Ontario wineries are booming, bringing in investors as province relaxes liquor laws

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Canadian wine regions, including B.C.'s Okanagan Valley and Nova Scotia's Gaspereau Valley, exported $66.3 million worth of wine in 2014, up 137 per cent from 2010.

Row after row of delicate young vines line the long driveway leading to Peller Estates Winery in Niagara-on-the-Lake. It’s a cool spring morning and the expansive lawn in front of the winery is edged by a patio that will host parties and tastings all summer.

John Peller, chief executive officer of Andrew Peller Ltd., is jovial as he surveys the vines that helped turn the company into Canada’s biggest publicly listed winery. Peller, 59, credits his Hungarian-immigrant grandfather for his foresight.

“When my grandpa started the business in 1961, he had this vision of bringing the culture of wine and food from Europe to Canada and we laugh because it was the right vision, but he was 30 years too early,” Peller said in an interview at the winery last month.

That vision is paying off now for his grandson, who took over the family business in 1994. Andrew Peller stock is trading near its record as a cheaper currency and looser liquor regulations draw investors to Ontario’s booming wine industry. Constellation Brands Inc., the Victor, New York-based beverage company, announced last month it was exploring an initial public offering of some of its Canadian wine business, Vincor Canada, the largest producer in the country.

Halo effect

“If Vincor does go public, it’s going to have a halo effect to our brand and to anybody that wants to invest in the industry,” Murray Souter, CEO of Diamond Estates Wines & Spirits Ltd., said in his office in Niagara-on-the-Lake, located on the south shore of Lake Ontario about 50 kilometres south of Toronto.

Once derided for sweet fizzy brands such as Baby Duck and Moody Blue, the region’s wares are gaining international appeal, led by rising Asian demand for ice wine and red table wines.

Canadian wine regions, which also include British Columbia’s Okanagan Valley and Nova Scotia’s Gaspereau Valley, exported $66.3 million worth of wine in 2014, up 137 per cent from 2010, according to data collected by the Canadian Vintners Association. The Canadian dollar dropped 9.4 per cent against its U.S. counterpart in the half-decade through 2014.

Peller, which has about a 14 per cent share of the country’s market, was named Canadian Wine Producer of the Year in 2015 by the U.K.-based International Wine & Spirit Competition. “We’re 100 per cent confident that we make wine as good as anywhere in the world,” Peller said.

Doubling exports

Diamond Estates, the only other publicly traded wine company in Canada, has seen about a 30 per cent increase in debit- and credit-card sales from U.S. visitors over the past year, Souter said. He estimates the company’s exports will be about $3 million this year and will almost double next year.

Ontario’s wine exports are increasing as the provincial government loosens the Prohibition-era liquor laws that govern domestic markets. Grocery stores will begin to stock Ontario wine starting in the autumn, the first time sales will be allowed outside government-run liquor stores and specialty wine stores. The five companies that hold almost 300 private wine store licenses, including Constellation and Andrew Peller, are also being encouraged to carry product from other wineries.

Diamond Estates is considering a third equity sale as the company makes plans to expand its wine-making facility and build a new retail store, Souter said.

Peter J. Thompson/National Post

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