Canada’s wine industry, valued at over £8 billion annually, is urging for strategic reforms to eliminate domestic trade barriers, which could unlock billions more for the national economy. Insights from a recent Deloitte report, commissioned by Wine Growers of Canada, suggest that increasing local wine consumption to 51 per cent could elevate the sector’s worth to £10.4 billion over the next 15 years, benefiting not only wineries but also related sectors such as shipping and tourism.
The Challenge of Market Penetration
For nearly two decades, the Canadian wine market has stagnated at around 40 per cent domestic consumption. Dan Paszkowski, president of Wine Growers of Canada, emphasised that achieving the 51 per cent goal will not come from increasing overall sales, but rather from displacing imported wines over time.
“Homegrown products dominate sales in top wine-producing countries. For instance, in France, local bottles account for 83 per cent of wine purchases. If we can encourage Canadians to support local producers, we could see significant economic benefits,” Paszkowski stated during an interview.
Advocating for Direct-to-Consumer Sales
One pivotal change proposed by the industry involves allowing consumers to purchase wine directly from out-of-province wineries for personal consumption. Paszkowski highlighted how current retail limitations hinder smaller operators from thriving: “It’s frustrating to tell a visitor they cannot have their favourite wine shipped home. This barrier is detrimental to our growth, especially with four million tourists visiting our wineries annually.”
In the United States, direct-to-consumer shipping is permitted in 48 states, greatly enhancing the market for producers and propelling California’s wine industry to an impressive £54 billion in value by 2024. In contrast, Canada lags behind, with only British Columbia, Manitoba, and Nova Scotia allowing unrestricted wine shipments from other provinces.
Navigating Provincial Restrictions
Despite the federal government easing restrictions on interprovincial alcohol trade, many provincial barriers remain intact. Alberta has established an agreement with British Columbia to facilitate direct sales, while Ontario recently signed a memorandum of understanding with Nova Scotia. New Brunswick and Prince Edward Island are also working towards similar legislation, albeit slowly.
Last year, ten provinces and territories signed a memorandum to explore a direct-to-consumer framework, which Paszkowski believes could soon lead to an announcement for a fully integrated market addressing shipping, compliance, and tax issues.
Addressing Tax Disparities
The report also points to an unfavourable federal excise tax structure that places Canadian wineries at a competitive disadvantage. Currently, Canadian wine with over seven per cent alcohol is taxed at 74.5 cents per litre, compared to only 39 cents in the U.S. and a mere six cents in France. This disparity means that Canadian wineries often face significantly higher tax burdens than their international counterparts.
“A winery in Niagara could pay hundreds of thousands of dollars more in taxes than one just across the border, which gives American producers an advantage in scaling and reducing costs,” Paszkowski noted.
In response to industry challenges, the Canadian government launched the £133 million Wine Sector Support Programme in 2022, which was renewed in 2024 with an additional £141 million. However, with the programme nearing its conclusion, there is a pressing call for long-term investment strategies to ensure continued growth.
Why it Matters
The Canadian wine industry not only contributes significantly to the economy but also enhances the cultural fabric of the nation. By addressing trade barriers, tax disparities, and encouraging local consumption, the government can fortify this vital sector. The potential for additional billions in economic growth, along with the preservation of local jobs and the promotion of Canadian culture, makes reforming the wine industry’s landscape a priority for stakeholders and policymakers alike.