Annual Reports

2022 ANNUAL REPORT

The Report, under the agreement with the Ontario Ministry of Government and Consumer Services, provides an overview of the Appellation Authority’s structure, its activities for the year and financial statements.

The online version below contains similar information but with an abbreviated financial summary and additional statistics on wine production. Each section can be accessed using the menu at left and tabs within each page.

Message from the chair

ONCE AGAIN, I AM WRITING THE CHAIR’S MESSAGE AS WE AND OUR FELLOW ONTARIAN’S FACE A LONG LIST OF CHALLENGES AND DO OUR BEST TO TURN THEM INTO OPPORTUNITIES.

Not that challenge is new to Ontario’s winemakers – we have always faced weather, environmental, technical and business issues. Sometimes it feels like we are in our own unique wine ecosystem of Boom, Bust and Echo. The grape surplus last year, winter damage this year, global supply chain issues and the constant evolution of our local and global markets…. these cycles have forced us to be innovative, patient and resilient.

VQA was created to demonstrate the integrity of our wines to consumers and provide them with the confidence to make authentic Ontario wines their first choice. As our appellation system, VQA provides wineries with a robust foundation for success in prosperous times but also to support and stabilize our values in difficult times. Challenges present opportunities to learn and adapt but as we do this, our commitment to origin, quality and authenticity remains constant.

We continue our focus on administering the VQA legislation in a fair and transparent manner that ensures label integrity for consumers through a risk-based, effective compliance monitoring program for regulated wineries. We will also ramp up our efforts to engage and educate, raising awareness about our appellations and the benefits of the VQA certification.

The Board of Directors will be developing a new strategic plan later this year to guide us into the future. As usual, change is relentless and not always predictable. We will look to the past for insight and guidance and also for ways to anticipate what the future holds and where the appellation system needs to be.

I am hopeful that our member wineries, industry and government stakeholders and consumers will engage with us to plan for a successful future.

A big thank you to my colleagues on the Board of Directors for their wise counsel and to our Executive Director for her support to the Board to help us make the best decisions we can. I also want to recognize all of our staff for their professionalism and efficiency in continuing to uphold our commitment to consumers and government that VQA wines are compliant with the regulations and embody the authenticity we stand for.

To my fellow VQA wineries, and all of our stakeholders in the wine, grape, education and hospitality industries and government, thank you for continuing to support our appellation system. I will look forward to the future with optimism and a glass of VQA wine!

“As our appellation system, VQA provides wineries with a robust foundation for success in prosperous times but also to support and stabilize our values in difficult times.”

Brian Schmidt
President and Chair

Who we are

VQA ONTARIO

Vinters Quality Alliance Ontario (operating as the Ontario Wine Appellation Authority) regulates Ontario's wines of origin and the appellation system as defined under the VQA Act of Ontario. It exercises delegated authority from the Province of Ontario to ensure label integrity that allows consumers to identify wines of origin made entirely from Ontario grown grapes.

The Appellation Authority is committed to working with and on behalf of consumers and its stakeholders in industry and government to promote a better awareness of Ontario’s wine regions and wines of origin.

Vision

Consumers will use Ontario's VQA appellations as their guide to buying authentic wines of origin and quality.

Mission

Provide a strong foundation for consumer confidence by enforcing relevant standards that recognize Ontario's regions and styles. Communicate the value of a credible appellation system.

Strategic goals

Origin, quality, authenticity

BOARD OF DIRECTORS

Officers

Brian Schmidt (5/6)
President and Chair
(elected from Vineland Estates Winery)
Dan Sullivan (5/6)
Vice-Chair
(elected from Rosehall Run Vineyards)
Derek Cartlidge (6/6)
Treasurer
(elected from Colio Estate Winery)
Louise Engel (6/6)
Secretary
(elected from Featherstone Estate Winery)

Directors

Greg Berti (6/6)
(elected from Andrew Peller Ltd.)
Amelie Boury (2/5)
(elected from Chateau des Charmes)
Ken Douglas (4/6)
Past-Chair
(appointed from 13th Street Wine Co.)
Tony Elenis (5/6)
(appointed from Ontario Restaurant, Hotel and Motel Association)
Paul Kassebaum (5/6)
(elected from Arterra Wines Canada)
Nadia Senchuk (5/5)
(elected from Leaning Post Wines)
Mary Shenstone (6/6)
(appointed from Government of Ontario)
Paul Speck (6/6)
(elected from Henry of Pelham Estate Winery)
Kevin Watson (5/6)
(appointed from Grape Growers of Ontario)

Attendance at Board meetings: Six Board meetings were held in 2021-2022. The number of Board meetings each Director attended is indicated beside their name.

