Harry McWatters: The Force behind the BC Wine Industry

harry and guest
Honourary Chair of Canadian Culinary Championship Harry McWatters with Co-host Judy Burns. Photo Credit: @McWattersWine

He’s been called a legend, a maverick, the godfather of wine and British Columbia’s Robert Mondavi.

As I chat with BC wine pioneer, and Okanagan Valley resident Harry McWatters about the highlights and lowlights of the BC wine industry over the last half century, I can’t help but think he’s the grape growing equivalent of a Jedi master.

mcw evolve time
Harry McWatters brands: TIME, McWatters Collection & Evolve Cellars Photo Credit: @McWattersWine

With 50 vintages under his belt – including the start-up, ownership and sale of MANY highly acclaimed wineries and vineyards – Harry is clearly gifted in vision, patience and fortitude. A noble warrior, he’s soldiered through legendary game-changing events like the Free Trade Agreement, the great BC vine pull-out, foreign government GATT (General Agreement on Tariffs & Trade) and NAFTA (North American Free Trade Agreement) challenges, and more recently, Rachel Notley’s ‘oil for wine’ provincial trade war.

He’s also taken on the dark(ish) side (or at least a Sith or two) – politicians, city planners and lawmakers who might not always have had the foresight and wherewithal to overhaul prohibition era liquor laws, allow ‘by the glass’ wine with food, or bring wineries to the people in downtown, urban locations. Harry likes to share the story of taking the BC ‘minister of alcohol’ to lunch and announcing he would run against him in the next election on a platform to reverse the archaic ‘no selling alcohol on Sunday’ legislation. “Strike me down, and I will become more powerful than you could possibly imagine,” warned the great Obi-wan. Three weeks later, the British Columbia law was repealed.

Y2K
Photo Credit: Summerland Review

Do, or do not. There is no try…

Duels aside, no one has helped lead the BC wine industry along the path to greatness like Harry. His masterful wine industry accomplishments include: Founding Chair of many landmark organizations including VQA Canada, British Columbia VQA, the BC Wine Institute, the BC Wine Information Society, the Okanagan Wine Festivals’ Society, the BC Hospitality Foundation, the Canadian Vintners Association and more! Oy! He’s been awarded the prestigious Order of British Columbia for services to the British Columbia wine industry, an Honorary Doctor of Laws Degree from Okanagan University College for the pivotal role he’s played in developing both British Columbia’s and Canada’s wine industry, BC’s coveted Spirited Industry Professional Award for his significant contribution to the sales, service and promotion of wine in British Columbia and how about Gold AND Diamond Jubilee medals from the Queen?

Christa Lee McWatters
Christa-Lee McWatters-Bond

With reader ‘list fatigue’ no doubt setting in, let me just say perhaps Harry’s greatest Jedi achievement is the wisdom, guidance and business sensibility he’s passed down as mentor and father to Christa-Lee McWatters and Darren McWatters. Part of the BC wine industry since birth, Christa has absorbed her father’s teachings and amassed an incredible breadth of experience in all sectors of the wine industry. Today she’s Chair of the BC Wine Institute, taking over where her dad left off. She’s also Director of Sales and Marketing for ENCORE Vineyards Ltd, the parent company Harry established for the family’s current portfolio of brands – TIME Winery, Evolve Cellars and the McWatters Collection.

You have to have vision and faith that you’re ahead of your TIME

When you talk to Harry and Christa, it’s clear the family’s Okanagan-based ENCORE Vineyards business has many moving parts. Indeed the entire Okanagan wine region is exploding as buying and selling sprees and industry consolidation takes root.

No one is better positioned to chronicle BC’s wild ride than Harry, who’s seen the industry expand from seven estate wineries in 1988 to 250+ today (plus another 125 fruit wineries and cideries that fall under the winery licensing act). Vineyard land prices have grown exponentially from $10,000 an acre for planted land in 1989 to up to $200,000 today. In Harry’s view, the Free Trade Agreement was a bad deal for BC’s wine industry, taking away all preferential support and government subsidies. Long-term, however, it forced BC growers and producers to band together and improve their vinifera grape growing and wine making game, resulting in better wines, the attraction of serious international wine-making talent and new investment in all parts of the 250 km/155 mile Okanagan Valley.

