SIP VQA wines store closes in March

Photo: The wines for SIP's 2015 Iconic Reds tasting

The attrition of VQA wine stores continues with the surprising announcement from Simon Wosk that he is closing his SIP Wines stores on March 5, 2016, after 12 years in business.

His explanation is cryptic: “There are a number of considerations, both business and personal, that have contributed to this decision. The decision was not easy to make.  I wanted to operate Sip Wines for another 15 to 20 years.  But things change and this decision is the correct one for my family and me in light of events taking place in the BC wine industry.”

The “events” refers to Jim Pattison’s Overwaitea Food Group taking over an increasing number of VQA stores. This is happening with the active co-operation of the BC Wine Institute, which owns the 21 active VQA store licenses.

Overwaitea “is acquiring our interest in the Operating Agreement with the BC Wine Institute who holds the licence,” Simon says.

The grocery store path was opened last spring when the British Columbia government’s liquor policy changes allowed the sale of B.C. VQA wine – and only VQA wine – in grocery stores.

Overwaitea began selling wine on April 1, 2015, in the Save-On-Foods store at South Point in Surrey.

Since then, the grocery chain has added wines at a second Surrey store and at stores in Tsawwassen and in Langley. The chain is currently preparing to add wine to a grocery store on Lakeshore Road in Kelowna after having acquired the business of two Discover Wines stores “Kelowna and Kamloops” and of the VQA store at the BC Wine Museum in downtown Kelowna. It is reported that the grocer is considering adding wine to a store in West Kelowna.

Kensington Square VQA Wine Store in Burnaby and the BC Wineguys in Cadboro Bay on Vancouver Island will close in February after selling their businesses to the grocery chain.  

Edgemont Village VQA store in North Vancouver sold its business to Overwaitea in September 2015 after 17 years. The presumed relocation to a Save-On-Foods store in North Vancouver has not yet happened.

The accelerating migration of VQA outlets has been controversial among some in the industry. Last September, a coalition of wineries – the B.C. Alliance for Smart Liquor Retail Choices – asked for a six-month moratorium on wine sales in grocery stores.

Church & State Winery president Kim Pullen, one spokesman for the group, was quoted as saying: “Grocery stores are just starting wine sales in B.C. If the model expands, small B.C. wineries will be in trouble.”

The fear is two-fold. Grocery stores are expected to sell more low-priced high volume wines which favour the largest producers. Secondly, international wineries have threatened action under trade agreements to blast the grocery store market wide open.

The issue could become more inflamed this year. There still are 24 dormant wine store licenses (so-called Bill 22 licenses) set to be auctioned this year. These are generic licenses, not BCWI licenses, but are also expected to be taken up by grocery chains.

The BC Wine Institute has strongly supported the migration of VQA licenses to grocery stores, believing that grocery stores will sell a lot more wine and that will benefit all VQA wineries.

In a statement last September, BCWI chair Shaun Everest said: “The principles guiding these changes include the objective of maximizing the sale of BC VQA wines through the BCWI licences for the benefit of our producers and operators, maintaining and enhancing the high quality reputation of BC VQA wines, and securing fair and equitable access to this unique sales channel by putting them on an equal footing with the Bill 22 licences.”

In November 2015, BCWI president Miles Prodan expressed satisfaction at sales trends so far in the grocery channel.

It's been 6 months since the first BC VQA wine store-in-grocery opened at Wines of British Columbia Save-On-Foods South Point, so I thought it would be helpful to quickly summarize some results,” he wrote in a statement.

Currently, both BC VQA wine stores-in-grocery carry more than 900 different BC VQA wines (SKUs) from over 150 different wineries with the Fleetwood location having  capacity to shelve two facings of as many as 1800 SKUs;

• The vast majority of these 900 + wines are not currently available in either private or government liquor stores;
• South Point store has 20,000 - 22,000 customers through the store each week with 12,000 unique wine purchasers;
• 70% of current display price is between $17.39 and $24.29 (tax in).

Since opening in April, South Point's weighted average sold price/bottle is $18.06 (tax in) with 76% of all wine sold >$15.00 (tax in).

Clearly, BCWI thinks the model is working even if a number of VQA store owners have decided to bail out.

It remains to be seen whether the grocery store staff will be as effective at wine education as the owners and the staff in the VQA stores. Owners like Tracy Gray of Discover Wines and Simon Wosk of SIP were knowledgeable and passionate about the wines in their stores.

The closure of SIP Wines is a particular loss. This was the store that organized the annual Icon wine tastings that supported the super-premium or collector category of VQA reds.

Simon Wosk says: “This is one event that has a life of its own and I do intend to investigate the possibility of its continuance in some form.”