STAFF AND STATUTORY APPOINTMENTS

Laurie MacDonald
Executive Director
Katherina Radcliffe
Director, Communications and Wine Standards
Petter Harris
Director, Audit and Compliance
Susan Piovesan
Manager, IT Systems and Inspector
Tricia Ramnath
Wine Testing Coordinator
Stan Loree (part time)
Accountant
Dan Keere (part time)
Inspector, Investigator

ORGANIZATION VALUES

Transparency and fairness – the Ontario wine appellation authority will carry out its statutory authority with transparency and fairness and uphold high ethical standards.

Responsiveness and Communications – The Ontario Wine Appellation Authority will conduct its operations openly, providing its members and the public access to information and timely responses to inquiries. It will adopt and implement appropriate policies to respect the confidentiality of its members and stakeholders. It will promote the value and benefits of VQA appellations and wines.

Firmness and Responsibility – The Ontario Wine Appellation Authority will discharge its regulatory responsibilities firmly to ensure VQA terms, descriptions and designations are not misused and consumers can rely on label integrity for all VQA wines.

Accountability– The Ontario Wine Appellation Authority will be accountable for its decisions and promote effective and fair dispute mediation to resolve conflict.

Effectiveness – The Ontario Wine Appellation Authority will strive to carry out efficient and cost-effective operations, and continue to pursue service improvements and burden reduction in all areas of operations.

ORGANIZATION STRUCTURE

Vintage Report 2021

LAKE ERIE NORTH SHORE | PRINCE EDWARD COUNTY | NIAGARA PENINSULA

For Ontario wineries, 2021 was an unforgettable year. Unpredictable weather challenged even the most experienced winemakers and grape growers. Record setting temperatures, intermittent drought, high rainfall and humidity – Ontario saw it all this year – led wineries to pay extra attention to vineyard management to ensure a good outcome. Fortunately, the outlook for the 2021 vintage is still positive.

Looking at the year in review, it was defined by extremely variable weather, from start to finish. The year started off warmer than average with January temperatures milder than in previous years. Mid-January, most of the province, including all wine appellations, was hit hard by snow and some regions experienced significant snowfall over the second half of the month complicating the last of the Icewine grape harvest.

Moving into February, the weather story was largely defined by lake effect snow around the Great Lakes Ontario and Erie covering many vineyards.

March temperatures rose quickly and much of Southern Ontario was without snow by April 1st. Lake Erie North Shore suffered high winds associated with the rapidly changing season but May settled into seasonal temperatures and generally dry conditions across the Province – a great start to the growing season.

Summer got an early start in June with above average warm temperatures across all of Ontario and significant heat to end the month. High levels of precipitation were experienced in Lake Erie North Shore into July, with some severe thunderstorm activity, while weather was more typical and drier for Niagara Peninsula and Prince Edward County.

As the summer progressed and July turned to August, the weather was dry and hot conditions prevailed. Despite scattered rain and severe thunderstorms at the end of the month, severe heat and drought were the major story by the second half of August.

Preparing for harvest in September, most were reporting good colour on red varieties, and lower acids due to the August heat. After a highly variable growing season, winemakers were monitoring grape health and ripeness closely to plan for optimum harvest windows for each variety.

HARVEST

Unstable weather continued in the fall, presenting some challenging harvest conditions. Rain and humidity at inopportune times required a strategic and nimble approach to getting grapes in at their peak in all three regions. It was a stop and start story in most regions, with bursts of precipitation slowing the harvest and introducing disease pressures to be managed.

