.

BCWINELOVER RESPONDS: To all those who invested early in the future of the Naramata Bench, we should all acknowledge your contribution and the success it has brought the region. I am convinced there is no sub-GI in Canada today that comes even close in terms of brand value than Naramata Bench.

This is even more reason why those who grow grapes and produce wine on the Bench should take measures to protect what they have built. Without some regulatory measures to ensure that the wines claiming to be from Naramata Bench are authenticated, the Bench will never reach its full potential in the eyes of those who follow wine.

You do not have to take my word for it. Talk to producers outside of B.C. to get a sense of the value of a sub-appellation.

When I was working for the Wine Appellation Task Group I interviewed Steve Robertson from Delmas Winery in Oregon. Steve had worked in California’s wine industry and saw the boom associated with Napa Valley. He noted that the Willamette Valley AVA was established approximately at the same time (in the 1980s) as Napa Valley. The Napa producers promoted the heck out of their AVA, building it into one of the world’s top five wine brands. Whereas Willamette took much longer to realize the potential of promoting themselves. Today, Willamette Valley wines are garnering international acclaim.

Robertson worked hard to create a new sub-AVA called “The Rocks” along the Columbia River valley in the Walla Walla AVA. He did all the community meetings, and described to me how he worked with other producers to get buy-in. It reminded me of the 18 months I worked on the Task Group, traveling around the province to hear what people wanted from the industry. I consulted with both Bob Ferguson and Jeff Martin during that process.

Regarding this statement: “the term Naramata Bench will be copyrighted and owned by the British Columbia government”. I get that it is meant to provoke anti-government cynicism. We all get those feelings. However, the term will not be “copyrighted”. Okanagan Valley is not a “copyrighted” term. It is regulated so that someone who makes wines that do not have grapes from outside the valley cannot use that label. The people of British Columbia “own” the place name. Its use on a bottle of wine will be regulated, and rightly so in my opinion.

4. MARTIN/FERGUSON SAY: The assumption that a GI will result in a higher return as a result of commanding higher wine prices. It’s a fact, pure and simple that quality develops a reputation which in turn sells wines and commands premium prices NOT because it has an indicator of origin. It was the quality of the wines being produced by wineries on the Naramata Bench at the time that created its reputation. This, together with pooling our marketing resources, enabled the public to realize the quality of our wines. It is far more important to concentrate on real wine quality than merely create more rules. Consumers will NOT pay more by simply putting a GI on the label. It is simply delusional.

BCWINELOVER RESPONDS: When it comes to pricing, reputation matters a whole lot. There are plenty of “quality” wines that cost very little. There are mediocre wines that come from Napa, France and Australia that we pay a lot more for. Over time consumers are willing to pay more because they want to experience wines from a certain region. Many producers will respond by raising prices, while others will remain competitively-priced. Quality is an important driver, but in the end people do not sit around the table waxing about a wine’s quality. They much prefer to talk about how the wine expresses the place it comes from.

5. MARTIN/FERGUSON SAY: The assumption that Land prices will go up. Naramata today has some of the highest land prices in the valley and this isn’t a result of the economics of grape growing. It is driven by what is seen to be its vineyard country lifestyle by folks from the cities like Vancouver, Calgary etc. The beautiful sunsets, lake views and the romance of living amongst the vineyards. This has resulted in Naramata historically being a solid real estate investment. It has had nothing to do with a GI in the past or any land appreciation because of a GI in the future.

BCWINELOVER RESPONDS: The past several PNE Prize Homes including this year’s have all been located in the Naramata Bench. Ticket sales for these prizes have broken records. The fact that it is a wine region is why, as we know there are hundreds of other, more affordable places to erect that home.

6. MARTIN/FERGUSON SAY: The assumption that we need label integrity. We can use Naramata Bench anywhere we want to now, whether the winery is a BCWA/ VQA participant or not. There are only 2 winery licences available in BC , one commercial licence where the winery is free to import wine, juice or grape products from anywhere in the world . The other is called a “land based” licence where all the wine produced has to be made from 100% Canadian grapes. A requirement of this second licence is regular auditing by the government to prove the wine produced is actually 100% BC. Any inference that only VQA wine is genuinely Canadian is an outright lie. Auditing by the BCWA/VQA has never ever resulted in a single violation of their GI regulations or any supposed scamming that this GI is proposed to protect us from. I hate to use the term but it is simply a “witch hunt” to say it will save our reputation from the scamming that is going on.

BCWINELOVER RESPONDS: When traveling the province to meet with wine producers in 2015/16, the number of audits was a recurring theme. As a result, one of the recommendations by the Task Group was to harmonize multiple audits into a single audit. I gather this is still being worked on between government and the BC Wine Authority. The federal excise tax audit is considered separate, and there can be no information sharing with the province. Whereas the province as audits from the B.C. Liquor Distribution Branch and the B.C. Liquor Control and Licensing Branch (LCLB, which now includes cannabis regulation). The Wine Authority as mentioned audits for grape origin and label integrity.

