Ontario Wine Arrives

To say that the Ontario wine industry has grown over the past forty years is something of an understatement—what started with a handful of grape-growing families has morphed into a global agritourism destination. But the story is as much about the journey as the destination, as I learned when I recently sat down with Leonard Pannachetti, president of Cave Spring Cellars; Allan Schmidt, president of Vineland Estates—both of whom were instrumental in establishing the Vintners Quality Alliance (VQA) in Ontario—and editor/founder Christopher Waters of Vines magazine. We discussed how Ontario wine became what it is today, where it’s going and what current trends they are seeing.

The year 1988 seems to be a turning point in the history of Ontario wine. With the signing of a free trade agreement with the United States, the implementation of a vine replacement program (replacing native vines with vinifera), and the establishment of the VQA system, there was a sense that the industry had to change. What was the industry like back then?

Leonard Pannachetti: The industry was much like the early days of the Finger Lakes. We had the same evolution. In fact, the interesting thing is that I went down there as a young grape grower—the place to learn about growing vinifera in eastern North America was the Finger Lakes. There was this sort of emerging quality-oriented estate winery movement and then there were these big wine companies much like in the Finger Lakes.

What were the first few commercial plantings of vinifera grapes in Niagara?

LP: The Saint Urban Vineyard at Vineland was planted in 1978, and I planted Cave Springs in 1978, so those two vineyards are probably today among the oldest producing vines in Niagara. The transition from labrusca sort of had a brief hybrid detour, but there were a few pioneers in the sixties—like Bill Lenko with chardonnay. Then in the seventies, riesling really emerged with Hermann Weis, who founded Vineland Estates. His riesling clone 21B became the standard for Niagara. The first, though, was Don Ziraldo’s Inniskillin—it was the first estate winery to be issued a license in 1974, and he was trying to move the industry into serious wine.

Allan Schmidt: The problem was viticulturally they could grow them here but there was a huge chasm between growing those vinifera in the vineyard and putting them in a bottle at the other end, because at the time there were no winemaking or appellation standards. When Hermann Weis started this property here [Vineland] with two other vineyards in Beamsville, it was actually the largest planting of riesling in Canada. He came from the Mosel region and he understood riesling and the potential of it. He established a showpiece vineyard [Saint Urban Vineyard] to sell grapevines from his nursery, which my dad was actually representing by selling the vines. Weis then got frustrated when wineries weren’t doing the right stuff with the grapes, and that’s when I got involved and became a partner.

What was the mission of the VQA back then and why did it work?

AS: The thing that really gave it credibility in my mind is that we seldom talked about "What does the consumer want to see?" or "What do we need to put on here to sell more wine?" It was all about putting a standard and raising the bar and most importantly separating us from what was considered Canadian wine at the time. We knew that if we did all of this, consumers would migrate towards this and understand it. But it took us a lot of years to educate people as to what the VQA is. We were okay with that. We knew what we were doing was right based on international standards and other fabled grape-growing appellations.

LP: Well it sort of morphed into that, but Allan’s right—the key reason for starting VQA was to separate the genuine article from all the pretenders. Our problem was we were making serious appellation wine but it was shelved beside stretched [water added], sugared-up stuff that had the exact same appellation—so that the customer would never know the difference.

Were the people making and growing vinifera wines in the region at that time considered outsiders, eccentric or crazy?

AS: In 1988, I was on the cover of Maclean’s magazine because of the free trade agreement and the general thought was that our industry would suffer from this new policy. By coincidence, we had just gotten an order from New York City. So I was quoted [in the magazine] as saying we’re doing really well and vinifera is the future. Well, we ended up getting a protest at the end of our driveway here because I said the future is vinifera and the people protesting weren’t growing vinifera. They thought I was going to kill their industry.

LP: Understand that innovation often comes from outside. There was a real cultural gap between the newcomers Konzelmann, Reif, and Carlo at Collio, who were immigrant grape-growing families, and the established community of growers. The people protesting had a big stake in the old system—a system that was totally subsidized. The industry then was really a racket between the government, the wineries, and the grape growers. The grape growers were growing shitty grapes; good for jam and jelly, but they were using them to make wine. They needed a market for these lousy grapes and they didn’t want to innovate.

What was the racket?

LP: The government—which owned the liquor board—said they’d sell the wine. They’d force the wineries to buy grapes. The deal was that the liquor board would basically sell the wine at the price they paid for the wine. So the winery’s sale to the government (liquor board) was essentially like a retail sale for them. Without a markup, there was a huge margin for the winery. So the wineries were happy. They made lousy wine, but they made lots of money. Nobody liked the wine, but who cared? They were making money, and that’s how the system was set up. When free trade came along, the US said that this is totally illegal, and you guys have to stop this. With the new trade rules, there was no way this was going to be sustainable.

AS: So then we had a twelve-year transition that went from one percent mark-up to fifty-eight percent mark-up, which put a huge squeeze on us financially. Every year, we were making less and less money. (Instead of the winery making $10 on a $10 bottle, they were now bringing in $5.86 on a $10 bottle.)

