Canada’s wine industry, valued at over £8 billion annually, is poised for significant growth, with experts suggesting that the removal of domestic trade barriers could inject billions more into the economy. A recent report from Deloitte, commissioned by the Wine Growers of Canada, highlights the potential for the sector to expand from its current valuation of £8.1 billion to £11.3 billion over the next 15 years, provided Canadians increase their purchases of domestically produced wine to at least 51 per cent. This shift would also benefit ancillary sectors, including shipping and tourism.
Domestic Market Challenges
The Canadian wine market has stagnated at around 40 per cent domestic consumption for nearly two decades. Dan Paszkowski, president of the Wine Growers of Canada, emphasised that the only way to reach the 51 per cent target is by gradually reducing the share of imported wines. “We’re not going to achieve 51 per cent simply by boosting overall wine sales; we need to displace imports,” he noted in an interview.
The report underscores that in leading wine-producing nations, local products dominate sales. For instance, in France, domestic wine accounts for 83 per cent of sales, illustrating the potential for growth in Canada if similar consumer habits are cultivated.
The Case for Direct Shipping
One of the pivotal changes sought by the Canadian wine sector is the ability for consumers to purchase wine directly from out-of-province wineries for personal use. Paszkowski pointed out that retail outlets often cannot stock every available product, as they typically require large volumes, which disadvantages smaller producers. “It’s frustrating that we have to turn away customers who visit our wineries and want to order wine for home delivery,” he stated. “Currently, we can’t legally accommodate that, which hinders our industry’s growth, especially when we welcome four million tourists annually.”
In stark contrast, the United States permits direct-to-consumer shipping in 48 states, a policy that has significantly bolstered the California wine market, which is now valued at approximately £54 billion.
Carl Sparkes, owner of Nova Scotia’s Devonian Coast Wineries, illustrated the absurdity of the current regulations by recalling his attempt to send a case of wine to every premier in Canada, accompanied by a letter referencing a constitutional clause that supports the free movement of agricultural products across provincial boundaries. “It’s puzzling that while Canadians can order almost anything online, they can’t easily purchase a bottle of wine from a neighbouring province,” Sparkes remarked.
Provincial Trade Barriers Persist
While the federal government has eased restrictions on interprovincial alcohol trade, provincial laws still present significant challenges. Only British Columbia, Manitoba, and Nova Scotia currently allow unrestricted direct-to-consumer shipments from other provinces. Other provinces have begun to relax their regulations, particularly in light of recent trade tensions with the United States. For example, Alberta has established a mutual agreement with British Columbia for direct sales, and Ontario signed a memorandum with Nova Scotia earlier this spring. Meanwhile, New Brunswick and Prince Edward Island are considering similar legislation, and Saskatchewan requires a permit for out-of-province sales.
Last year, ten provinces and territories signed a memorandum of understanding to explore a direct-to-consumer shipping system. Paszkowski anticipates forthcoming announcements aimed at creating a seamless market that addresses shipping, compliance, and taxation issues.
Economic Implications of Local Production
The report reveals that each bottle of Canadian wine contributes approximately £72 to the economy, compared to just £13 for each imported bottle. This impact extends beyond the 600+ wineries across the country, bolstering related sectors such as culture, tourism, and transportation.
Wine growers are also advocating for a review of the federal excise tax structure, which they argue places Canadian wines at a disadvantage compared to imports. The excise tax on Canadian wine exceeding seven per cent alcohol content is £0.60 per litre, while in the U.S. it averages about £0.31, and France imposes a mere £0.05 per litre. Paszkowski pointed out that a winery in Niagara can incur tax liabilities hundreds of thousands of dollars higher than its American counterparts, putting Canadian producers at a competitive disadvantage.
In response to industry challenges, Ottawa launched the £132 million Wine Sector Support Programme in 2022, which was renewed in 2024 with an additional £139 million. However, as the programme nears its conclusion, the sector is advocating for ongoing investment and stability. “To grow the industry and retain investments domestically, we need consistent policies that provide wineries with the confidence to invest in their futures,” Sparkes added. “We’re in a long-term business, and the decisions made today will take years to yield results.”
Why it Matters
The Canadian wine industry stands at a crossroads, with the potential for transformative growth that could significantly bolster the national economy. By addressing trade barriers, fostering direct consumer sales, and revising tax structures, Canada could not only enhance its wine sector but also invigorate related industries. As consumer preferences shift towards local products, the opportunity for sustainable economic development within Canada’s wine landscape is ripe for the taking.