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Harry in the TIME Winery Barrel Cellar

In my interview with Harry (below), he talks about the significant investments in BC in premium wineries by “the big three” – Anthony von Mandl Family Estates, Arterra (formerly U.S. owned Constellation, and before that – Vincor International) and Andrew Peller Estates, who recently purchased respected wineries Black Hills Estate Winery, Gray Monk and Tinhorn Creek Vineyards. In addition, with proximity to China, investors are seeing value in Canadian land and have purchased powerhouse vineyards on the Black Sage Bench, including Harry’s half-built TIME property (now called Phantom Creek Vineyards). Close by, One Faith Vineyards – which brands itself as a ‘First Growth’ property – is turning heads, with business development consulting and distribution support provided by – you guessed it – Harry McWatters.

What’s clear – above all – is Harry’s unassailable belief in the potential of the BC Wine Industry. He has taken business risks in the Okanagan that have opened up the wine industry for producers in all parts of the valley.

Harry's vision
Harry McWatters: Ahead of his TIME

I spoke to the Jedi master on the set of his latest production, the new TIME winery in Penticton, which is scheduled to open its tasting room and retail space, later this spring (transcript below).

To truly appreciate the wisdom and some of the historical references in our discussion, here is Harry McWatter’s timeline:

  • 1968 – 1978 – Harry lands at Casabello Wines in Penticton, first as head of sales and later as Director of Marketing
  • 1979 – 34 year old Harry McWatters and partner Lloyd Schmidt buy Sumac Ridge Golf Course just outside Summerland, turning it into B.C.’s first estate winery. He converts the first, second and half of the ninth fairway into vineyards
  • 1989 – first release of Stellar’s Jay, one of the pioneering Traditional Method sparklers in BC & one of Canada’s most awarded sparkling wines
  • 1995 – Harry buys another property north of Okanagan Falls along Highway 97. He renames it Hawthorne Mountain Vineyards and later, See Ya Later Ranch
  • McWatters brings the term ‘Meritage’ to Canada. The name is owned by a California based organization and used to describe New World wines blended in the Bordeaux tradition
  • 1993 and 1994 – McWatters and partner Bob Wareham purchase the 115-acre Monashee Vineyard site on the Black Sage Bench, land left fallow after the Free Trade pull program. They pay $3,700 an acre for the renamed Black Sage Vineyard and are deemed crazy, both for the price paid and for planting mostly Bordeaux varietals. Current price (ahem): ~$225,000 an acre
  • 2000 – Harry sells Sumac Ridge, See Ya Later Ranch and half his Black Sage Bench Vineyard in Oliver to Vincor International (Constellation Brands Inc.) and renames the 60 acres he retains as Sundial Vineyard. He takes on Director of Sales and Marketing role at Vincor
  • 2008 – Harry “retires” from Vincor/Constellation. McWatters vintage Consulting Group is born
  • 2011 – Harry launches legacy McWatters Collection and TIME brands
  • 2016 – Harry sells Sundial Vineyard and his half-built 25,000-square-foot TIME Estate Winery, to businessman Bai Family Estates
  • 2016 – Harry begins converting the 15,000-square-foot former movie theatre, the PenMar on Martin Street in downtown Penticton, into a winery.  Evolve moves forward.
  • May 2017 – Evolve Cellars launches lakeside in Summerland – a lower price point brand, targeting a younger demographic, with a portfolio of highly aromatic whites and sparkling. A month after launch the landlords sell the property. Happily, Christa secures a long term lease with new landlords!
  • August 2017 – TIME crushpad and barrel room up and running.
  • Spring 2018 TIME launch

harry - longshot

Interview: Harry McWatters – President and CEO of Encore Vineyards

You won outstanding winemaker in British Columbia last year and you’ve been called the Robert Mondavi of BC wines – that’s pretty heady praise.