ICEWINE

Pre-registrations for grapes set aside for 2021 vintage Icewine total 1,952 tonnes, almost double the registered tonnes from last year’s record low, but still down significantly from previous years.

WINE OUTLOOK

Early reports indicate 2021 will be an excellent year for early white varieties that were harvested before the rains, notably aromatic whites Sauvignon Blanc and Riesling, and white varieties harvested for Sparking programs. Despite the weather challenges, most wineries reported good phenolic ripeness on skins and lower acid across many varieties, thanks to careful viticultural practices. Anticipate continued high quality red blends from varieties such as Cabernet Franc, Cabernet Sauvignon and Merlot.

Operations

It was another eventful year for the Wine Appellation Authority, as we continued to adapt to changing health measures, a dynamic retail environment and various stresses facing our wineries and stakeholders. The organization has been nimble and remained tightly focused on maintaining uninterrupted delivery of our core regulatory services – wine testing and approval, and verifying compliance.

After the success of bringing sensory testing services in-house at the start of the pandemic, we have now completed a second major initiative to fully integrate the winery audit program into the broader structure of inspections, investigations and enforcement. This is a transformational change to the VQA compliance program, allowing us to implement a more efficient risk-based approach to promote and monitor compliance and to take timely corrective action when necessary. I am pleased to formally welcome Peter Harris who joined our staff team in July 2021 as Director, Audit and Compliance. Tricia Ramnath also joined our permanent staff in August 2021, supporting the wine approvals program. Welcome Tricia!

The LCBO Corporate Affairs, Quality Assurance, and Internal Audit departments were instrumental in a smooth transition from audit and sensory testing provided by the LBCO to our inhouse services. I thank them, and the AGCO, for their advice and support in making this a success. We continue to rely on LCBO for analytical testing and closely collaborate with them and the AGCO on reporting and related issues.

We have also been working diligently with our overseers and partners at the Ministry of Government and Consumer Services. Work is underway to modernize the Agreement that governs the Wine Authority’s relationship with the government and sets the framework for how the Authority implements its mandate to administer the VQA Act. I look forward to completing the new framework in the coming year.

To complement our core regulatory duties and ensure we communicate our mandate, we are putting a renewed emphasis on education and communications. Beginning with an update to our corporate identity that communicates our regulatory role, we are building an appellation-focused suite of materials – new website, educational materials and resources – that enhance the value delivered by a credible and trusted appellation system backed up by the VQA certification process.

There has been so much change that there can be no “back to normal” but I am confident that we have made the best of a difficult time and looking forward to very positive year ahead.

Laurie MacDonald
Executive Director

Goals and Activities

PERFORMANCE GOALS

Progressive and inclusive regulation of Ontario's wine appellation system increased awareness and understanding of Ontario wines wine appellations and the appellation authority’s role efficient and effective corporate governance and operations.

ACTIVITY HIGHLIGHTS

8 Net new Member Wineries

98% Overall success rate for wine approval applications

2134 Wine Approvals Issued

1337 Export Certificates Issued

498 Audits and Inspections Conducted

3 Compliance Orders Issued

2 Approvals Revoked

WINE APPROVALS

2186 applications for approval to use the VQA designation and descriptive terms regulated under the VQA Act were processed. Each wine must successfully complete comprehensive quality assurance testing including a taste test, laboratory analysis and label review before being certified as a wine of origin. Approvals were granted for 2134 wines and denied for 52.

WINERY PARTICIPATION

191 wineries were registered as members of the Wine Authority at the end of March 2022. These included 6 large wineries (sales of over 750,000 litres of VQA wines) 23 medium class wineries (sales of 100,000 to 750,000 litres of VQA wines) and 162 small wineries (sales of up to 100,000 litres of VQA wines).

EXPORT CERTIFICATION

The Appellation Authority provides an independent certification process required by the European Union as a condition of access to its member states. 1337 certificates were issued for 227 wines from 27 different wineries.

