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22 WINES&VINES May 2015 WINE INDUSTRY NEWS V ancouver, B.C.—Shift- ing mark-up protocols and fluctuating ex- change rates have Brit- ish Columbia wineries eyeing price increases in 2015. The aver- age bottle of wine made entirely from B.C. grapes sold for $17.76 (CAD) in the most recent fiscal year, but a combination of factors could see that increase in the com- ing months. During a wine law seminar held at the start of the Vancouver International Wine Festival, Al Hudec, a corporate lawyer with the firm Farris, Vaughan, Wills & Murphy LLP, noted that the end of subsidies for the B.C. Liquor Dis- tribution Branch (BCLDB), a new government markup structure for alcohol that went into effect April 1 and a shift in Canada's dollar versus the U.S. greenback that will boost the price of imported wines could create an opportunity for wineries to raise prices. Canada's dollar, in particular, has dropped sharply after trading at near parity for four years, and is now worth 78 U.S. cents. This has boosted the cost of imports, with a recent study for the University of Guelph suggesting Canada could see overall food prices rise by 2.4% this year, with some food imports rising by as much as 7%. At the same time, wineries have been asked to submit whole- sale pricing under a new model without knowing how much their products will be marked up, mak- ing it difficult to know what the final shelf price will be. "Some producers may take the opportunity to take a price in- crease," Hudec said, an opportu- nity easily seized in the overall turmoil surrounding pricing. However, no one wants to offend the consumer. David Enns, co-owner of Laughing Stock Vineyards, be- lieves the lower end of the market will be more sensitive to price in- creases while premium-tier wines will have more leeway to boost prices. "All you have to do is look into Washington state—the same kind of premium product (there) is almost double the price," he said. "A bottle of Cabernet-Merlot or a Syrah out of Walla Walla from Seven Hills Vineyard, or from Red Mountain, is going to be $60 or $80 a bottle. Our Syrah is $36 a bottle." Laughing Stock itself takes a long-term view of pricing. Its original business plan identified where pricing should be to sup- port the winery's development through its first decade, and as it prepares to debut a Pinot Noir of- fering this year, Enns said it is looking out another decade. "Price increases in the past 10 years have just been there to allow for inflationary pressure, and gen- eral industry price increases," he said. "We look at the marketplace, what we have to do to make that bottle of wine, and we look at where we want to be … five to 10 years from now. That's how we set the price." Changes to the province's re- tailing environment may affect wineries that sell primarily at re- tail. Enns feels that those that have developed good relation- ships with restaurants and the direct-to-consumer channel will be largely unaffected. —Peter Mitham British Columbia Wineries Eye Price Hikes A higher cost for imports and changes to wholesale pricing could prompt B.C. wineries to raise prices.