Wine Kitz Atlantic

Many who have followed this blog over the past year or two may be aware that Tuesday, June 16th was the date set for the judge to render her decision on charges laid against Ross Harrington.

In quick review, Ross Harrington is owner/operator of Wine Kitz, a home winemaking store located in Halifax NS. In 2007, Mr. Harrington attempted to offer the same in-store winery services available to consumers in many other Canadian provinces including British Columbia, Saskatchewan, Ontario, New Brunswick & Prince Edward Island.

Charges laid against Mr. Harrington were: selling alcohol without a license, and keeping/storage of alcohol without a license.

On the charges of keeping/storage of alcohol without a license, Mr. Harrington was found not guilty. In short, the judge deemed the license obtained from the Federal Excise Act for in-store winery services as valid. The crown had contested that this document was a registration and not a license.

On the charges of selling alcohol without a license Mr. Harrington was found guilty. The judge clearly indicated that her decision was not based on the in-store winery services provided by Mr. Harrington but solely on the definition of alcohol contained in Nova Scotia Liquor Act. In her opinion, this broad definition of alcohol considers a winemaking kit as alcohol!!

To review this soon-to-be famous definition of alcohol click on the link below. You will find the definition under Interpretation (k).

http://www.gov.ns.ca/legislature/legc/statutes/liquorc.htm

The judge’s basis for a guilty decision has left many and most stakeholders in the consumer-made wine industry befuddled and bewildered.

What happens next? Will all Nova Scotian industry retailers, wholesalers and distributors be forced to cease and desist in selling wine kit products? Will more Nova Scotians join the ranks of the unemployed?

Maybe our newly elected government, the NDP, hold the answers to these many questions. Time will tell.

Sentencing for Mr. Harrington’s guilty charge is scheduled for Tuesday, June 30th.

Cheers,

Blair

FRUIT WINES (MADE FROM KITS)

Back in the 1990′s, fruit-flavoured wines were introduced to the consumer-made wine industry. Since that time, these products have taken a life of their own. The availability and quality of fruit wines have converted many store-bought wine cooler drinkers to successful winemakers. In some markets fruit wines have become the most popular product on the shelf!

Many of these branded kits are referred to as “Mist” kits. Many winemakers will recognize the most popular brands: Country Mist, Island Mist & Orchard Brezzin. Fruit flavours range from Apple to Wildberry and many other fruits in between. The wine base used for these many flavours ranges from Chardonnay to Zinfandel. My research has determined that there are simply too many available flavours to list.

These fruit wine products are very versatile and can easily be tweaked to suit personal tastes. Adding 1/2 of the fruit flavour packet at the initial stage of the winemaking process reduces the sweetness level by approximately half. Adding Tonic Water or Club Soda at serving time makes for an enjoyable spritzer style beverage (this also reduces alcohol content).

Most of these fruit wine kits have 28 day recipes and make 23L. Since fruit wines do not require long aging periods, many winemakers use the very popular 7-Day Accelerator Pack. The 7-Day Accelerator Pack vastly reduces the processing time, does not hinder quality and allows for early consumption.

The better quality kits will cost an average of under $2.50 per bottle or .62 cents per glass. Alcohol varies from 5% for less expensive kits to 9% for better quality kits.

Fruit wines are a delicious alternative to everyday wines and wine coolers. If you haven’t already done so, I recommend you try one soon. Your family and friends will be impressed, and they’re perfect for Spring and Summer!

THE GOOD

On Wednesday, March 25th, New Brunswick stakeholders in the consumer-made wine industry were invited by the Health & Safety department of the provincial government to attend a fact-finding meeting in Fredericton.

The New Brunswick government is in the process of reviewing and overhauling their Liquor Act. This presents an opportunity for the inclusion of the in-store winery industry into the new legislation. Having the industry legislated is something we as stakeholders welcome with open arms. The advantages are many, the disadvantages are few.

The base objective of the meeting was to allow all stakeholders to have a say and be heard as to what should and should not be included into this new legislation.

At the end of our 2-hour meeting we all seemed to come away with a positive feeling that the government will act in the industry’s best interest. In general terms it was agreed that unlike other provinces, there would be no levy, tax or literage fee applied to finished product. It was also acknowledged that there would be a minimal licensing fee to store owners, that there would be no stipulations or prohibitive guidelines put on advertising or store configuration. Legislation had yet to be drafted but it seems it will be “business as usual.” Hopefully, the process of legislating in-store wineries will be painless and seamless to both the end-user consumers as well as store owners.