Regarding the phrase, “Auditing by the BCWA/VQA has never ever resulted in a single violation of their GI regulations or any supposed scamming that this GI is proposed to protect us from”. It is not hard today to play fast and loose with a wine’s origin. You can put Naramata Bench on your front label today and have grapes in the bottle that are not from the Bench — it is apparently already happening. I am not sure who thinks that is okay, which is why the BCWA needs the tools to enforce the regulations. Until that happens, the work put in by the Bench’s pioneers to grow the region’s reputation will be under threat. That is not a “witch hunt,” that’s just a fact.

7. MARTIN/FERGUSON SAY: The assumption that we need to have regulations like the French to guarantee quality and origin. The French regulations have not achieved this by any measure, so why should we try to emulate this. It’s impossible for regulations to guarantee quality. Regulating a winemaker with a recipe to guarantee wine quality, is preposterous. In our experience we would argue regulation stifles innovation.The French system is the most regulated in the word and yet it has generated a revolving door of French wine scandals in the media, just search the title online.The well respected wine writer for the Globe and Mail, Beppi Crosariol recently wrote these poignant comments “ Here’s a riddle. France is the world’s third largest importer of Sicilian wine, almost all of it in bulk. Ever encounter a bottle of Sicilian vino on your French travels? Didn’t think so , the Sicilian paradox would be interesting to ponder next time your sipping an unusually rich glass of the house “ burgundy” at a French bistro”.In 2007, a French consumer group published a report saying that up to a third of wines sold under France’s hallowed appellation system could be from a different region than that listed on the label. The group, UFC-Que Choisir pointed a finger at awards panels for the Appellation d’Origine ( AOC), saying they were populated by local industry workers with vested interests. It declared the AOC system was turning into a joke. Does that sound familiar?

BCWINELOVER RESPONDS:

BC VQA (“Vintners Quality Alliance”) is a standard for ensuring that specified “faults” do not exist in the wine. These faults include testing for grape characteristics and sulphur content. What BC VQA is not meant to be is an indicator of the wine’s quality – though that was probably the original goal, including having a nationally recognized standard. It probably does not help that the word “quality” is part of VQA (hence the confusion). Ideally, the industry should agree upon what VQA is meant to stand for.

France has hundreds of years of wine production to base its reputation upon. We have little more than a generation to look back upon. Therefore, it makes sense that we would put credible standards in place to ensure the appellation of origin of B.C.’s wine.

8. MARTIN/FERGUSON SAY: There are approximately 270 grape winery licences in BC of which only 176 are members of the BCWA/VQA program. This means wineries you are currently selling your grapes to will not be able to use any reference to Naramata Bench in their marketing unless they join the VQA program. This could easily have the effect of lowering grape prices for Naramata grape growers. There is talk of membership in the BCWA becoming compulsory rather than voluntary, but this is just talk and a long way off. For the record La Frenz and Kettle Valley wineries are members of the BCWA and pay the annual dues because it is the regulatory body of our industry and is run at arm’s length from industry. In our opinion, for the BCWA to remain a credible wine industry organization, it needs to be autonomous from industry.

BCWINELOVER RESPONDS: It is good news that both La Frenz and Kettle Valley are members of the Wine Authority and that they see the need for a regulatory body in the industry. Today, grape prices in the Okanagan/Similkameen are at an all-time high thanks to growing demand. It is hard to foresee those prices coming down anytime soon.

As more wineries become aware of the low-cost “flat fee” for joining BCWA and having wines approved by the taste panel, more producers are likely to sign up as members. This will strengthen the case for going back to a mandatory membership, like the one that used to exist for the industry and is in place in other regions such as neighbouring Washington State.

MARTIN/FERGUSON SAY: IN SUMMARY

As we’ve stated clearly we don’t believe a GI will have any positive influence. However if some stakeholders believe it will, then why not use a different geographical indicator term like Penticton or Naramata. That way it appeases all parties and leaves the Naramata Bench brand alone.

We urge you to vote against the sub-GI as proposed and look to terminology that can work for all industry members on the Naramata Bench. La Frenz Winery and Kettle Valley Winery, both have made significant financial investments in vineyards and their wineries on the Naramata Bench during the approximately three decades both have been in operation.

BCWINELOVER RESPONDS: People can decide for themselves what this closing passage means. Needless to say, the term “Naramata Bench” is not the property of those who put down roots here a few decades ago, let alone those who are newly arrived. We can all agree the place name should be protected from those who might exploit the name for personal interests only.

The rest of the wine world has made appellation of wine origin as a priority. It is something that our comparatively young wine industry should do as well.

What I see is the industry and the regulator adapting in response to the sector’s growth, and an ambition to have B.C.’s wines stand up to international competitors who barely notice us today. It is a changed industry since Ferguson and Martin set down roots on the Naramata Bench. Establishing a sub-GI is an important step forward.