Shall We Kill the Golden Goose?
Guess how many glasses of Canadian wine are consumed by Canadians each year? If you said one billion, take the rest of the day off. That amounts roughly to 220 million bottles or, if this is the way you purchase your wines, 18.3 million cases.
You probably don’t need an excuse to drink Canadian wine, but here’s a compelling reason to do so that will appeal to the lurking accountant in all of us. By purchasing a bottle of local wine you will single-handedly be propping up the Canadian economy.
A recent study commissioned by the Canadian Vintners Association, the Winery and Grower Alliance of Ontario, the British Columbia Wine Institute and the Winery Association of Nova Scotia discovered that the Canadian grape and wine industry generates a whopping $6.8 billion annually. Nearly half of this figure, $3.3 billion, is raised by the Ontario wine industry. (But just to put this in perspective: 73 per cent of wines sold in Ontario are what is known as ICBs — International Canadian blends — which are comprised of up to 70 per cent off-shore material.) British Columbia raises $2 billion, Quebec $805 million and Nova Scotia $196 million.
The report, entitled Canada’s Wine Economy — Ripe, Robust, Remarkable, estimated that for each bottle of wine produced in Canada, “there is $31 of domestic economic impact generated in the country.”
This figure is factored from a number of interlocking concepts: “The grape and wine industry is responsible for more than 31,000 jobs in Canada, from manufacturing, agriculture, tourism, transportation, research, restaurants and retail.” More than three million visitors travel to wine country each year generating more than $1.2 billion through tourism revenue and employment. Less to applaud, perhaps, is the fact that the wine industry generates federal and provincial taxes of $1.2 billion, which includes liquor board markups.
Currently sales of wines produced and bottled in Canada represent only 30 per cent of all wines sold across the country. Can you imagine the same statistic in France, Italy and Spain, let alone California? But the good news for the industry is that the growth in Canadian wine consumption of imported and domestic wines is three times faster than that of the world level. Between 2007 and 2011, Canadian wine consumption increased by 14.55 per cent. This statistic translated into the sales through liquor control boards and Alberta’s private stores of over 43 million 12-bottle cases.
A report by a Vinexpo market study predicts this growth in wine sales in Canada will continue at the same pace between 2013 and 2016 and is forecast to reach 14.27 per cent. This translates as an average annual increase of 3 per cent, three times that of overall world wine consumption.
So the Canadian wine industry has some catch-up to do if they want to increase their share of the pie. Privatization could help or at least the setting up of VQA stores in key markets.
As I see it Ontario and Quebec will be the last provinces in Canada to privatize. There is no political will to alter the status quo (which is shorthand for saying “Don’t kill the golden goose” — although Alberta has shown the government still gets its pound of flesh whether they own the stores or not).
In an effort to appease the groundswell of criticism from wine lovers, the Ontario government is cautiously, cautiously experimenting with the idea that consumers will be able to buy wine and spirits in their local grocery stores. The LCBO, late next year, will be setting what they term “express outlets” inside 10 as-yet-unspecified grocery stores. A timid approach to say the least, and only begrudgingly undertaken to take the legs from under the Conservative Party’s desire to see wine in corner stores.