Canada’s Growing Wine Thirst Could Help Trade Tiff

As Canada’s wine market grows, California producers are trying to secure access.

Canada’s love of imported wine could be key to a fermenting dispute over liquor regulation in British Columbia.

A new Vinexpo report on wine consumption showed that demand for wine in Canada far exceeds supply by local industry, and consumption is growing twice as fast as the rest of the world.

Canada is one of the world’s largest consumers of imported wine – it drank 32.7 million cases of foreign brands last year – and has catapulted itself into sixth place, Vinexpo chairman Xavier de Eizaguirre said after the report was released this week in Toronto.

Canadian palates still lean towards traditional producers like France and Italy – although “New World” wines from New Zealand, the USA and Chile will enter the market more strongly in the next three years, the study by the UK agency International Wine and Spirit Research predicts .

This is good news for California producers, who have disapproved of plans by the British Columbia provincial government to allow locally produced wines to be sold alongside groceries in grocery stores, while keeping imported wines segregated.

The California Wine Institute wrote to the Canadian government last month against the plan, threatening a legal challenge.

“We believe that the proposal that only allows BC Vintners Quality Alliance (VQA) wines to be sold in grocery stores in BC should be withdrawn or amended to allow imported wines to be sold,” wrote Tom LaFaille, Vice President of Wine Institutes. “By not extending these new opportunities to imported wines, they violate Canada’s international trade commitments, including NAFTA, GATT, and the EU-Canada Agreement on Wine Sales.”

The BC Attorney General Suzanne Anton’s office acknowledged receipt of the letter but made no comment on whether the rule changes would be changed. The rules are due to come into force on April 1st.

Regardless of whether Canadians buy their wine on the grocery shelf or in a separate store in-store, the country is expected to increase its total wine consumption by 7.8 percent through 2018, the Vinexpo report said. About three-quarters of the wine consumed in Canada is imported, with Italy the main source, followed by the US, France and Australia.

“The Canadian market is doing better than most. It really is a destination for all the big producers in the world,” said de Eizaguirre.

Red wine is the biggest market driver in Canada and accounts for 60 percent of consumption. BC Wine sales topped $ 1 billion for the first time in 2014, the report said, and those sales will continue to grow over the next three years.

“Canadians produce a lot of very good wine, but probably not enough for domestic consumption,” said de Eizaguirre.

The USA became the largest consumer of still wines last year with a total consumption of 339.6 million crates (up 11.6 percent compared to 2009). This country is also considered the largest wine market with total sales of $ 29.5 billion, the study shows.

In comparison, Canada’s market is the seventh largest in the world, valued at $ 6.1 billion; this is expected to grow by 10.4 percent by 2018.

Per capita wine consumption in Canada has risen 0.6 percent since 2013, and the outlook is good, with consumption expected to rise 4.1 percent to 16.4 liters per adult in 2018, the report said .

“Over the next five years, Canada’s wine consumption growth rate will be double that of the rest of the world,” said de Eizaguirre.

The production trends in 28 countries and the development of consumption in 114 countries were analyzed in the study on behalf of the Bordeaux wine fair organizer Vinexpo.

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