STANDARDS AND AUTHENTICITY

Maintaining labelling, composition and quality standards and verifying they are met is an important part of The Wine Appellation Authority’s mandate. Amendments to VQA wine standards to define Appassimento as a regulated term for wine made with dried grapes and adding Glera to the list of authorized grape varieties kept the standards up to date.

INSPECTION AND AUDITS

179 scheduled winery audits were conducted during 2021 – 2022 to verify compliance with origin and composition standards for all VQA approved and VQA-eligible wines.

Of these, 96 were completed remotely. Remote audits were delivered based upon several factors including winery activity, travel, and public health mandates. Augmenting the audit cycle, 190 inspections of websites and online sales channels were completed along with 129 inspections of winery retail store premises which included a sample of non-VQA wineries. As a result of audits and inspections, follow-up was conducted in 45 cases. Most issues addressed were minor in nature and were corrected in a timely manner. The audit and inspection program was redesigned in 2021 to be delivered by Appellation Authority staff and integrate all compliance activities under an updated risk-based model. These new protocols were fully implemented on April 1, 2022, including measures to improve efficiency based on compliance history and specific risk factors.

ENFORCEMENT

Most compliance issues were resolved with warnings and corrective actions. The Appellation Authority issued 3 compliance orders in relation to wineries using regulated terms without approval or failing to take corrective action within a stipulated time. The Authority also revoked the approvals for two previously approved wines due to incorrect composition declarations.

EDUCATION AND AWARENESS

More than 250 students enrolled in the School of Hospitality and Tourism Management at George Brown College completed our micro course on Ontario’s wine appellations and successfully passed an examination set by the Authority to achieve their Level 1 certificate in Ontario VQA Wine Appellations. The uptake on this new course has been strong and we are grateful to our partners at George Brown College for the opportunity to educate the next generation of local hospitality professionals about our local wine appellations. We continue to work closely with other educators, including Niagara College and Brock University, to bring Ontario appellation education to their students.

STAKEHOLDER COMMUNICATIONS

Regular communication with member wineries continues to be a priority, with monthly newsletters and bulletins to inform and assist wineries in navigating the VQA appellation program.

Winemakers Forums resumed in early 2022 and will continue to create opportunities for collaboration within the winemaking community.

Partnerships with industry stakeholders remain strong, and we continue to engage the wine and grape industry in supporting the regulated VQA system as a foundation for consumer trust. In particular, our relationship with the Wine Marketing Association of Ontario is an important part of disseminating the appellation message and supporting wineries in educating consumers about the value of credible, authentic Ontario wines. Origin is at the core of every VQA wine, and our appellation resources are designed to help communicate the unique provenance of every appellation in Ontario.

Statistics

VQA WINE PRODUCTION

All statistics are for the period of April 1, 2021 to March 31, 2022. These figures are based on wines approved during this period and are calculated using volumes declared at the time of submission for approval. Reported volumes may reflect wines that have not yet been released but will not reflect wines that may be finished but not yet submitted for approval. Statistics for previous years can be found at www.vqaontario.ca in past annual reports.

Wine Category	# of Wines	Volume (9L cases)	Change from last year (volume)	Estimated grape tonnage
Table Wine	1887	2,727,877	-10%	33,863
Icewine	48	12,402	-27%	638
Sparkling	170	188,402	-22%	2,339
Late Harvest	16	9,436	-46%	170
Other	13	1,993	-59%	25
Total	2,134	2,940,110	-11%	37,035

Regional and Varietal Production

APPELLATIONS

This table includes all wines labelled with the stated appellation on the principal display panel. These wines must contain at least 85% content from the stated appellation. Wines labelled with one of the ten sub-appellations of the Niagara Peninsula or the South Islands sub-appellation of Lake Erie North Shore must contain 100% content from the stated sub-appellation. Production of wines labelled with the Niagara Peninsula appellation rose slightly offsetting a decline in production labelled with simply Ontario.

