Popular Ice Wine Lifts Ontario Vintners' Reputation Out of the Cellar

From Bloomberg News

When the temperature drops below -10C (-14F) for the first time each winter, winemakers at Hillebrand Estates grab their warmest clothes and go to work. Picking grapes.

The frozen fruit is used to make ice wine, a syrupy sweet dessert drink whose sales are surging amid a boom in Ontario's premium wine industry.

"We haven't had to export a case of ice wine because the demand here has been so great," said Greg Berti, general manager of Hillebrand. "It's a gift item. We never have trouble selling [the idea] that Canada gets cold in the winter."

Hillebrand last year sold 36,000 13-ounce bottles of ice wine. At $44.95 in Canadian dollars (U.S. $32.80) a bottle, it costs a lot more than the average $15 bottle of French Chardonnay.

In the past seven years, Ontario's vintners--for years purveyors of barely potable, cheap wines--have torn up their old vines and planted new ones from France, Germany and California. Now, they are enjoying a popularity boom with everything from premium reds to tangy whites.

The province, Canada's most populous, now accounts for 90% of all wine produced in the country, said the Wine Council of Ontario.

And Ontario's largest wine company, Vincor International Inc., made an initial public offering on the Toronto and Montreal stock exchanges in June to help finance even faster expansion.

That followed an IPO by Magnotta Winery Corp. in October. Andres Wines Ltd., which bought Hillebrand in 1994, has traded in Toronto since 1972.

"A couple of good vintages since the early 1990s and good marketing have really put Ontario wines on the table," said Norman Hardie, a sommelier who introduced domestic wines to the menu at Toronto's tony Four Seasons Hotel.

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Facing stiffer competition from imports after new international trade agreements, a handful of Ontario vintners in 1989 set out to produce finer-quality grapes to make Chardonnays, Pinot Noirs and Reislings to rival those bottled in Europe and the U.S.

The Vintners Quality Alliance, which now stamps its approval on 18% of bottles, was formed to assure quality. And more than $1 million was poured into a generic marketing campaign promoting Ontario wines to consumers and restaurants.

Forty-two percent of all wine sold in Ontario is now produced in the province. French wines account for an additional 40%; U.S. imports, less than 5%.

While Canadian wine consumption has dropped in the past 10 years, premium and red wines are gaining popularity as physicians suggest there are some health benefits associated with moderate consumption, according to Statistics Canada.

In 1995, Ontario wine sales were $214 million--equal to 1989, only achieved with far fewer available grapes as new grape varieties matured, said Linda Franklin, Wine Council executive director.

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New sales figures are also encouraging, she said. Led by premium-priced reds, sales are up 12% in the first seven months of this year from the same period in 1995.

"From 1989 to 1995, the struggle was to change our image," Franklin said. "From 1995 on, the struggle is to increase domestic share--there is a lot of room to grow."

That's how Donald Triggs, Vincor's chief executive, sees it.

The company raised $42 million in its public offering to pay down debt and in September said it bought London Winery Ltd., Ontario's fourth-largest wine company, for $9.5 million.

Vincor, with labels that include Inniskillin, Jackson-Triggs and Entre-Lacs, reported net income of $4.15 million in the year ending March 1996 on sales of $129.45 million. Sales are expected to reach $160 million this year, Triggs said.

On Oct. 3, shares rose to an all-time high of $9 in Toronto, up from an offering price of $8.35. Vincor shares recently traded at $8.90.

Vaughan, Ontario-based Magnotta shares recently traded at $1.35 in Toronto, little changed from the initial price of $1.33.

To be sure, many Niagara-area growers who own the leafy rows laden with grapes, peaches and apples have seen their property value jump in recent years. And they are getting offers from developers keen to build housing and commercial space.

"It is unrealistic that the agricultural industry will ever compete with high-density housing and maintaining the premium viticultural areas is critical to our long-term growth," Triggs said.

Still, he expects the industry to grow steadily as the wine companies continue to lift the local economy with jobs and visitors.

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