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Visions of huge profits, glamourous lifestyle not close to reality, says local winery owner
Anyone who thinks owning a winery is a license to print money and ticket to host glamourous parties has no clue about the brutal reality that most South Okanagan wineries are struggling to make a profit and stay in business.
Mick Luckhurst, the owner of Road 13 Winery near Oliver for the past 11 years, said he and his family have worked endless hours to be one of the few wineries in the region that is surviving financially.
“This is the least amount of money I’ve made since I was 29 years old,” said Luckhurst, during a presentation to the Osoyoos Rotary Club at the club’s weekly luncheon last Thursday. “But I didn’t come here to make a ton of money … I came here for the lifestyle and we’re loving it out here.”
When you combine the stiff competition from an ever-growing list of small wineries trying to make an imprint on the regional, provincial and national markets, the fact the provincial liquor board takes most of the profit from all B.C. wineries and the high costs of running the business, owning a winery is exceptionally difficult, said Luckhurst.
“Liquor boards take two-thirds of the profit,” said Luckhurst, who said the B.C. Liquor Board makes an annual profit in excess of $1 billion, which pales in comparison to the Ontario Liquor Board, which reports annual profits well in excess of $1.5 billion.
When Luckhurst and his family moved to the South Okanagan 11 years ago, they purchased a small winery called Golden Mile Cellars, which they sold six years ago.
Due to provincial and federal regulations in the wine industry, the only place B.C. wineries can sell their product in Canada is in B.C. and Alberta, said Luckhurst.
Established wineries like Burrowing Owl and Jackson Triggs, that have been around for decades, continue to do extremely well as they sell massive volume at most price points, said Luckhurst.
But that’s simply not the case with smaller wineries as they simply can’t produce or sell those massive volumes and have to rely on producing quality wine and finding loyal customers at all price points, he said.
Many smaller wineries over the past decade could survive by turning marginal profits or even losing money as land values were exceptionally high, but that has also changed dramatically for most small wineries since the turn of the millennium, said Luckhurst, who owns 61 acres of land with Road 13 winery.
While the South Okanagan has been known for decades for growing the finest grapes in the country, that is no longer the case with the Similkameen Valley now producing some of the finest grapes in the world, said Luckhurst.
“The best grapes in B.C. are located on one farm in the Similkameen Valley,” he said. “The Similkameen is largely the same way as we are here and most winery owners came here for lifestyle.”
The competition from several new wineries in the Similkameen Valley only adds to the difficulty of trying to establish a name in the South Okangan, he said.
Road 13 Winery has captured several quality awards over the last two years and is continuing to expand its brands and make a profit, but it’s never easy, said Luckhurst.
“We’re struggling with so much competition right now that it’s unbelievable,” he said. “There is so much wine out there right now it’s hard to believe.
“It takes a lot of money tied up until you finally get to market and once you get to market, you’re up against so many other wines. It’s tough.”
Like many other South Okanagan wineries, Road 13 is looking to international markets to sell product, he said.
His wife has some connections in Japan and his winery is close to signing a deal to sell some major volume in that country, while he’s also looking to establish connections in China, said Luckhurst.
When it comes to running a successful winery, the bottom line is you have to produce exceptional grapes and market your product to the best of your ability, he said.
“It’s all about the grapes,” he said. “That’s a saying that absolutely holds true. Period.”
There are more than 40 wineries for sale between Osoyoos and Kelowna and likely more to follow, he said.
“Those are the ones that are listed,” he said. “I would think there are many more than that.
“You get into this business thinking it’s going to be one way, but the romance goes out of it real quick.”