As declared on label	Cases (9L)	% of all VQA wines
Niagara Peninsula	1,553,649	53%
Ontario	1,036,621	35%
Sub-appellations	319,402	11%
Prince Edward County	23,097	Less than 1%
Lake Erie North Shore	7,341	Less than 1%

GRAPE VARIETIES USED IN ALL VQA WINES (TOTAL OF 50 DIFFERENT VARIETALS)

Variety	% of total production (by volume)
Riesling	13%
Chardonnay	12%
Merlot	11%
Cabernet Franc	11%
Pinot Gris	9%
Sauvignon Blanc	8%
Pinot Noir	7%
Vidal Blanc	6%
Cabernet Sauvignon	6%
Baco Noir	5%
Gamay Noir	3%
Gewurztraminer	3%
Syrah	1%
Other	5%

47%

Red Grape Varieties used in all VQA Wines

53%

White Grape Varieties used in all VQA Wines

AS WITH PREVIOUS YEARS, ABOUT HALF OF THE VOLUME OF ALL VQA WINES IS SOURCED FROM THE FOUR GRAPE VARIETIES, RIESLING, CHARDONNAY, MERLOT AND CABERNET FRANC.

TABLE WINES

The table wine category includes white, red and rosé wines. The total volume of white and red wines produced declined slightly, while Rose grew by 12%. A large majority of table wines continue to declare a grape variety or varieties on the label, with only about 16% labelled with a non-varietal proprietary label.

Colour		Litres	Cases (9L)
White (47%)	Varietal	10,977,276	1,219,697
	Non-varietal	359,316	39,924
	Total white	11,336,592	1,259,621

Red (44%)	Varietal	9,632,092	1,070,232
	Non-varietal	1,005,051	111,672
	Total Red	10,637,143	1,181,905

Rosé (10%)	Varietal	765,773	85,086
	Non-varietal	1,633,702	181,522
	Total rosé	2,399,475	266,608

POPULAR SINGLE-VARIETAL TABLE WINES

The top four red and white varietals remain the same as in previous years. Pinot Gris edged out Riesling for the number two position but both have similar production volumes. Sauvignon Blanc remained fourth among white varietals but with a substantial increase to 217,000 cased compared to 102,000 last year. Single varietal Baco Noir moved from top volume to third with a decrease of almost 40% in contrast to a 21% increase for Merlot and 11% increase for Pinot Noir, possibly reflecting the excellent 2020 vintage conditions.

This table includes the top four varieties used in wines that are labelled with a single grape variety. These wines must contain at least 85% of the stated variety.

	Varietal	Litres	Cases (9L)
White	Chardonnay	2,105,414	233,935
	Pinot Gris/Pinot Grigio	2,032,531	225,837
	Riesling	1,998,544	222,060
	Sauvignon Blanc	1,955,160	217,240

Red	Merlot	1,338,202	148,689
	Pinot Noir	1,300,918	144,546
	Baco Noir	1,028,428	113,159
	Cabernet Franc	925,215	102,802

ICEWINE

Icewine production was down substantially from the previous year’s production of 56,000 cases. This is the result of a record low tonnage of grapes harvested for Icewine in 2020.

Variety	Litres	Cases (9L)
Vidal Blanc	71,236	7,915
Riesling	18,868	2,096
Cabernet Franc	17,976	1,997
Gewurztraminer	2,695	299
Cabernet Sauvignon	393	44
Others	446	51
Total	111,614	12,402

OTHER WINES

Overall the production volumes in specialty categories leveled out, with slight decreases in Sparkling, Fortified and Vin de Cure (Appassimento) and a more significant decrease in Late Harvest.

	Litres	Cases (9L)
Late Harvest and Botrytis Affected	84,928	9,436
Fortified and Liqueur wines and Vin de Cure	17,935	1,993
Sparkling wines	1,695,619	188,402

Ontario VQA Wine Sales

YEAR ENDING MARCH 31, 2022

BY VOLUME

	Litres (2022)	Litres (2021)	% Change
Winery Retail	7,179,639	7,900,545	-9.1
Licensees	2,204,304	1,188,709	85.4
LCBO (shipped)	10,310,618	10,683,750	-3.5
Farmers Markets	49,595	38,384	29.2
Other Provinces	1,063,240	907,784	17.1
Export and Miscellaneous	772,670	608,504	27.0
Total	21,580,066	21,327,676	1.2