I knew Robert fairly well but I don’t claim any of those things. I’ve just been around longer than most!

Well Congratulations. I see you’ve also recently celebrated – is that the right word? – your 50th vintage. What a valuable wine historian that makes you! How easy or difficult has that journey been?

I’d be lying if I didn’t say it was somewhat of a roller coaster! Fortunately we get to pick up speed on the downhill’s and it gets us over the next rise.

The whole landscape of wine over those fifty years has changed so much. It’s just so radically different in so many ways and there have been major pivotal changes certainly from when I started in the business. I was fortunate. I started out with a company that set out to make some very good wine and rise above what had been there in the past. Anything that came out of the wine industry in BC the 60’s was high alcohol, a hybrid or a labrusca grape wine. When I started with Casabella right off the bat we started by planting a limited number of vinifera vines.

We weren’t going to build the business on vinifera at that point. For starters, we didn’t have a lot of access to it and they were on their own rooted vines but certainly we were pushing the envelope to see where we could go. The goal was higher quality table wines and we had names like Canadian Burgundy and Canadian Riesling – because back then we could – even though it was Okanagan Riesling and the Burgundy was Pinot Noir. But they were respectable wines in their day. To be honest, the biggest obstacle we faced was the reputation of Canadian wines. It was so bad that it was just very, very challenging.

Pop-Wine - cr Vines Magazine
Anyone inbibe?  Photo Credit: Vines Magazine

When did that start to change?

One of the biggest pivotal changes around attitudes happened with the introduction of low alcohol, sweet sparkling wines. As much as everyone poo poo’s the likes of Baby Duck (Andrew Peller -1971) and its imitators (Baby Bear, Canada Duck, Love-A-Duck, Kool Duck, Daddy Duck, Cold Duck and Fuddle Duck), that proved a big turning point for Canadian attitudes towards Canadian wines. We had a nation that grew up drinking soft drinks. So cold, sweet, bubbly “pop” was a natural sweet progression. Yes, it had some alcohol, some grapes but it was tasty and it turned a lot of people onto the idea of consuming wine. And the progression was a little easier to a lot of the German imitators – things like Hochtaler in eastern Canada and Schloss Laderheim from Casabello here in the west. Those imitators were well-liked, affordable, sweeter table wines. From there, it was much easier to move to drier wines. In the seventies most consumers thought Chardonnay was synonymous with a dry white wine – they didn’t know it was a grape. There was no wine education ‘back in the day’.

And as we continued to progress, one thing that changed radically in BC was the advent of land-based wineries. There was an order in council in 1977 that allowed what were called cottage wineries. Only two wineries in BC opened up under those licenses and they failed miserably because the regulations were way to restrictive. We were able to get the designation modified to the term “estate winery” and back then it was based on average sales in British Columbia as opposed to production limits, so it gave us a bit of a loophole to be able to create a business model that made some sense.

Harry McWatters Sumac Ridge cr BC Business
Harry McWatters 1981  Photo Credit: BC Business

At Sumac Ridge, we were the first to get an estate license. The other two wineries in BC evolved into that under different ownership and then more wineries came on stream. So by the time the Free Trade Agreement was passed in 1988, there were seven commercial wineries and seven estate wineries in the province. We were still a fledgling industry with only 14 wineries in total. The biggest pivotal change – negative change, I might add – was the free trade agreement and what it did to the industry. For the first time in our history, it gave us a burning platform and we had no choice but to band together. We were no longer competitors. We had to fight for survival – together – and the only way we could do that was to attract attention to what was truly locally grown. The seven estate wineries knew the challenge was going to be how do we get “the big guys” onside because it wasn’t a major part of their business. And the irony is people complain about the big guys, today, but if we hadn’t had them …. Of course it’s not seven here in BC anymore, from a VQA perspective. It’s really the big three.

Harry, can you offer some background on who those seven were and how they became three?

 Right – St Michelle, Brights and Cartier, Calona, Peller, Mission Hill and us. Those were the original seven.

