Canada’s wine sector, currently valued at over $10 billion annually, has the potential to expand significantly by addressing trade barriers and enhancing local purchasing habits. A recent Deloitte report, commissioned by the Wine Growers of Canada, outlines how boosting domestic wine purchases to at least 51 per cent over the next 15 years could elevate the sector’s value to approximately $13.7 billion. This increase would also benefit ancillary industries such as shipping and tourism. As it stands, Canadian wines have stagnated at around 40 per cent market penetration for nearly two decades.
The Case for Domestic Wine Purchases
Dan Paszkowski, president of the Wine Growers of Canada, emphasised that achieving this ambitious goal relies not merely on increasing overall wine sales but rather on reducing the market share of imported wines. “We’re not going to be reaching 51 per cent by increasing wine sales across Canada. We’re going to be increasing to 51 per cent by displacing imports over time,” he stated in an interview.
The report notes that domestic wines account for more than half of sales in leading wine-producing nations, with France leading the charge at 83 per cent. Notably, Canadian consumers have yet to fully embrace their local offerings, reinforcing the need for strategic shifts in purchasing behaviours.
Overcoming Provincial Trade Barriers
One significant change sought by the wine industry is the allowance for consumers to purchase wine directly from out-of-province wineries for personal use. Paszkowski pointed out that retail outlets often struggle to stock every available product, particularly those from smaller operations. “We’re probably the only retail sector in the country that has to say no to a consumer when they come and visit our winery and say, ‘Can you ship this to my home province?’” he lamented. This legal hindrance stifles growth, especially given that approximately four million tourists visit Canadian wineries each year.
In stark contrast, the United States permits direct-to-consumer wine shipping in 48 states, which has significantly bolstered California’s wine industry, now valued at around US$67.5 billion.
The Need for Legislative Change
Carl Sparkes, owner of Nova Scotia’s Devonian Coast Wineries, highlighted the absurdity of current restrictions, recalling a time when he shipped a case of wine to every provincial premier. “As a principle, any Canadian should be able to order directly,” he argued. “It’s just wrong that they can order so much from Amazon yet can’t buy a bottle of wine from next door.”
While the federal government has relaxed some restrictions on interprovincial alcohol trade, provincial laws still impose barriers. Currently, only British Columbia, Manitoba, and Nova Scotia permit unrestricted direct-to-consumer shipments from other provinces. However, progress is being made, with Alberta and Ontario initiating agreements to facilitate such sales. New Brunswick and P.E.I. are also considering pending legislation.
In 2022, a collective of ten provinces signed a memorandum of understanding to explore a direct-to-consumer system. Paszkowski anticipates an upcoming announcement that could pave the way for a fully integrated market, addressing issues of shipping, compliance, and tax collection.
Economic Implications and Tax Challenges
The Canadian wine industry is primarily concentrated in four regions: the Okanagan Valley in British Columbia, the Niagara region in Ontario, Quebec’s Eastern Townships, and Nova Scotia’s Annapolis Valley. Each bottle of Canadian wine contributes roughly $89.99 to the economy, compared to just $15.73 for imported wines. This economic impact extends beyond wineries, positively influencing tourism, culture, and transportation sectors.
However, the industry faces challenges, particularly concerning federal excise taxes, which are disproportionately high compared to those in competing countries. For instance, the excise tax on Canadian wine exceeding seven per cent alcohol is 74.5 cents per litre, while in the U.S., it stands at about 39 cents, and in France, a mere six cents. This disparity places Canadian wineries at a significant disadvantage in the marketplace.
To address these challenges, Ottawa launched the $166-million Wine Sector Support Program in 2022, which received an additional $177 million in 2024. However, as this support approaches its final year, the industry is advocating for renewed long-term investment certainty. Sparkes stressed the importance of stable policies, stating, “If we’re serious about growing the sector and keeping the investment here at home, we need stable, predictable policy that gives wineries the confidence to invest here.”
Why it Matters
The potential for Canada’s wine industry to expand significantly hinges on legislative reforms and consumer behaviour changes. By opening up interprovincial trade and addressing tax disparities, Canada could not only enhance its local wine market but also stimulate broader economic growth. With proper support and a focus on domestic consumption, the wine sector can flourish, benefiting not just producers but also the wider economy, tourism, and cultural identity. The path forward is clear, but it requires concerted effort from both industry leaders and policymakers to realise this vision.