BY RETAIL VALUE

	Retail value ($) (2022)	Retail value ($) (2021)	% Change
Winery Retail	189,411,022	199,232,780	-4.9
Licensees	40,637,122	22,124,663	83.7
LCBO (shipped)	151,957,088	155,953,223	-2.6
Farmers Markets	972,458	713,717	36.3
Other Provinces	15,430,600	14,393,949	7.2
Export and Miscellaneous	25,234,929	17,705,114	28.1
Total	423,643,219	412,123,446	2.8

VQA Wine Tasting and Approval Process

Every wine that carries a regulated appellation of origin and the VQA certification has completed a rigorous approval process. Once a wine is finished and ready to bottle it is submitted to the Appellation Authority for testing and approval. The evaluation includes a sensory evaluation, laboratory analysis and label review to ensure the wine meets quality standards and is labelled according to VQA regulations. Labelling regulations reserve certain terminology for VQA approved wines and set standards for declaring origin, varietal content, vintage and other attributes. These regulations ensure consumers are not misled with respect to the wine content. Only after having successfully completed all components of this process can a wine receive approval and be released for sale, using regulated terms and descriptions. Ongoing winery audits and retail inspections also verify that underlying standards are met.

2186

Applications for Wine Approval Evaluated

2134

Number of Wines Approved for VQA Status

Performance Measures

Overall Sucess Rate - 99%

LABORATORY ANALYSIS:

Applications for Wine Approval Evaluated

12 Days

% of Tests Completed Within 15 days

79%

% of Tests Completed Within 21-day Target

99%

Pass Rate at Laboratory - 99% (Final Status)

SENSORY ANALYSIS:

Average Time to Completion

6 Days

% of Tests Completed Within 15 Days

99.7%

% of Tests Completed Within 21-day Target

99.9%

Pass Rate at Sensory Panel - 99.6% (Final Status)

Online Query and Reporting System Uptime (100.00% During Business Hours)

99.8%

Compliance and Summary

The Wine Appellation Authority enforces compliance with the VQA Act and regulations as its primary mandate. In addition to the testing completed during the wine approval process, the regulatory process includes monitoring of grape quality at harvest through independent sugar testing, and regular audits and inspections to verify wine origin and content, wine making processes, record-keeping, labelling and advertising. These steps ensure that the wine meets the technical standard, the label complies with the regulations and that the wine offered for sale has completed the approval process.

ACTIVITIES

179

Compliance Audits

2

Revoked Approvals

122

Retail Store Inspections

43

Warnings and Minor Corrective Orders Issued

190

Website Inspections

3

Compliance Orders Issued

PERFORMANCE MEASURES

76%

Percentage of Audits Completed with no Issued Raised

99%

Percentage of Wines Found to be Compliant During Audits

99%

Percentage of Wines Found to be Compliant During Retail and Advertising Inspections

The overall level of compliance with VQA regulations within Ontario continues to be very good. The majority of infractions are relatively minor and many potential issues are flagged and corrected before products reach the consumer market. Winery compliance with correction requests is excellent and few infractions require enforcement action to achieve compliance.

Financial Summary

The Ontario Wine Appellation Authority is funded by its member wineries through sales levies and fees for service. It continues to seek out ways to maximize the efficiency of service delivery and deliver value for money to its stakeholders, including participating wineries and the Government of Ontario.

This summary is drawn from the auditor’s report and financial statements for the year ended March 31, 2022. Revenues fell short of expenditures by $25,667 for the year ended March 31, 2022, reflecting the decision to waive membership fees in response to the financial strain on the industry caused by pandemic measures. Expenses were greater than the previous year but still down from pre-pandemic levels as a result of restricted activities. Total revenue was $1,670,998 and total expenses were $1,696,665. Net assets are $1,254,641 and include funds set aside for general use, capital and intangible assets, and a legal and enforcement reserve.

Revenue for fiscal 2022 was derived primarily from sales levies ($991,512) and approval fees ($665,113). Major components of the approximately $1.7 million in expenses were wine approvals and quality monitoring ($567,779), and employee costs ($687,173).