Kudos to the executive board of the Atlantic Fomenters Association ( AFA) who pro-actively worked with government representatives prior to the March 25th meeting, making the entire process much easier for all parties involved.

We as a group and as an association look forward to having the New Brunswick in-store winery industry recognized as a legitimate and bona-fide industry. Along with improving the industry’s visibility in the community, this new recognition will strengthen the business model of the industry, attracting new investors with new and fresh ideas. Legislation should create a win-win for all stakeholders

THE BAD

As mentioned in my February blog, Ross Harrington, owner of the Wine Kitz Halifax location, was scheduled to appear in court on April 2nd to defend himself against various alcohol related charges. These charges stem from Mr. Harrington’s attempts to introduce in-store winery services to Nova Scotia.

We were hopeful that on April 2nd the judge would render her decision and we would all now know the outcome, enabling us to move on in life and business. Unfortunately, after a short hour of listening to arguments from both the crown prosecutor and the defense, the judge has elected to postpone her decision until June 16th (hopefully 2009!). Two more long months! We once again wait with baited breath.

THE FUGLY

One of the charges laid against Mr. Harrington is “Selling alcohol without a license” (aka bootlegging). To the surprise of many, the crown prosecutor contends that, according to the Nova Scotia Liquor Act, a wine kit is considered alcohol, hence, Mr. Harrington should be found guilty on the above charge.

Holy wine corks Batman! If this is the case and the judge agrees with the crown prosecutor, it will not be long before all brew shops in Nova Scotia are driven out of business due to selling a controlled substance- alcohol. Additionally, big box stores, co-op stores, selected drug and convenient stores will need to cease and desist in their selling of wine kit products.

The most ironic part of this absurd scenario is that the competitor who filed the original complaint(s) now has the most to lose. As a stakeholder with five independent wine making locations throughout metro Halifax, he will also be forced to abide by the judge’s ruling. We often sow what we seed.

Several days back I read in our local newspaper that Nova Scotia had the lowest participation of all Atlantic Provinces in the recent Earth Hour. This should come as no surprise as many Nova Scotians are already aware that Canada’s Ocean Playground remains in the dark ages on many matters including alcohol regulations. Why else would other provinces such as New Brunswick, Prince Edward Island & Saskatchewan be welcoming the in-store winery industry with open arms while Nova Scotians are cheated of this service and industry players are intertwined in court battles?

Cheers!

Blair

I was hopeful come March 5th I would be reporting the outcome of the court case between Wine Kitz Halifax and the Nova Scotia provincial government. Needless to say I was also hopeful that at this point I would be reporting court results which would be beneficial to the consumer-made wine industry.

Rather than being the bearer of good or bad news (depending on which side you’re on), all I can offer in the way of information is to advise that this case has been delayed until April 2nd.

As many of you may be aware, these types of delays are common occurrences when dealing with matters before the Supreme Court.

For those of you unfamiliar with the court case between Wine Kitz Halifax and the Nova Scotia provincial government I invite you to review my November blog.

Since this delay has caught me unprepared to offer information on any other industry topic, I leave you with the following observation:

Alcohol does not make you FAT – it makes you LEAN ….
against tables, chairs, floors, walls and ugly people!

Cheers,

Blair

Wine & Beermaking……A Recession-Proof Industry

An Irish wake, a kitchen ceilidh, a Saturday night shin-dig…‘What are three good reasons to have a drink, Alex?’

Many industries have their own uniqueness or quirks. One of the home wine industry’s quirks is that the industry itself is recession proof in nature.

No matter how tough and difficult life becomes, no matter how at risk our job security becomes, or how much month is left at the end of the money, we simply refuse to stop consuming alcohol.

I live and work in Atlantic Canada, a former rum-running region with a population mix dominated with Irish, Scottish, French Acadians, et al, so there may be more truth than poetry in the above statement. This statement also holds true for many (and most) other regions of our fair and vast country.

Despite our situation, we often seem to find a way to work our booze costs into our budget. This is generally accomplished by either reducing consumption (then again, maybe not) or by finding cost effective alternatives.

