Viticulture in Huron County Huron County Economic Development Business Case November 9, 2020 NOTICE OF CONFIDENTIALITY The content of the present report is private and confidential and cannot be reproduced, in full or in part, except with the consent of Huron County Economic Development. The recipient promises to preserve the confidential nature of the information contained in the present document and will take all necessary actions to prevent non-authorized copying, divulgation or transmission, in part or in full, of this information to unintended parties. The recipient also promises not to use, modify, translate, adapt, convert or exploit the content of the present document without written consent from Huron County Economic Development. i TABLE OF CONTENTS 1. Executive Summary .......................................................................................................... 1 2. Strategic Context .............................................................................................................. 2 2.1 Business Needs and Desired Outcomes ................................................................... 3 2.2 Opportunity Objectives ............................................................................................. 3 2.3 Detailed Description of the Opportunity ..................................................................... 4 2.3.1 Grape Description ........................................................................................... 4 2.3.2 Description of a Vineyard and its Growing Season ......................................... 5 3. Analysis ............................................................................................................................10 3.1 Evaluation Criteria ................................ ...................................................................10 3.1.1 Vineyards Throughout Ontario .......................................................................10 3.1.2 Market Size ................................ ...................................................................10 3.1.3 Growing Degree Days ................................ ...................................................19 3.1.4 Growth Potential and Trends ................................ .........................................20 3.1.5 Grape Prices ................................ .................................................................25 3.1.6 Staffing Costs and Job Descriptions ................................ ..............................27 3.1.7 Alignment with Huron County ................................ ........................................30 3.1.8 Zoning Bylaws ................................ ...............................................................31 3.2 Supply Chain Description .........................................................................................32 3.3 Vineyard Establishment ................................ ...........................................................33 3.3.1 Site Selection ................................ ................................................................33 3.3.2 Climatic Requirements ...................................................................................34 3.3.3 Land Preparation and Soils ................................ ...........................................35 3.3.4 Variety Selection ............................................................................................38 3.3.5 Winter Freeze Damage and Spring Frost Ratings for Grapes at Vineland Station, Ontario ........................................................................................................38 3.3.6 Training the Young Vine ................................ ................................................39 3.3.7 Pruning and Training Systems .......................................................................40 3.3.8 Cold Climate Maintenance Practices ................................ .............................41 3.4 Implementation Cost ................................................................................................42 ii 3.4.1 Financial Analysis - Assumptive Model #1 .....................................................42 3.5 Economic Impacts ................................ ...................................................................52 3.5.1 Ontario Economic Impacts .............................................................................52 3.5.2 Canadian Economic Impacts ................................ .........................................54 3.6 Project Financing .....................................................................................................55 3.6.1 Productivity and Competitiveness ..................................................................55 3.6.2 Business Development and Growth ...............................................................56 3.6.3 Market Access ...............................................................................................56 3.6.4 Protection and Insurance ...............................................................................56 3.6.5 Research and Development ................................ ..........................................57 3.6.6 Workforce/Labour ..........................................................................................57 4. Conclusion ................................ .......................................................................................58 5. Recommended Next Steps ..............................................................................................58 5.1 Four Point Plan ........................................................................................................59 5.1.1 Marketing .......................................................................................................59 5.1.2 Human Resources .........................................................................................59 5.1.3 Financing .......................................................................................................59 5.1.4 Production ................................ .....................................................................59 6. Bibliography .....................................................................................................................60 TABLE OF TABLES Table 1 - Number of Growers Registered with Grape Growers of Ontario (Table Format) .................... 16 Table 2 - Number of Growers Registered with Grape Growers of Ontario (Chart Format) .........17 Table 3 - Wine Sales in Ontario (by Volume, ‘000s litres) (Table Format) ................................ .18 Table 4 - Summary of Growing Degree Days and total rainfall across Ontario’s Appellations ... 19 Table 5 - Date of key phenological stages at select locations within Niagara Peninsula (2019) ... 19 Table 6 - LCBO Forecasted Sales Targets (2018-2021) ................................ ...........................21 Table 7 - Grapes for Processing Prices (2020) ..........................................................................25 Table 8 - Variety Selection ........................................................................................................38 Table 9 - Winter Freeze Damage and Spring Frost Ratings at Vineland Station ........................39 Table 10 - Total Establishment and Operating Costs ................................ ................................43 Table 11 - Mature Vineyard: Annual cost ................................ ..................................................43 Table 12 - Mature Vineyard: Annual Operation Costs ................................ ...............................44 Table 13 - Break Even Yield to Cover Total Costs (Cabernet Franc) .........................................45 Table 14 - Total Establishment and Operating Costs ................................ ...............................46 Table 15 - Mature Vineyard: Annual cost ................................ ..................................................46 iii Table 16 - Mature Vineyard: Annual Operation Costs ................................ ...............................47 Table 17 - Break Even Yield to Cover Total Costs (Chardonnay) ..............................................48 Table 18 - Total Establishment and Operating Costs ................................ ................................49 Table 19 - Mature Vineyard: Annual cost ................................ ..................................................49 Table 20 - Mature Vineyard: Annual Operation Costs ................................ ...............................50 Table 21 - Break Even Yield to Cover Total Costs (Vidal) ................................ .........................51 TABLE OF FIGURES Figure 1 - Vineyard Acreage in Ontario (2019) ..........................................................................11 Figure 2 - Distribution of Ontario Grape Growers (2019) ...........................................................11 Figure 3 - Total Tonnage by Category (2019) ................................ ...........................................12 Figure 4 - Sales of Wine Grapes in Ontario (2019) ....................................................................12 Figure 5 - Vinifera Harvest in Ontario (2019) .............................................................................13 Figure 6 - European Hybrid Harvest in Ontario (2019) ................................ ..............................13 Figure 7 - Wine Grape Harvest in Ontario