OMIC Mini Forum

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OMIC Mini Forum
Presented By VQA ONTARIO Nov. 12, 2004

• The Ontario
• Wine Cluster

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What I will cover

• History of wine industry
• Transformation prompted by FTA
• Progress to date
• Importance of strategic thinking, vision,
  leadership and partnerships

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What do we have in common?

• Natural resource based industry added value is
  focus for sustained growth
• Have to keep adapting to grow and stay prosperous
  
• Stiff global competition
• Senior players in industry committed to get
  things done

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Wine in Ontario

• History down market
• 1970s changing tastes
• 1980s free trade brought a crisis to the
  industry
• Loss of tariff protection taxes went
• from 1 to 60 over 10 years
• Competitors heavily subsidized
• Industry pulled together to face
• challenge
• Partnership with government, but with
• industry in lead

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Early days

• Panic
• Standards for VQA developed
• Industry put together the case to justify the
  return on government investment and worked hard
  to engage the government both staff and
  politicians
• Strategic Plan (1993) developed with government
  and other stakeholders
• Balanced short-term, operational realities and
  long-term goals
• Government provided funding for quality
  improvements and marketing

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Strategic Plan (1993)

• Industry association brought together
  stakeholders
• Grape growers, LCBO, AGCO, related departments of
  government (Consumer and Corporate Affairs,
  Agriculture, Tourism, Economic Development)
• Senior representation from all stakeholders
• Overall goal to make industry competitive and
  therefore prosperous new approaches needed
• 10 year plus horizons, interim performance
  targets
• Government assistance required to make necessary
  changes in infrastructure (grape plantings and
  regulations)
• Industry-run quality assurance program set up and
  used for branding and marketing

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The road to success

• The vision Quality and authenticity pride in
  origin
• Pillars
• Improved quality and competitiveness
  
• Branding to promote consumer recognition
• Building credibility and reputation
• consumer confidence
• Leadership
• Partners
• Government, industry, public
• How to get there?
• Better raw materials, industry wide quality
  standards
• Generic marketing to consolidate resources
• Supporting everyones successes, keeping everyone
  engaged

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Importance of VQA

• High uniform standards
• Distinction from wines of Ontarios past new
  credibility
• Similar to models from abroad
• Represented common vision across industry
• Generic branding and marketing
• Bottom line growing the industry, reaching
  critical mass for better support (increased
  return to province)

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Then and now 1990
2004
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Impact

• Dramatically increased sales double digits each
  year
• Improved image - Over 40 of consumers say that
  VQA represents quality
• 90 say Ontario wines are good quality
• Buyers of imported wines buy VQA wines more often
• Sales value has increased dramatically range
  from 8 to well over 100 per bottle
• High value niche market for Icewine owned by
  Canada, with growing global presence
• Surpassed growth goals for 1993 plan

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Todays Wine Cluster

• Has reached critical mass, but still a small
  industry
• Experienced grape growers and winemakers, trained
  workforce
• Local educational institutions, domestic
  suppliers, related businesses familiar with
  industry
• Continued strong partnership with government
• Improved public awareness
• Tourism, lifestyle component growing rapidly
• More growth opportunities domestically and in
  export markets

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New strategic plan (2002)

• New plan in place to 2020
• Steering committee representative of cluster
• Wine and grape associations, regulators,
  government, retailers, Chaired by Deputy Minister
• Independent benchmarking by KPMG to quantify
  economic impact and as basis for projections (and
  to validate industrys case to government for
  investment)
• Ambitious annual and 5-year incremental goals
• Continuous improvement - Value of wine sales,
  market share, tourism and spin off economic value

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Is there a transfer to your industry?

• Value added approach to our natural resources
• Quality sells and sells at a higher return
• There are existing models on how to leverage core
  strengths of industry
• Mining venture capital markets, export of mining
  consulting services/expertise, emerging diamond
  industry
• Diamonds an interesting example of the industry
  reaching directly to consumers and branding the
  product as uniquely Canadian (with government
  money) comparable to experience promoting
  Icewine

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Is the industry on board?

• Can the industry commit to a common goal and will
  everyone (large and small) benefit?
• Will the commitment last and will it sustain long
  term investment (particularly in senior human
  resources and through funding to industry
  association)?
• Is it worth it?
• Where does the government come in?
• Are there structural or regulatory barriers?

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Thank you!