Vincor was a consolidation of St Michelle, Brights and Cartier. Essentially they were three that ended up as one. The management from Cartier – formerly from Labatt’s (Allan Jackson and Don Triggs) rose to the top of that transaction. Vincor was bought buy Constellation and then Constellation exited and was reinvented as Arterra. And then we had Calona Wines – they bought Buprey a small winery on the coast and then Peller bought Calona. Add Mission Hill and those were the ones in existence at that time.

More recently, with the big three, we’ve seen additional consolidation over the years with Vincor buying us – Sumac Ridge and See Ya Later, and then of late Mission Hill acquiring Cedar Creek and Arterra acquiring Laughing Stock and we’re hearing rumours of other acquisitions in the works that I haven’t had confirmed. Those are either a badly kept secret or it’s a rumour, so we’ll see if any of that is confirmed.

So the big three today? Arterra, Andrew Peller and Mission Hill.

BC VQA
Photo Credit: Wines of British Columbia

The Vintners Quality Alliance Program or VQA, is Canada’s Appellation system that you managed here in BC. When did VQA come into play?

 We’d been working on wine standards in British Columbia for 10 years. So adopting the standard for VQA in 1990 was actually the simplest part of the process. We were arguing about what we were going to call it – Appellation British Columbia or British Columbia Appellation. That’s how silly it was. As it turned out, our own standards were almost identical to the published standards for VQA. At the end of the day, VQA was about drawing attention to the fact that with an estate winery there was no foreign content, which was always the rule for Estate Wineries in BC, but wasn’t the case in Ontario. In Ontario there was one type of winery license and so all wineries – whether they chose to or not – had the ability to use a portion of imported content before VQA whereas we did not have that option here. And many of us here defended that very strongly.

wineries Oliver
Wine Route in Oliver – Black Sage Bench

So if it says BCVQA, 100% the grapes are from British Columbia…

Yea, one of the questions we get asked the most – even after VQA – is what percent of your wine comes from grapes – or wine – that is imported? We still get it, just not to the same extent. So really, it’s about truth in labeling and the appellation itself.

And it took off here very fast because we had a network of private retail stores so that gave us a bit of a leg up on Ontario and I’m not trying to compare what was done in Ontario with here, but some advantages were we already had a pretty good following with the restaurant trade so we had the ability to sell direct before VQA – we could sell direct to restaurants and because we were also a golf course we had food service at the winery from day one – in fact we had food service before we had the winery open.

And I can tell you the change in the regulations allowing much smaller growers to become ‘farmgate’ wineries…… no one in their right mind could ever have predicted the kind of growth we’ve had with wineries.

I was asked as founding Chairman of the BC Wine Institute here what I saw 10 years out and I said, y’know, I’m so optimistic I believe in 10 years we could have the same number of acres that we had before the government hybrid pullout program*. I think we’ll see growth in all categories and I’ll stick my neck out and say we could see as many as 50 wineries!! People thought I was nuts and those 50 wineries became 165 in ten years and they went from 1,000 acres instead of the 3,400 we had and grown to 6,500 in the 10 year period. We’ve grown at a much slower pace in acres since then and today we’re at about 11,000 acres and over 250 wineries.

So yes, the VQA program was extremely successful. I’m critical of different parts of it. I’m critical of different governments of the day, that the certification should continue and that it should always have been compulsory and it’s not. You can opt out. So we have a small number of brands that are outside the terminology and VQA framework and there’s no certification, no monitoring and no auditing of them and I think it does the rest of the industry a disservice. So there’s a loophole here. Not to dwell on it but I do hope we get it remedied here.

The Canadian Food Inspection Agency has finally ruled that Cellared in Canada labeling descriptors on blended wines is misleading and hurray hurray – is now illegal.

Yes, lots of people here are very emotional about this issue. I am a little bit less so. Not that I support it but what we’re talking about is commodity wine. Commodity wines happen everywhere in the world. That wine is going to be sold here whether it’s packaged here or imported from somewhere else. So I don’t lose a lot of sleep over it. And there are some consumers who know full well they are not buying a product from Canada and they’re going to buy it on price point anyway. I think sometimes we spend too much time getting twisted about what’s happening with those commodity wines. I think if we spent more time making ourselves look good and talking about VQA as the only certified product where there’s a guaranteed certification that you’re getting 100% of what it says on the label….I think that’s time better spent.

