Inflation

Happy weekend,

The whole Icellars team is excited to see some of you tomorrow at our 2020 "The Vintage of the Century" wine tasting. We had some cancellations and still have  a couple of tickets left which can be booked at 2020 - " The Vintage of the Century " tasting

Today I am going to write about a problem instead of a solution, INFLATION. A problem that as a small business and consumer we have absolutely zero contribution and control. Like many small business owners we do not have any leverage or say in the cost of materials, fees, taxes etc. The authority/supplier dictates whatever price they want to. 

As being an Estate Winery, our main cost items are in the order of their share;

1. Taxes and regulatory fees
2. Staff salaries
3. Vineyard labour
4. Mortgage interest
5. Packaging like bottles, corks, labels
6. Vineyard supplies and diesel for tractors
7. Winemaking supplies
8. Utilities

You may ask why I placed taxes and regulatory fees at the top of our cost is because these taxes&fees are sales taxes not an income tax we pay if we turn a profit. We pay these even we loose money. Many times I hear why the wine prices in Ontario are so high. Below is an infographic prepared by an Ontario winery Potter Settlement

It may look a little bit exegerated but I agree with most of their calculations. As a certified organic and certified sustainable winery we have additional costs on top of these. 

On the input inflation, it has been even worse for us in the last two years. There is no wine bottle manufacturer in Canada, they have to be imported from Asia, Europe or the USA. In the prepandemic years 2019/2020, we were buying a 12 bottle case of bottles at $9.75, In 2021/2022 we paid $18.50 for the exact same bottles. Last week, I ordered again at $16.00/case. It looks like it came down a little bit but it is still 62% more than what we normally pay. 

Another example is the diesel we use for our tractors and wind machines. In 2019 we were paying 85 cents and paid $2.00+ for most of the last three years.

One item I never understood is the insurance premium increase on our winery policy. We were closed for most of 2020 and 2021 but our premiums went up 30% each year.

You might wonder if we could incorporate all these cost increases to our wine prices. I say absolutely NO. During pandemic we were closed to in-store tasting&purchases, restaurant customers were closed, LCBO did NOT buy anything from us. We were only selling online and trying to compete with the cheap imported wines from the LCBO and bottle shops of the two big Ontario wineries Arterra and Peller. If you remember even we were forced to close our retail shop the LCBO and these 300 off-site wine shops were allowed to be open. So in order to stay competitive we have NOT increased any of our wine prices to this day. We were selling the 2018 Reserve Red for $30 in 2019 and it is still $30.

This all ate from the already slim margins of small Ontario wineries. What we did to curtail some of the increases is to increase the tasting fees and remove the concept of waiving tasting fees with bottle purchases. I am sorry to apply these changes but there is no other way to stay in business. And believe me this is not even covering a fraction of our cost increases.

But we are not pessimistic at all. We belive that we are making some of the finest wines in the world and I always challange anyone that Icellars wines will top any wine from anywhere in the world at the same price range in quality in an unbiased blind tasting.

All we ask from you Canadians is to support your local wineries by buying directly from them and ordering or forcing them to list VQA Ontario wines in restaurants. 

Stay well.
Adnan Icel
Owner&Winemaker