LP: That was the reason for consolidation of the big wineries while at the same time there was a proliferation of new entrants like us, and behind us many more. We now have 130 members of VQA in Ontario.

 It seems like there are new wineries still popping up in the past few years—whether they are virtual wineries with just their own labels, or brick and mortar wineries. Where is the growth coming from today in Ontario?

AS: The growth we are seeing is in very small wineries. There isn’t a winery that has opened up in the last ten years that is the size of our [Vineland Estates and Cave Spring] wineries. It’s very hard for a winery to get over that ten-fifteen-twenty-thousand case count. A lot of these wineries opening up aren’t doing it so much through third generation grape growers—we’ve now got a lot of what we call Bay Street winemakers coming in as second careers investing a great deal of money in our industry.  Which is great—it’s helping the whole reputation of our industry.

In which direction is quality going these days and what grapes or practices are driving that trend?

Christopher Waters: Year after year, despite the vagaries of vintage variation—I don’t think we’ve had two vintages that have resembled one another—the wines are getting better and better simply because of the accumulated knowledge that is growing around here. People are learning how to farm accordingly; people are losing the flights of fancy of sangiovese and other grape varieties that aren’t suited. You think of the wide-eyed fanatics who planted chardonnay and riesling and here we are in 2012. The vineyards that are emerging as the best voices of Niagara are the ones that had been planted with a little bit of book learning and a whole lot of fingers crossed. It’s taken twenty years of people running madly off in all directions and trying different grape varieties, throwing stuff at the wall to see what sticks to figure out that riesling, chardonnay, cabernet franc, gamay—god bless it if we can sell it—and pinot noir in the right hands are what works.

LP: Those five varieties that Chris mentioned are those that I believe are working best in Niagara. Ironically there are three reds on the list —only two whites being chardonnay and riesling. We’re also having some success with—and I’ve been a skeptic but I’m starting to feel more comfortable with—sauvignon blanc. I still wouldn’t consider it core, as I don’t feel we’ve made sauvignon blanc that has the stamp of Niagara that’s really interesting and different from other regions. It’s decent wine but still not at the level of our rieslings and chardonnays.

The marketing of chardonnay has taken center stage in Ontario with the recent International Cool Climate Chardonnay Celebrations (I4C). Is this a movement towards branding Ontario as "chardonnay country"?

LP: It’s a desperate attempt to overcome ABC [Anything But Chardonnay].

AS: I think a lot of the wine-consuming world gets it that riesling is from a cool-climate region; it makes sense they don’t do great riesling in California, but it’s not common knowledge that chardonnay is a cool-climate grape. Our biggest sales increases are coming from our unoaked chardonnay which we make in a riesling style—harvested earlier and earlier every year with higher acidity. It’s given us some international credibility to say we make chardonnay here, but we don’t compare it to California, because it’s not the same.

LP: And when he says California, he means bulk production stuff with a style that goes back to the early eighties and nineties: surfboard chardonnay—over-oaked and sweet and all tropical fruit.

CW: We just went through the second iteration of the I4C and there was great excitement and great positivity kicking around it but I still see it as kind of a prayer [laughs] then a real bona fide movement. But from my kind of sticking a wet finger into the air, Ontario sauvignon blanc seems to be having more of a push in sales, and white blends continue to climb. We’re preaching and talking a varietal because it really is the future, but right now there are a lot of blends and what I call roman candle brands that are going to be here and gone. As much as we talk about not chasing the market, there’s a lot of that happening.

LP: We’re all just small companies and if we were in the US, we’d never be selling to big box companies like the Liquor Control Board of Ontario [LCBO]—we would have no business on their shelves. Unfortunately, that’s our only choice, so we have to accommodate those trends because if we don’t, with chardonnay sales declining or flat, people are coming up with different ways to sell the same thing and that’s what those blends are about I would think.

There’s obviously some momentum with the younger generation of wine drinkers and the go local movement. Who are you seeing in the tasting rooms today, and what are they coming for?

AS: We are really starting to develop the whole agritourism aspect of our industry. There’s a whole lot more to the wine industry than what’s in the bottle. It’s the environment around the bottle that has much to do with it as well. So we’re seeing an increase in tourism here, and that’s what is giving us the image being hip or whatever. We were lacking that here, and now our identity is coming from not just making good wine but people coming to experience wine country.

Are the new people visiting tasting rooms buyers or are they coming just to taste and "experience wine country"?

LP: Ten or fifteen years ago, when there was a handful of wineries, it was not unusual to see people leave the winery with a case of wine—now they’re visiting ten or maybe a dozen wineries and they’re building a case two or three bottles at a time.

What’s the typical reaction from newcomers to the region?

AS: The common expression of people is, "Wow—we had no idea of the amount of sophistication here, the infrastructure, the tourism, the vineyards, the food." Everyone is surprised.

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