BC Business
Patrick Ellis, Blue Note Wine & Spirits | BCBusinessPatrick Ellis scours the globe for exciting new premium wines and sakes – the real challenge begins when he tries to import them back to B.C.
A handful of booze importers navigate a ?maze of international law, shipping logistics ?and customs regulations – all to make sure B.C. liquor stores and bars are stocked ?with our favourite foreign tipples.?
The small bottle of Dassai 50 sake arrives at the table nestled on a rocky bed of ice cubes in a heavy glass cooler, condensation misting the sides. It has taken a long time to arrive. Not since we ordered it from the server at the sleek new Hapa Umi restaurant near the convention centre – that took a matter of minutes – but for liquor importer Patrick Ellis, it’s been a years-long process.
Ellis runs Blue Note Wine & Spirits Inc., one of the 300 companies in B.C. that are responsible for what we see on the shelves of the province’s public and private liquor stores or the menus of local restaurants. The government-run Liquor Distribution Branch (LDB) employs only four buyers and except in rare cases – one buyer, for example, personally goes to France to taste the early stages of that year’s Bordeaux and place future orders – they rely on what these importers scout out around the world.
Ellis first visited the Asahi-Shuzo sake brewery in a small town in the Yamaguchi prefecture on the southern tip of Japan’s Honshu Island in January of 2008, where he met the Sakurai family who run it, tasted all the brewery’s products, and toured the facility. Ellis describes the impression made by his first tasting of its Dassai 50 super-premium sake: “sophisticated enough to attract people looking for something new and special-tasting, but priced right for the market, kind of like Ferrari offering a great-value premium sports car.” He applied in March of that year to B.C.’s LDB for a product number code and received it a few weeks later, allowing him to place his first order for 100 cases. The bottle that comes to our table in May this year – its first month of availability in B.C. – was part of an order Ellis placed with the brewery on October 29, 2009.
After the two months it took to produce it, the shipment was sent to Tokyo, 800 kilometres away, where it sat waiting for a container bound for Vancouver to fill. Once on the boat, it was a 10-day trip to Vancouver. From the port, it was sent to ContainerWorld, the bonded warehouse in Richmond that is the Ellis Island of all alcohol imported to B.C. It took a week for customs processing and then Hapa Umi’s staff, who had been given tastings of it earlier, ordered a supply of Dassai 50 from a nearby government liquor store. When that restaurant’s order for a case came in, it was released from the bonded warehouse for a transfer to the LDB warehouse at Broadway and Rupert – a process meant to take three days, but which can stretch to two weeks. From this second warehouse, the sake was then shipped to the liquor store where restaurant staff had placed the order, at which point Hapa Umi staff could pick it up.
Ellis doesn’t brood about the Captain Cook-like journey or the paperwork that went into all of the stages of it. The 48-year-old has a smile so broad on his face that he makes Santa look mildly depressive. He’s happy it’s here. He’s happy more restaurants are ordering premium sake these days. He’s happy to tell me the history of the sake and of the owner of the company that produces it and of the way it’s made. It’s called Dassai 50, he explains, because 50 per cent of the husk has been removed from the Yamada-Nishiki rice grains to give it a distinctive flavour. “You can smell a little banana in there, some melons,” he says as he sniffs and tastes. “Or a touch of fennel or a really juicy Asian pear.” None of those flavours is actually in the sake, which is composed only of water, rice and koji mould spores. But the chemical makeup of this particular bottle of clear liquid makes our tongues taste what’s not there. As do Ellis’s words. [pagebreak]
Liquor importing is not something taught in schools or through any kind of structured apprenticeship. Like most B.C. importers, Ellis arrived at it via a circuitous route. He grew up in B.C. and Ontario and attended the University of Victoria, where he became fascinated by Asian studies. A scholarship enabled him to pursue graduate work in Japan, after which he went to work for a Japanese automaker in Ontario. He switched to exporting Canadian wines to Japan while working with his Japanese father-in-law, and arrived at the idea of importing sake to B.C. about a decade ago. His success in arousing consumer curiosity about sake led him to lend his marketing talents to a select group of wineries.