So we talked about the concentration of wineries with the Big Three. Why so much buying activity now? What’s going on?

 The world may not have been aware that there was a “for sale” sign on all three of the wineries that Andrew Peller bought. They may not have had signs at the gate but lots of people within the industry were aware they fell into a ‘may be receptive to a purchase offer’ category. I think this is really about the big guys being able to buy at a price that is less than what it takes to build a new winery. All three of these wineries are very credible producers and so if these large agencies can buy a brand that’s got a great reputation and put some more resources behind them to help grow that brand, it just becomes part of their overall book and they get efficiencies.

If we look at their buying power around packaging materials, the savings in distribution and sales forces, rationalization of some of the admin processes… if they can maintain similar price points and become more efficient, they can enhance their bottom line. Clearly they’ve done the analysis of those wineries and went in knowing they were a good business decision. A lot of consumers were upset with some of those purchases, but at the end of the day I’m sure there was probably some champagne – ok lets call it sparkling wine – that was consumed on both sides of the deals.

It happens in other industries and these were not small wineries – they were substantial to larger wineries that have established volume. If the parent company can take the best of those resources, at the end of the day the consumer should benefit from those transactions. What I take great pleasure in is that all three of those companies are Canadian owned.

Harry and Christa TIME winery construction
Harry and Christa at original TIME Winery Site  Photo Credit: @McWattersWine

So let’s catch up on you. When did the next stage of Harry McWatters wines evolve?

 I made the first McWatters Collection Meritage selection in 2007. I didn’t actually leave the Constellation world until 2008 (ha ha) and I have to tell you I made that wine knowing full-well that I’d be gone by the end of that year and as it turned out I was asked to stay on until April. I continued to do some consulting work for them and I continued to sell some grapes to them. So McWatters Collection was really a placeholder for the family name and we only have two offerings at the moment.

And then we started to move forward with the TIME brand. We were building the winery on Black Sage Road when the vineyard was acquired by an offshore investor, who made us a very generous offer. We knew he was going to be a very substantial player. In the meantime we had taken over a winery in Summerland and branded it as Evolve. So here we are today and Encore – the parent company – owns two wineries and three brands – Evolve, TIME and the McWatters Collection – which is made by TIME.

evolve cellars summer view
View of Evolve Cellars Vineyards    Photo Credit:@evolvecellars

McWatters Collection carries your name your heritage and your legacy…will there be more?

The whole name thing (ha ha ha), that’s a bit of a funny story. I have too many colleagues in the industry that drive by wineries they used to own with their name on it and they can’t use their own name. To be honest, I never planned to have a brand with my name on it. I was very hesitant. I had a different name picked out. Both my kids grew up in the wine business and they hated that name choice and said they might need to do an intervention. They said….Why are you doing this…. this is our legacy? We want to remind you that this is our name too and we think McWatters will be worth a lot more to us and future generations when you’re not here (ha ha).

So yes, to answer your question, there will be more. We have a traditional style sparkling entry coming up and we’re going to do a small amount of a port and sherry since I personally have an affinity for those styles of wine. But, going forward, it’s really about my family and the decisions they’ll make around the winery, since we have a licensing agreement… although I’m the signatory on both sides of the agreement!!

But TIME is really our high-end, ultra premium brand and Evolve is at the ~$20 price point and the wines have a different focus. We have half a dozen white wines with Evolve and it doesn’t see any oak so they’re very fruit forward wines, very approachable and we’re looking at a younger demographic.

evolve line-up
Photo Credit: Evolve Cellars
TIME winery
Historic PenMar Theatre now TIME Winery on Martin Street, Penticton, BC

And you’re building the TIME urban winery in Penticton.

I don’t call it an urban winery.