This cost effective alternative is where the home wine & beer industry plays a large part in fulfilling consumer budgetary needs. A quality wine kit will yield on average under $5 per 750 ml bottle. A quality beer kit will average well under $1 per 341 ml bottle. And as many well versed wine & beer makers will attest to, the added bonus to “making your own” is you don’t forfeit quality, you gain pride in ownership and workmanship.

This short spiel was partly inspired by a newspaper article I recently read. To read an expanded view on this topic, I invite you to click on or paste the link below:

http://www.calgaryherald.com/news/Canadians+turn+booze+tough+economic+times/1214446/story.html

Americans may have a constitutional right to bear arms, but we friendly Canadians have found a way to put our bare arms to far better use…a back yard BBQ, a campfire…

Cheers,

Blair

If the old adage “A picture a worth a thousand words…” is true, I’m curious how many words several videos are worth?This month rather than having you read what I have to say, you may wish to click on the two web links below, relax and watch what other industry players have to offer.

The first link features Ross Harrington, owner of Wine Kitz in Halifax, NS, who walks us through the process of making affordable wine at home.

The second video is a CTV segment featuring Doug Stills of Stills Brewing in Oshawa, ON. Mr. Stills explains the advantages and savings of making your own beer & wine in a brew-it-yourself facility.

Enjoy, and Happy New Year to all!

LINK#1: Ross Harrington

LINK #2: Doug Stills

I intentionally delayed my December blog in anticipation of the results of Ross’s Harrington’s December 9th court date with the Nova Scotia Provincial Government (see November blog for details).

Unfortunately, December 9th was not our tell-all date as I first anticipated and mentioned in my previous blog. Other than sitting in on an hour or so of very entertaining (and often sad) court cases, our case was dealt with (or not) in approximately 10 minutes.

Prior to our court date, all parties agreed on a statement of facts. i.e: Yes, Ross has provided in-store winery services. Yes, Ross has provided storage for customer’s carboys of wine etc, etc.. In this case agreeing to a statement of facts means that no witnesses are required to testify in court.

As a time- and cost-savings measure, Ross’s legal council and the Crown Attorney requested the opportunity to submit a written summary of facts, etc., as opposed to an oral presentation of their case. The judge agreed with this proposal. Each side must now submit their case in writing to the judge for review by the end of February. The next scheduled date is March 5th, where the judge will allow for oral presentations and hopefully render a decision.

Based on the above facts and comments made by legal council, the issues of this case and the judge’s decision will hinge on the interpretation of Nova Scotia Provincial liquor laws. Be sure and check out my March blog for more information.

In the meantime, best wishes to all for a safe and happy Holiday Season.

Blair

On Tuesday, December 9th, Ross Harrington, owner of the Wine Kitz location in Clayton Park, Halifax, NS, is scheduled to go to court to defend himself against the following charges: keeping liquor for sale; manufacture and keeping of liquor; and use of premise for storage of liquor. All three of these charges stem from Ross’ 2006 attempt to introduce in-store winery services to Nova Scotia (for a detailed description of in-store winery services go to http://winekitzatlantic.ca/winery/). These charges are in spite of the fact that this Halifax location has obtained an in-store winery license from the Excise Tax division of the federal government.

In-store winery services have been a mainstay industry in British Columbia and Ontario for over 12 years. In the past 5 years the concept has also been introduced in Quebec, and in our neighouring province of New Brunswick. Additionally, the Saskatchewan government is currently meeting with the player in the industry in order to draft up legislation to introduce in-store winery in that province by Spring of 2009. Our sources tell us that beautiful Prince Edward Island may soon be following suit. So, the question begs: Why not Nova Scotia?

In such a transient world, the shop owner/operators are asked this question on a daily basis by many of our customers who have previously lived in provinces which offer this service. Additionally, our fellow New Brunswick owner/operators tell us they have many Nova Scotia residents who regularly use their do-it-yourself services.

Prior to Ross Harrington’s 2006 attempt, many local home wine shop owner/operators have attempted to have the government amend it’s antiquated Liquor Act and permit the introduction of do-it-yourself-wine shops.

In our continued efforts over several years to convince our provincial government to amend the Act, we have hired a lobbyist, we have hired an outside consultant and we have provided the government with a detailed study which included economic impact, impact on commercial wine sales, provincial tax revenue and much, much more.

