A Deloitte white paper commissioned by Wine Growers Canada suggests that Niagara’s wine industry, and Canada’s wine industry writ-large, is falling short of its economic potential because of interprovincial trade barriers.
The report looks at Canada’s four major wine growing regions, first among them being Niagara. Niagara represents 90 per cent of Ontario’s grape-growing volume and Ontario is by far the biggest wine producer of Canada’s provinces.
Overall, Canada’s wine industry contributes about $3.2 billion to Canada’s GDP and sustains nearly 22,000 full-time equivalent jobs annually. It also generates about $1.7 billion in government revenue.
The report argues that government trade barriers are standing in the way of growing domestic consumption of Canadian wine. In Canada, roughly 40 per cent of wine products sold are Canadian, compared to some 83 per cent of domestic sales in France. Because provinces are largely in charge of rules governing what alcohol can be imported from other provinces, winemakers have to deal with a patchwork of rules that the report argues is holding the industry back.
As the report says, “Selling alcohol across the country remains complex due to varying provincial regulations related to taxation, storage, shipping, labelling, and distribution.”
The report also notes that when Canadian wine is purchased, it has a significant multiplier effect on the Canadian economy. For every bottle of Canadian wine sold, including wine from Niagara, there is an $89.99 impact generated on the economy, compared to $15.73 per bottle of imported wine. Thus, there is a major incentive for economic growth to ensure wines produced in various regions in Canada are able to reach customers in other provinces – which presently isn’t always the case.
If Canadian wine were able to capture 51 per cent of the domestic market share, something Wine Growers Canada sees as an achievable goal over the next 15 years, Canada could see an additional $1.4 billion added to the nation’s GDP and the creation of 7,000 additional full-time jobs. Both could have a tremendous impact on Niagara, Canada’s largest wine-producing region.
Plus, when accounting for growth in interconnected industries, Canada’s regional wine clusters could add an extra $2.2 billion to Canada’s GDP.
The biggest factor in being able to achieve that goal, according to Wine Growers Canada, would be free internal trade in Canada.
“Regulatory alignment across provinces can help reduce trade frictions, while also supporting labour mobility in the wine ecosystem, and the broader economy, to help boost national productivity and economic resilience across Canada,” reads the report.
Those looking to read the full report can do so here.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
