One thing the recent TFWE in Cannes showed was that international travellers' tastes are changing. Spirits have always dominated the duty-free/travel retail market because the returns are greater but premium wine is beginning to capture the consumer's fascination.

"Scotch whisky was always the king of duty-free because it delivers high margin. But now premium wine companies such as Boisset and Jaboulet are pushing into the market and seeing good growth," said Donald Ziraldo, president and founder of Canadian-based Inniskillin Wines.

His presence in Cannes was for the same reason. Inniskillin VQA Icewine is being launched into the travel retail sector, priced as a luxury item to attract the lucrative Asia-Pacific market.

"Through our successful partnership with DFS two years ago, we have penetrated the Japanese market. Icewine has become the number one winter gift for the Japanese business traveller," he said.

There is now a recognition among wine producers that sales in the "high end" of the market are increasing. Targetting the hotels and venues where potential consumers frequent (a ploy used by the spirits industry for years) is now the issue. Inniskillin has secured deals with the Four Seasons chain and Ziraldo intimated he is in discussion with some hoteliers in Dubai. Delta Airlines has also signed an exclusive deal to supply its business passengers with Inniskillin's Icewine

The big thaw

Restrictive trading and complicated tax laws governing Canada and the US have hindered the winery's export aspirations for many years, Ziraldo said, but the internet and online shopping will be the liberating force. He believes it will naturally break the stringent three-tier structure in the US.

"We have distribution agreements with wine.com, when someone wants to order from us, they click directly into our homepage and our warehouse in California sends the wine directly to the customer. So basically the deal was done in cyberspace, circumnavigating the US wholesaler/retailer system," he said.

Though the investment is draining, he believes the net will finally "make money" and the marketing opportunities are immense. "The duty-free market can benefit the most from online activities. It has smashed the problems of cross-border trading and currency transparency means anyone, anywhere can trade," Ziraldo said.

The proliferation of the ice wine market has meant fake producers are appearing. In August, the three leading ice wine producing countries, Canada, Germany and Austria, agreed to sign an international standard to maintain stringent quality standards for Icewine. The VQA logo (Canada's Appellation of Origin System) will be placed on ice wine bottles to authenticate its quality and origin.

"Germany was the original home of ice wine. Canada started producing Icewine in 1994 and it was the Grand Prix d'Honneur granted to Inniskillin wines in Bordeaux, France in 1991 that elevated it to international recognition. I think it will bring the traditional producers of Germany and Austria closer with the younger markets like ourselves in Canada," Ziraldo said.

German law reclassified icewine in 1983, establishing -7degrees Celsius as the minimum temperature for harvesting. Inniskillin harvests at -10 to -13 degrees Celsius, making yields extremely low, sometimes only 5%-10%.

Eventually, he can see more joint ventures with European companies occurring because of this agreement. "This could lead to German partnerships in the future. I am also in talks with Masi, the Italian company, who are interested in our success with Icewine to enhance their dessert wine. More consolidation is inevitable."

Elliot Lane