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The Canadian wine industry, currently valued at over $10 billion annually, is advocating for reforms that could significantly enhance its economic contribution. A report by Deloitte, commissioned by the Wine Growers of Canada, suggests that eliminating domestic trade barriers could elevate the sector’s worth to approximately $13.7 billion over the next 15 years. This growth hinges on encouraging Canadians to purchase at least 51 per cent of their wine from local producers, a shift that would also benefit ancillary sectors such as shipping and tourism.
Domestic Market Potential
For nearly two decades, Canadian wineries have struggled to penetrate the domestic market, which has stagnated at around 40 per cent. Dan Paszkowski, president of the Wine Growers of Canada, pointed out that achieving a 51 per cent market share will not stem from increasing overall wine sales but rather from reducing imports. This strategy reflects trends seen in the world’s leading wine-producing countries, where local products account for a majority of sales. For instance, in France, domestic wine represents an impressive 83 per cent of total sales.
Direct-to-Consumer Shipping: A Key Change
A critical change the Canadian wine sector is pushing for is the ability for consumers to order wine directly from out-of-province wineries. Currently, many retailers cannot stock every wine available, and they typically require large quantities, which disadvantages smaller producers. “We are perhaps the only retail sector in the country that has to refuse consumers who visit our wineries and request shipments to their home provinces,” Paszkowski remarked, highlighting the frustration felt by many in the industry. With approximately four million tourists visiting Canadian wineries each year, the inability to ship directly hampers growth potential.
In contrast, the United States allows direct-to-consumer shipping in 48 states, contributing to a robust California wine market valued at about US$67.5 billion in 2024. Carl Sparkes, owner of Nova Scotia’s Devonian Coast Wineries, echoed the sentiment, stating that Canadians should have the right to order local wine just as easily as they can purchase products from global retailers like Amazon.
Provincial Trade Barriers Persist
While the federal government has made strides in removing restrictions on inter-provincial alcohol trade, several provincial barriers remain. Only British Columbia, Manitoba, and Nova Scotia currently permit unrestricted direct-to-consumer wine shipments. Other provinces have initiated discussions or established limited agreements to ease these restrictions. Notably, Alberta has formed a partnership with British Columbia to facilitate direct sales, while Ontario recently signed a memorandum of understanding with Nova Scotia to advance similar objectives. New Brunswick and Prince Edward Island are also working on legislation to permit direct shipping, and Saskatchewan allows out-of-province sales but requires a permit.
Last year, a collective of ten provinces and territories signed a memorandum of understanding to explore a direct-to-consumer wine system. Paszkowski anticipates forthcoming announcements aimed at creating a fully integrated market that addresses challenges related to shipping, compliance, and tax collection.
Economic Contributions Beyond Production
The report highlights that while all provinces produce some wine, four key regions dominate: the Okanagan Valley in British Columbia, Ontario’s Niagara region, Quebec’s Eastern Townships, and Nova Scotia’s Annapolis Valley. Each bottle of 100 per cent Canadian wine generates roughly $89.99 for the economy, contrasting sharply with the mere $15.73 contributed by each imported bottle. The ramifications extend beyond wineries, positively impacting tourism, culture, and transportation.
Moreover, the industry is advocating for a revision of the federal excise tax structure, which currently favours foreign wine. Canadian wineries face an excise tax of 74.5 cents per litre for wine containing more than seven per cent alcohol. In comparison, U.S. wineries pay about 39 cents per litre, while French wineries benefit from a mere six cents per litre. This disproportionate tax burden places Canadian wineries at a competitive disadvantage, limiting their ability to scale operations and reduce costs.
The Need for Long-Term Investment
In 2022, Ottawa launched the $166-million Wine Sector Support Program to assist the industry in navigating challenges. This initiative was renewed in 2024 with an additional $177 million but is now in its final year. The sector is advocating for further renewal and emphasising the necessity for stable, predictable policies that instil confidence in long-term investments. “If we are serious about growing the sector, we need a framework that enables wineries to invest confidently,” Sparkes remarked, underscoring the long-term nature of viticulture and the importance of actionable policies.
Why it Matters
The potential uplift of $3.6 billion to the Canadian wine sector represents not just an economic opportunity but also a chance to enhance national pride in locally produced goods. By addressing trade barriers and creating a conducive environment for market growth, Canada could see its wine industry flourish, fostering a robust cultural identity and stimulating job creation across various related sectors. With the right policies in place, there’s an opportunity to rejuvenate this vital industry and ensure it remains competitive on the global stage.