Robert Simpson, the president of the older and larger Liberty Wine Merchants Ltd., took a similarly sideways route; he began with a degree in sociology and English. After discovering by chance that he was good at distinguishing wine quality, he ran a restaurant in Point Roberts before moving on to importing wine and operating private wine stores. It’s a kind of quirky passion that keeps him going, even after excruciating bus trips in Portugal over bumpy country roads that sometimes end at wineries whose products taste like gasoline.
Thanks to the demands of bringing alcohol into a place like B.C., Ellis, Simpson and their fellow importers must also have the patience to track down endless bits of paper (when did that container with my French wine leave Marseille, anyway?), negotiate the bureaucracy of government-controlled liquor operations, and sell with relentless charm, knowledge and strategy to those who are doing the bulk buying. That selling job is particularly complex in B.C. because of its hybrid system of public and private alcohol sales. It’s not an all-public system, like the massive Liquor Control Board of Ontario, which is the largest single buyer in North America and runs every liquor store in the province. (If you think the complaints about the Stalinist control of liquor are bad here, check out the griping in Ontario.) But it’s not an all-private system, either, like Alberta, where there are close to 2,000 private stores.
Instead, B.C. continues to operate 197 government liquor stores, which sell 41 per cent of all the alcohol in the province. There are also another 670 private stores. But all liquor that comes into the province, whether destined for government stores, private stores or B.C.’s 8,000 restaurants and bars, is obliged to pass through the provincial registration system, the bonded ContainerWorld warehouse and an LDB warehouse, either the one in east Vancouver or the one in Kamloops.
Importers need to be deft at working with all those moving parts, especially in the last two recession years, where the public appetite for wines over $25 and celebratory bottles dropped precipitously. (Simpson knew the recession was coming in 2008 when sales of champagne suddenly dried up.) The downturn weeded out several small importers who didn’t have the cash to pay for an order up front or the resources to wait out a slow and less extravagant market.
For Patrick Ellis, whose Blue Note Wine & Spirits sells about $4 million worth of specialty wines (90 kinds, 20 vineyards, six countries) and premium sake annually, part of the job is convincing one of the four all-important LDB buyers, officially called “portfolio managers,” that he or she should commit some of the much-sought-after shelf space in the 197 provincial stores to his products. The four LDB buyers are Barbara Philip, who buys all the European table wines; Bill Michaels, who oversees all beer products, plus Australian and New Zealand wines; Steve Schiedel, who handles all the wines from North and South America; and Adele Shaw, whose territory is officially described as “Spirits, Fortified, Fruit, Asian and South African Wines.” This quartet rules the importers’ world.
Those buyers are key, but an importer like Ellis must also devote time and energy to the owners and managers of the private stores, restaurants and bars to get them interested in what he’s bringing in and help him shepherd it through the LDB process. The branch rarely refuses to allow a product that an importer wants to bring in on speculation for those buyers (alcohol jellies are one product known to have been turned down, largely because of the danger of them being consumed by kids), but it does control the registration process, the distribution and the rules about where it can be stored at its final restaurant or bar destination. It’s a system that drives some people in the food and wine business crazy, leading to routine eruptions of frustration directed at the branch.
“The Great Stifler, the grand obstacle to our emergent wine culture,” is how local sommelier Jake Skakun referred to the LDB in a post on Scout, a popular food blog, last fall. “You make interesting wine inaccessible for the average Joe with ignorance, absurd pricing and curtailing what is made available.” In addition to Skakun, critics of B.C.’s liquor system include a healthy representation of lawyers who, either because they do legal work in the business or happen to be wine buffs, frequently express their public dismay at what they see as a system fraught with excessive bureaucracy. One of those lawyers, Mark Hicken, who also writes a blog, says there are all kinds of strange rules and time lags that hamper bar and restaurant owners at multiple stages. Importers can’t even see the product they’ve bought and paid for until it’s ordered by a private store, restaurant or bar; restaurants have to order a full case of whatever they want, but they are forbidden from sharing a case among branches of the same restaurant and they’re not allowed to store wine off-site.
