REPEAT-Winter Cheer: Canadian Icewines Poised to Uncork Solid Growth with Higher Exports-BMO Economics

REPEAT-Winter Cheer: Canadian Icewines Poised to Uncork Solid Growth with 
Higher Exports-BMO Economics 
- Ontario's icewine grape harvest expected to increase by 50 per cent 
- BMO Economics forecasts higher sales and exports  
- Overall consumption of wine is up - Canadian adults purchase an
average of 22 bottles annually vs. 13 bottles in 1995 
NIAGARA-ON-THE-LAKE, ONTARIO -- (Marketwire) -- 01/26/13 -- According
to BMO Economics, the Canadian icewine industry is poised for solid
production and sales this season as a result of ongoing low
temperatures this winter, favourable growing conditions in 2012 and,
more generally, a shift by consumers from beer to wine. 
Icewine - first made in Germany in the late 1700s - is made from
grapes that have been left on the vine until a sustained temperature
of minus 8 degrees Celsius or lower is reached, boosting the grape's
sugars and enhancing the flavour. Typical varietals used for icewine
include Riesling, Vidal and Cabernet Franc.  
Since frozen grapes produce a small amount of liquid, the production
volumes of icewines are lower compared to table wines. The result is
pricier wines, ranging from $50-$100 or more for a 375 ml bottle. 
"Last year brought solid growing conditions for most varieties of
wine grapes in both Ontario and British Columbia, and the crop is
expected to produce some exceptional wines," said Aaron Goertzen,
Economist, BMO Capital Markets. 
"Ontario's icewine grape harvest for this season is expected to total
5500 tonnes - an increase of 50 per cent from the year before. This
raises the prospect of ongoing solid production and export growth."
However, Mr. Goertzen added that production will be 20 per cent below
the record set in 2007. 
In Ontario, the largest icewine-producing province, icewine
production accounts for approximately four per cent of total wine
production by volume. However, because of its high price, icewine's
share in sales would likely be substantially higher, according to Mr.
Goertzen. 
"The 2012 vintage will likely go down in history as the best vintage
ever for Ontario table wines and this is likely to prove true for
icewine as well," said Norm Beal, President, Peninsula Ridge Estates
Winery. "Although we have anxiously awaited a little longer for
colder tem
peratures this year, the extra time on the vine has further
added to the richness and complexity of an already stellar icewine
vintage." 
Mr. Beal stated that yields are down in some areas by as much as 40
per cent given the late cold snap. However, he believes that the
exceptional quality of the 2012 vintage combined with skyrocketing
demand from the Far East will result in increased global demand for
Ontario icewines.  
Canadian icewines continue to make inroads internationally  
Mr. Goertzen noted that conditions are ripe for the Canadian icewine
industry to expand its presence globally. "There is room for Canadian
wineries to increase their exports of premium-priced products such as
icewine, for which economies of scale are not as important. While
icewine is produced in relatively small quantities, its high value
means that it already accounts for one-third of wine exports, and
Canadian wineries are internationally renowned for this cold-climate
product." 
On a volume basis, Canada exported the equivalent of 483,000 375 ml
bottles of icewine in 2011. Around 80 per cent of Canadian icewine is
exported to Asia, with China accounting for nearly half of the total. 
"Icewine represents a fantastic opportunity for Canadian wineries to
showcase a popular, made-in-Canada product to consumers around the
world," said Al Giguere, Commercial Banking Area Manager, Niagara
Region, BMO Bank of Montreal. "With more nations looking for unique,
high-quality products like icewine, the market for wineries we work
with in Ontario and B.C. will no doubt continue to expand." 
Mr. Goertzen added that icewine is part of an overall robust Canadian
wine sector. "The Canadian wine industry has expanded considerably
over the past two decades. The stimulus comes from an aging
population as well as a willingness by consumers to pay more for
premium wines." 
Canadian adults in 2011 purchased an average of 22 bottles of wine,
up from 13 bottles in 1995. One-third of wine consumed in Canada is
produced by domestic wineries. 
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $525 billion as at October 31, 2012, and more
than 46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
solutions. 
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