Canada’s wine industry, currently valued at over $10 billion annually, believes that eliminating domestic trade barriers could significantly enhance its economic contribution. A recent report by Deloitte, commissioned by the Wine Growers of Canada, outlines a strategy aimed at increasing the share of domestic wine sales to at least 51% over the next 15 years. This shift could elevate the sector’s value to approximately $13.7 billion, factoring in benefits from related industries such as shipping and tourism.
Domestic Market Penetration Stagnates
Currently, Canadian wineries have struggled to break through a market penetration ceiling of around 40% for nearly two decades. Dan Paszkowski, president of the Wine Growers of Canada, emphasises that achieving the proposed 51% target won’t come from an overall increase in wine sales, but rather from diminishing imports.
“Increasing to 51% means displacing imports over time,” Paszkowski stated in an interview. He highlighted that leading wine-producing nations, such as France, witness homegrown products making up over half of their market. In France, for instance, consumers prefer domestic wines 83% of the time.
Need for Direct-to-Consumer Sales
One pivotal change proposed by the Canadian wine sector is to allow consumers to purchase wine directly from out-of-province wineries for personal use. Paszkowski pointed out that retail stores often lack the capacity to stock every product, and small- to mid-sized wineries face challenges in fulfilling large volume requests.
“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 ask, ‘Can you ship this to my home province?’” he noted. “We can’t legally do it yet, and that really is detrimental to the growth of the industry, especially with four million tourists visiting our wineries every year.”
In contrast, the U.S. wine sector benefits from direct-to-consumer shipping in 48 states, a system that has propelled California’s wine industry to an estimated value of US$67.5 billion in 2024.
Provincial Trade Barriers Persist
While the federal government has eased restrictions on interprovincial alcohol trade, numerous provincial barriers remain. Currently, only British Columbia, Manitoba, and Nova Scotia permit unrestricted direct-to-consumer shipments from other provinces. Other regions have begun to implement reforms, with Alberta and British Columbia establishing reciprocal agreements, while Ontario and Nova Scotia have signed a memorandum of understanding to facilitate direct sales. However, challenges still exist, with New Brunswick and Prince Edward Island currently considering similar legislation.
Last year, a memorandum of understanding was signed by ten provinces and territories to explore a direct-to-consumer system, and a comprehensive market integration announcement is anticipated.
Economic Impact of Local Production
The report highlights that each bottle of 100% Canadian wine contributes around $89.99 to the economy, compared to just $15.73 for imported bottles. This economic benefit extends beyond the 600-plus wineries in the country, bolstering sectors like culture, tourism, and transportation.
Moreover, wine producers advocate for reforms to the federal excise tax structure, arguing that it unfairly disadvantages local wines. Currently, Canadian wine with more than 7% alcohol is taxed at 74.5 cents per litre, while U.S. counterparts face a tax of approximately 39 cents and French wines are taxed at around six cents per litre. Paszkowski pointed out that this discrepancy means a winery in Niagara can pay hundreds of thousands more in taxes than a similar operation across the border.
The Path Forward
In 2022, Ottawa introduced the $166-million Wine Sector Support Program to assist the industry in navigating its challenges. This initiative was renewed in 2024 with an additional $177 million, though it is currently entering its final year. The wine sector is now advocating for further long-term investment certainty.
“If we’re serious about growing the sector and keeping investment here at home, we need stable, predictable policy that gives wineries confidence to invest,” Sparkes added. “We’re in a long-term business, and the level of predictability is critical.”
Why it Matters
The potential growth of Canada’s wine industry holds significant implications for the economy, with a projected increase of $3.6 billion on the horizon. By fostering a more supportive environment for local producers through the removal of trade barriers and reformation of tax structures, Canada has the opportunity to not only enhance its wine sector but also stimulate ancillary industries. This could lead to a vibrant, self-sustaining market that celebrates Canadian craftsmanship and culture while offering more choices to consumers.