Needless to say, our efforts to date have hit a brick wall. One of the few responses was a letter from Ernie Fage, then minister responsible for the Nova Scotia Liquor Act stating “the Wine Association Industry of Nova Scotia has developed a long-term strategic plan for the industry that government has chosen to support, and the u-vint concept may not be consistent with this approach.”

Such a response raises so many questions. The first being whatever happened to free enterprise in Nova Scotia? Both segments of the wine industry have successfully co-existed in provinces with much larger commercial wine industries than Nova Scotia. Why is there a need by our provincial government to hold back one segment of the legitimate wine industry in their effort to support another segment of the industry?

Another question which comes to mind is where is our provincial government’s vision? We have an opportunity to establish a bona-fide industry that will create both employment and self-employment outside of the traditional major centers. While tens of thousands of satisfied customers are using this service in other provinces, Nova Scotians are once again forced to play second fiddle to the rest of the country.

Will things ever change? Stay tuned………with Ross Harrington championing our cause, December 9th may be our tell- all date.

In last month’s blog I provided a copy of the Andrew Peller Limited news release announcing the purchase of World Vintners Inc. Since then, APL management has spent a considerable amount of time meeting with the various regional Wine Kitz groups from around the country.

Speaking on behalf of the Atlantic group, our meet & greet dinner on Saturday night at a local downtown Halifax restaurant was a great ice-breaker. It provided everyone who attended with an opportunity to meet our new management team on an informal basis. Our Sunday meeting was very informative for all parties involved. Once the meeting was complete and most questions had been discussed and answered, all 8 Atlantic franchisees came away with a very positive outlook for the future prosperity of their business. With plans for expanded product selection, innovative product mix and advanced wine making procedures, we are confident that Wine Kitz will remain the leader in the consumer-made wine industry.

Without going into too much detail, it was mentioned at the meeting that the main attraction of the World Vintners purchase was the 75 Wine Kitz franchise locations. The jewel of the 75 locations is the 8 Atlantic stores. When compared to national sales trends, our continued growth over the past several years seems to be leading the pack. When asked by APL management to share our “down east” secret to success, no silver bullet answers were provided but our business–like approach and nose-to-the-grindstone work ethic, combined with above-average customer service and quality products, seem to surface as the most determining factors. (Mr. Harper’s “culture of defeat” comment doesn’t apply with this group.)

The Wine Kitz Atlantic region is no longer the industry’s best kept secret. In my March blog, I mentioned there was never a better time to be involved in the consumer-made wine industry. Having now met our new ownership group, I reiterate my earlier comment and invite anyone looking for a career change to research the business opportunities offered by the Wine Kitz Franchise network. Furthermore, I welcome any existing stores wishing to grow their business to the next level to consider the Wine Kitz Franchise network as a solid business alternative.

In closing, if there was a downside to the weekend meetings, it was saying our goodbyes to the outgoing Wine Kitz management team and employees. On behalf of all Atlantic franchisees and myself, I wish to thank each and every one of them for their efforts in making our jobs easier and for helping to make our businesses prosperous and successful on all levels. At the risk of a bit of embarrassment, there were a few tears shed at the close of our last meeting together.

As one door closes, another one opens.

Blair

September 2008

As regional director for the Atlantic region and as a franchisee (store owner), I consider the announcement below a step forward in continuing to provide our loyal customers with the best possible products & services currently available in the consumer-made wine industry.

This change of ownership will have very little impact on our customers. But it’s only fair to make our many winemakers aware of who sources and formulates the products and recipes they have all become accustomed to confidently purchasing and enjoying with friends and family on a regular basis.

Kindly read on.

Blair

“ANDREW PELLER LIMITED STRENGTHENS LEADING PRESENCE IN CONSUMER-MADE WINE BUSINESS

This news release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained elsewhere in this news release.

GRIMSBY, Ontario – July 2, 2008 – Andrew Peller Limited (the “Company”) announced today that it had acquired 100% of the common shares of World Vintners Inc. (“WVI”), a producer and seller of high quality consumer-made wine kits. WVI’s sales for its most recently-completed financial year ended July 31, 2007 were approximately $12.0 million. The purchase price was approximately $9.0 million, with the acquisition closing on June 30, 2008.

