The view from the vineyard

Canada's booming wine industry is fuelling investments in everything from tourism to housing developments

JENNIFER LEWINGTON
November 21, 2008

When former Ontario MPP and ex-college president Richard Johnston and his wife Vida Zalnieriunas moved to Prince Edward County, a bucolic island known for its sand dunes and former glory days as a tomato cannery at the eastern end of Lake Ontario, they planned to buy a 50-acre farm.

That's not how it worked out. In the 15 years since buying their property - 215 acres of corn and soybeans - they became boutique wine-makers, setting aside 20 acres to plant high-quality vinifera grapes in 1999.

As they prepare to celebrate the 10th anniversary of By Chadsey's Cairn next year, the couple find themselves part of a stunning transformation of a long-depressed agricultural area into a fast-growing wine region that has made Prince Edward County a destination for top chefs, tourists and investors in the past five years.

"Now all of a sudden we have been discovered," Mr. Johnston says.

It's a trend playing out in wine-growing regions across Canada, with an explosion in the number of wineries - many of them linked to investments in restaurants, artisan food shops, hotels, golf courses and high-end housing. Their target market is aging baby boomers with the time and, even in the current downturn, the disposable income, to savour the romance of wine.

"The wine becomes a catalyst," says Peter Gamble, a top consultant who advises startup wineries in Ontario, Nova Scotia, British Columbia and internationally. "It is a life-style indicator and the kind of thing that works with a lot of upscale projects."

For example, near Penticton, B.C., Greata Ranch is a working 40-acre winery owned by Cedar Creek Wineries that has teamed up with Concord Pacific Group to develop another 40 acres for 400 units of town homes and villas on the shores of Lake Okanagan. Near Vernon, B.C., a new resort community by Okanagan Hills Development Corp. features single-family homes alongside a winery set to open next year.

In Niagara Falls, Ont., where the long-established industry has built an international reputation for ice wines, a winery named for Canadian golf star Mike Weir aims to open in 2010 on a parcel of land leased from the Niagara Parks Commission, alongside an existing golf course.

In Nova Scotia, whose Annapolis Valley is touted by some as Canada's next major wine region, the provincial winery association predicts the number of wineries will double to 20 from 10 at present by 2020, with current sales expected to triple to $24-million over the same period.

"It's the 'perfect storm,' in a good way," says Seaton McLean, president of Ontario's Prince Edward County Winegrowers Association, of the recent convergence of wine, agriculture and tourism.

Working with his group is a county development officer, a federal rural economic development office and Taste the County, a marketing effort financed in part by local businesses. Through joint promotional efforts such as Wassail, being held this weekend and next to mark the end of the harvest, the wineries work with local food producers, bed and breakfasts and artists to raise the profile of the largely rural county. In the process, they have been able to extend a summer-only tourist season to five months of the year, with wine lovers from Quebec an unexpected bonus.

The area's grape-growing and wine industry received all-important provincial government recognition as a Designated Viticultural Area in 2006; it has 16 wineries today, up from only one in 2001, with nine more expected to open next year.

"The wine industry has been a magnet for non-wine investment in real estate, new businesses in culinary and agriculture and tourism," says Dan Taylor, the county's economic development officer. He points to the decision of local winery Huff Estates to build a 21-room inn and proposed art gallery as indicative of efforts to coax visitors to come, stay longer and spend more.

A recent study by KPMG for the 84-member Wine Council of Ontario estimates the province's wine and grape-growing industry generated $529-million in economic activity in 2007, up from $202-million a decade ago.

In Nova Scotia, where the wine industry is expected to generate $160-million in economic impact by 2020, the emphasis is on synergies between vineyards, agriculture and tourism.

"We offer great wines, but we offer the whole experience," says Janice Ruddock, managing director of the Winery Association of Nova Scotia and executive director of Taste of Nova Scotia.

Along with wine-country tour packages, festivals and other tourism marketing, cruise-ship stopovers in Halifax allow for day trips to the Annapolis Valley vineyards. "When you are getting off a cruise, you want an experience," Ms. Ruddock says. "It is adding to the dynamic of Nova Scotia."

The same pattern is unfolding on an even bigger scale in British Columbia, with 171 wineries today, up from 17 in 1990, the post-free trade birth of the vinifera grape industry there.

"People's interest in wine has continued to grow and it is not just about what is in the glass; it's how did it get there," says wine consultant Harry McWatters, a 40-year veteran of the B.C. wine industry and a founder of Sumac Ridge Winery.

Wineries are increasingly aiming to create a complete experience for the consumer, be it the lure of a top chef at a vineyard restaurant that features locally grown food or the chance to live in a house or condo with a view of the vines.

So far, the economic downturn has done little to scare off investors, says B.C. Wine Institute chairman Scott Fraser, noting that prime vineyard land fetches more than $100,000 an acre in the province. "There is certainly room to expand and we expect to see continued growth over the next five to 10 years," he says.

The key to future success, say industry leaders, is Canadian-based research - on the best grapes for a short growing season in a cool climate and on questions about changing consumer tastes.

"When I started 34 years ago, I was told it was too cold to buy European grapes," recalls industry icon Donald Ziraldo, a co-founder of Inniskillin Wines who, having sold in 2006, now focuses on promoting a national research agenda.

"I learned through trial and error and that's very expensive," says Mr. Ziraldo, chairman of Ontario's Vineland Research and Innovation Centre and chairman of the National Grape and Wine Strategy Committee. "It's better to do it in research."

Amid rising costs, growing international competition and a domestic market still dominated by imports, Canadian wineries look to research to boost the value-added of a grape. "As you go up the premium ladder with wine, you need more and more to go back to the terroir," says Mr. Ziraldo, referring to the soil, sun and growing conditions that define wine regions.

Meanwhile, as Mr. Johnston prepares for Wassail visitors this weekend, he wryly observes that for all the perceived romance of wine-making, it is a physically and financially draining business with little hope of a quick profit.

"This is something you should do young and with money," jokes the 62-year-old. "I missed out on both."