“There are all sorts of structural problems,” says Hicken. “It seriously affects the selection of wines in restaurants and stores.” He describes the spec system, where importers bring something in that they only hope private operations will order, as “not efficient at all.” [pagebreak] But importers like Ellis aren’t interested in getting into those kinds of arguments. Ellis, who also sells in Alberta, the Yukon, Manitoba and Saskatchewan, says B.C.’s arcane system of importing and distributing liquor has its advantages. “Because of the system, I can go to Campbell River and buy a decent bottle of wine,” he says. In Alberta, he adds, a retailer in a small town often won’t have the financial capacity or know-how to bring in a wide selection. He has to rely on what sells fast and most often. And when it comes to having to deal with four people who control almost half of what’s available in B.C., that’s not much different from negotiating with a single buyer who represents a large chain store in Alberta.
Simpson, whose Liberty Wine Merchants brings in 400 different wines from 120 producers and also sells to several provinces, is similarly phlegmatic. Although he’d like to see the warehousing and distribution become more efficient, he says the LDB is “also a benevolent parent at times.” He doesn’t buy the claim that alcohol in B.C. is more expensive than anywhere else in North America, as some have observed. Certain products are more expensive and some are less. But he also recognizes that the almost $900-million profit the LDB made in 2009-10 accounted for 2.4 per cent of government revenue that year.
The liquor importing and distribution system in B.C. may be convoluted, but according to Ian Tostenson, president of the B.C. Restaurant and Foodservices Association (and former chair of the B.C. Wine Institute and former president of Cascadia Brands), it emerged over many years to meet Victoria’s need for revenue. Tostenson observes that “the importers who are successful, they know the system really well and they work with it.”
That appears to be the case for Ellis, Simpson and others who have mastered the game and managed to stay in it. Simpson, who is also the general manager of the seven Liberty Wine Merchants stores, says the company is among the top 40 importers, selling 70 per cent of what it imports to its seven stores and 30 per cent to government stores.
Ellis, whose company is smaller and imports a select list of sakes and specialty wines, is encouraged by the fact that sales, especially of sake, are holding their own or increasing even in tough times, while others have seen plunges. Both importers have been able to navigate the path of discovering products that appeal to what the public and the LDB are looking for.
So what is the LDB looking for? One key to their buyers’ hearts is the quarterly reports the branch produces, which show what’s selling and what’s not. The 81-page report issued for the first three months of 2011, which compares sales by dollars and volume to the same three months of the previous years, tells dozens of stories in minute detail: Beer sales from big breweries are down, while sales from little breweries are up. Japanese draft beer sales are skyrocketing, French ones are up 60 per cent and beers from Kenya and Montenegro are moving faster. Sparkling wine sales are down. Mexican white wines are improving, as are all Spanish and Portuguese wines, while the sales of U.S. wines dipped by one per cent.
Those are the kinds of reports that Barbara Philip, one of the LDB’s four buyers, pores over. She receives reports like that every month. Not that numbers are the only thing she knows. Philip, a relatively new hire with two years at the LDB, is also an unusual one. Rather than working her way up through the system, the standard procedure at the LDB, she has come from the outside, with experience in restaurants, wine education and a certification as a Master of Wine. But ultimately, sales numbers are just as important as what her palate and education tell her is a good-tasting wine
“The market is flooded with product these days, so we have to ask, ‘Is this category saturated or is there room to add product? Will it give us more revenue or create more excitement?’” says Philip. No matter how good a pitch an importer might make, she sometimes has to say, “Please don’t show me another one like this because I already have too many and the category is in decline.” So an importer has to convince her not just that the product is good, but that it adds diversity, that it has a unique characteristic or selling point, that the label is appealing, that the quality matches the label, and that the price is right. The importer also has to convince her it will sell.
Philip, who started in theatre in Vancouver as an actor but gravitated to wine through her secondary work as a sommelier at restaurants, including Adam Busby’s Cascabel, Andrey Durbach’s Étoile, and The Fish House in Stanley Park, makes it clear that she relishes the Rubik’s cube task she has. “I think I have the best job in the province. I love the product, but I also love the statistics side and I love the negotiation.”
Which makes her a worthy match for importers like Ellis and Simpson, who come bearing new discoveries every year from around the world. They’re off again this fall, Simpson to Spain and Portugal, Ellis to Italy and Japan. Sometime next year, after bus trips and bullet trains, a flurry of paperwork and much shipping to and fro, we’ll see what they found. Perhaps.