The acquisition brings to the Company a dedicated network of 75 franchised wine-on-premise and retail outlets under the Wine Kitz brand name. The Company remains committed to WVI’s franchisees and will invest in the network to enhance its marketing, service, and support. Franchisees will benefit from the Company’s market leadership, financial strength and reputation for quality and service. WVI also produces the popular Heron Bay brand sold through independent wine-on-premise and retail outlets across Canada.

“This acquisition significantly strengthens our consumer-made wine business, and enhances our presence in a number of markets,” commented John Peller, President and CEO.

“The addition of World Vintners complements our Vineco and Winexpert businesses and strengthens our position as Canada’s largest producer and supplier of consumer-made wines. Looking ahead, we expect this acquisition will generate enhanced business opportunities as well as economies of scale and synergies to increase our profitability,” added Rob Van Wely, President of the Company’s consumer-made wine business.

Andrew Peller Limited is a leading producer and marketer of quality wines in Canada. With wineries in British Columbia, Ontario and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula, British Columbia’s Okanagan and Similkameen Valleys and vineyards around the world. The Company’s award-winning premium and ultra-premium brands include Peller Estates, Trius, Hillebrand, Thirty Bench, Croc Crossing, XOXO, Sandhill, Copper Moon, Calona Vineyards Artist Series and Red Rooster VQA wines. Complementing these premium brands are a number of popular priced products including Hochtaler, Domaine D’Or, Schloss Laderheim, Royal and Sommet. The Company also markets craft beer under the Granville Island brand. In addition, the Company owns and operates Vineyards Estate Wines and WineCountry Vintners, independent wine retailers in Ontario with more than 100 well-positioned retail locations. Andrew Peller Limited common shares trade on the Toronto Stock Exchange (symbols ADW.A and ADW.B).

With a focus on serving the needs of all wine consumers, the Company produces and markets consumer wine making products through Winexpert, Vineco International Products and Wine Kitz. Its broad range of high-quality brands includes Selection, Vintner’s Reserve, World Vineyard, KenRidge, California Connoisseur, Island Mist, Niagara Mist and Heron Bay.

FORWARD-LOOKING INFORMATION

Certain statements in this news release may contain “forward-looking statements” within the meaning of applicable securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) with respect to Andrew Peller Limited (“APL” or the “Company”) and its subsidiaries. Such statements include, but are not limited to, statements about the growth of the business in light of the Company’s acquisitions; its launch of new premium wines; sales trends in foreign markets; trends in capital expenditures and sales and marketing expenses of the Company; its investments in vineyards; its supply of domestically grown grapes; international grape surplus and price discounting; consumer demand; and current economic conditions. These statements are subject to certain risks, assumptions and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. The words “believe”, “plan”, “intend”, “estimate”, “expect” or “anticipate” and similar expressions, as well as future or conditional verbs such as “will”, “should”, “would” and “could” and similar verbs often identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. With respect to forward-looking statements contained in this release, APL has made assumptions and applied certain factors regarding, among other things: future grape, glass bottle and wine prices; the Company’s ability to obtain grapes, imported wine, glass and its ability to obtain other raw materials; fluctuations in the U.S./Canadian dollar exchange rates; its ability to market products successfully to its anticipated customers; the trade balance within the domestic Canadian wine market; market trends; reliance on key personnel; protection of the Company’s intellectual property rights; the economic environment; the regulatory requirements regarding producing, marketing, advertising and labelling its products; the regulation of liquor distribution and retailing in Ontario; and the impact of increasing competition.

These forward-looking statements are also subject to the risks and uncertainties discussed in this release and other risks detailed from time to time in the publicly filed disclosure documents of APL which are available at www.sedar.com. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which could cause actual results to differ materially from those conclusions, forecasts or projections anticipated in these forward-looking statements. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. The Company’s forward-looking statements are made only as of the date of this release, and except as required by applicable law, APL undertakes no obligation to update or revise these forward-looking statements to reflect new information, future events or circumstances or otherwise, or to explain material differences between actual events after the date of this release and such forward-looking statements.

For more information, please contact: Mr. Peter Patchet, CFO and EVP Human Resources
(905) 643-4131 Ext. 2210 – E-mail: peter.patchet@andrewpeller.com”