Oh. That’s what your press release says, Harry (haha). I’ve visited some really awesome urban wineries…..

Right. Well then you know then that in most cases the winemaking part of what’s there is somewhat of a façade. We’re not. We have a full-fledged state of the art crushpad and cellars there, so I refer to it more as a downtown winery. And to get it passed by city council I alluded to a 1977 order in council that allowed land based wineries. Ironically, you could not have a winery on agricultural land in British Columbia before 1977. When I started with Casabello Wines in 1968 which is 3 km south of our new winery, it was on 11 acres …. we threw up a couple of grape plants for show in the garden. We had more petunias than we had grapevines!! So it’s not a new concept.

But certainly the average consumer today thinks it’s a new concept and those of us who have been around for a while know that’s not the case. And we’re not actually the first. The Sandhill winery in Kelowna – they’ve got a beautiful facility there.

TIME tasting room
TIME Winery: Coming Soon!

So I’m not resisting the urban scenario. But we’re right downtown, on a busy street and the advantage is I expect to see consumers 7 days a week, every day of the year. And they can come and visit wine country and see the vineyards but I don’t think consumers need to kick the dirt. In the seventies and eighties the most popular question was how many crops a year do you get. Consumers had no understanding of wines and vines and what it takes to grow grapes. Today, any reasonable wine consumer understands the basics and they may be interested in learning more but I can show them pictures and they can relate but I don’t need to walk them through the vineyard anymore. I think this business model should give us a much higher percentage of our sales on site. And Penticton has year round traffic and conferences in the off-season and we can easily deliver the wine to their hotel if they like.

Here at TIME, we’ll have a 40 seat outdoor patio, a commercial kitchen, an event space and movie space, we’ll be offering cooking classes and all sorts of culinary events but my prime objective today is getting the door open. We’re later than we planned because we took an old theatre and had to bring an old building up to code and it was a lot more challenging than starting from new. But some surprises were very pleasant. If you look at our cellars that were originally ‘Theatres One & Two’, it looks like Noah’s Arc turned upside down. There’s all these beautiful beams that form the roof and the barrel cellar and this wonderful wooden arch roof. It’s really beautiful and has a pretty neat feel to it.

That sounds fabulous. When will it open?

Spring. We won’t be ready before April.

So BC and the Okanagan is still one of the wine world’s best-kept secrets. What’s holding you back?

It really is supply. We’ve had the good fortune of Canadians supporting us very well. So we don’t have huge surpluses to take to other parts of the world. Having said that, there’s a modest amount being sold in the US, UK and certainly in Asia by some producers and a lot of that is ice wine. Americans don’t even think of us as wine producing. They think of us as the frozen north and then we go in there with Icewine and prove that they might be right. I can tell you I judge a lot of competitions in the U.S. and the judges I meet are acutely aware of the quality and diversity of our wines.

harry with bottles @evolve twitter
Harry: The Force behind ENCORE Vineyards   Photo Credit: @TownHall Brands

Is there a particular wine that you can’t live without, Harry?

Port. I’m a bit of a fanatic. I have a few 45’s –a great vintage and the year I was born – but not sure what kind of shape they’re in. I have a love of many different categories of wine but I’d probably say Sparkling – I drink it every day. At Evolve we have three Charmat Sparkling wines that do very well and a traditional – as I mentioned – that’s coming soon to McWatter’s. Starting with Stellar’s Jay in the mid-eighties we built it to a 10,000 case brand and the most awarded sparkling brand in the country. It led the market in Canadian premium sparkling wine.

Thanks Harry!! The very best of luck with your new venture! And maybe work your magic so we can get some of your fabulous BC wine into retail in Toronto!!!

  • pullout program – in preparation for Free Trade (1988) and increased competition, British Columbia growers were given financial aid and encouraged to pull out the low-quality hybrids and upgrade with Vitis Vinifera vines. BC’s acreage “under vine” plummeted. At the same time the government encouraged new wineries to open by reducing minimum entry requirements to 2 ½ acres

 

Feature Image: Evolve Cellars Photo Credit: Blush

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