Thursday, June 19, 2008

Canada's wine sales post strong domestic growth

The vineyard is:
The demonstration vineyard at Tinhorn Creek Vineyards in British Columbia.

Vancouver, B.C. -- A growing taste for wine in Canada has helped spur sales of locally produced wines in the country's two major grapegrowing regions, Ontario and British Columbia. An annual analysis of alcohol sales by Statistics Canada, the federal statistics department, shows that wine now accounts for 17.6% of the total volume of alcohol sales in Canada, up from 12.6% in 1997.

While imported wines have gained ground against domestic wines in the past decade, the volume of domestic wines sold in the year ended March 31, 2007 surged 18.2% to top 175 million liters. Domestic wines now account for 43.1% of total wine sales in Canada, down from 46% in 1997.

In British Columbia, where domestic wines have enjoyed double-digit sales growth over the past decade, sales of premium wines rose just 7% in 2007. That was about half the 13.6% growth in sales posted by wines from Ontario, the country's other major grapegrowing region.

Growth was dampened because of a low crop in 2005, said Shaun Everest, general manager of Tinhorn Creek Vineyards in Oliver, and chair of the marketing committee of the British Columbia Wine Institute. "We've been on this tremendous growth curve, and so that's great, but then because of the low crop we had a bit of a flattening out ," Everest told Wines & Vines. "It's not because consumers don't want our wines.
It's because we had a low crop."

Still, wine sales in B.C. are mirroring the national trend, and domestic sales should resume more aggressive growth in the current sales year as wines made from the better harvests of 2006 and 2007 come on stream.

Nationally, greater demand for domestic wines has helped divert product away from export markets. While the United States was the single biggest importer of Canadian wine in 2007, importing 6.3 million liters, Canada exported less wine during last year than at any time since 1999. Wine exports peaked during the decade at 43.9 million liters in 2002, but have dropped steadily since. In 2007, exports of Canadian wines stood at just 7.2 million liters.

Dan Paszkowski, president and COO of the Canadian Vintners Association, said exchange rates played a factor in the decline in exports--Canada's dollar strengthened against the U.S. dollar through 2006 and 2007--as much as short crops and strong domestic sales.
"A stronger Canadian dollar does have an impact," Paszkowski said. "But if there is a growing market in Canada, obviously the returns in Canada are attractive."

Ontario is dissimilar from B.C. because of its ice wine production, which accounts for about half of its wine exports. Most wineries in B.C. don't even pursue export markets because of the lack of product--ice wine or otherwise--to sell.

"The demand domestically for B.C. wines has been growing so much that there aren't many wineries in B.C. that are even engaged in exporting," Everest said. Tinhorn Creek, for example, hasn't exported any of its wines for the past three years.

Statistics Canada figures also highlight that Western Canada, which continued to enjoy economic boom times through the 2007 fiscal year, was the primary growth area for wine sales countrywide.

The provinces of Saskatchewan and Alberta saw the strongest growth in volume of wine sold, posting gains of 11.2% and 10.4%, respectively. Indeed, Saskatchewan also posted the greatest growth in wine sales of any province over the past five years, with sales rising 47.8% to 5.8 million liters.

The only province to see lower volumes of wine sold over the same five-year period was Newfoundland, which saw sales drop 6.7% to 2.6 million liters.

Among foreign wines, the wines of France dominated the national shopping cart at 62.3million liters in 2007, followed by Italy (52.9 million liters) and Australia (52.4 million liters). Canada's imports of wine from the U.S. totaled just 40.9 million liters.

A statistical summary of beverage alcohol sales in Canada is available from Statistics Canada.

Peter Mitham