Legislative changes in alcohol and cannabis are likely to shape the wine industry in Canada in the coming year as much as long-running consumer trends
Canada crosses six time zones and occupies more land mass than the United States to the south – nearly 10 million square kilometres. Given its size, and history of strong Provincial identities and government structures, it should not be that surprising that each Province has developed its own regulatory processes dealing with alcohol.
Once upon a time these Province-level rules were broadly aligned, stable, and with slightly nuanced differences. In recent years, however, the Canadian alcohol regulatory landscape has undergone more fundamental shifts. Combined with the renaissance of wine growing in Canada, particularly in the Okanagan region of British Columbia, the changes are starting to have a profound impact on consumer behaviour.
The traditional view of wine consumption in Canada is often framed by the contrasts between the two biggest Provinces by population: Ontario and Québec. Despite enjoying something of a rarity in Canadian geography – proximity – Québec clings to its French roots with a love of European wine while Ontario has a strong bias towards Canadian wine (traditionally, much of it grown within Ontario), and more generally North American and New World wines. While both Provinces exerted a strong hold on the alcohol supply chain through the use of Scandinavian-style retail monopolies (LCBO in Ontario and SAQ in Québec, respectively), Québec offered a slightly more liberal regime, where convenience stores and supermarkets could offer a limited range of beer and wine.
This contrasts with the picture in the west of the country, in Alberta and British Columbia, where state retains some control of the supply chain but the actual job of retailing wine has been completely, or at least partially, turned over to the private sector.
However in the past 2 years major changes have been in the works in Ontario, the most populous Province, as it moves more towards the Québec model. In the new Ontario model, prices and what they are able to stock remain controlled by government, but a number of grocery and convenience stores can now stock wine, which provide far greater access and convenience for the everyday consumer. This means that in most major population centres in Canada, wine can now be purchased in the same shop as groceries, or at least in adjacent settings, in a structure that would be familiar to consumers in most of the rest of the developed world. The effects of this change is one of the themes explored in our new Canada Landscapes 2018 report.
Another big legislative change, much anticipated but yet to be enacted, will be the legalisation of cannabis – currently scheduled for June 2018. Experts remain divided over the level of impact this will have: the data currently available on the effect on wine sales from US states where partial or full decriminalisation has taken place is inconclusive, partly because of flaws in the studies themselves, and partly because it is very difficult to separate out change that is directly attributable to cannabis versus other factors in a given market. Wine Intelligence is starting to collect data in this area but it may be some time before we know anything conclusive. One hypothesis that we’ll be following up: the most likely substitution between wine and cannabis may be at lower price points where consumers are less involved in wine as a product and more as a means to a good time. This is, perhaps, a reason to play down the proposed threat of cannabis: the premium wine sector is seeing a particular increase in sales and cannabis seems an unlikely substitute for a nice bottle at a dinner party.
No current Landscapes report seems complete without a mention of Prosecco, and the Italian sparkling juggernaut is also pulling up in the Great White North. It is, however, not growing as quickly as in other markets. Prosecco now accounts for 28% of sparkling wine volumes in Canada and consumers are beginning to get on board with sparkling wine as an ‘everyday’ drink, but the category is still very small compared to light still wines.
Rosé, on the other hand, appears to be on a more dramatic growth path. While many consumers still consider it a seasonal, cheap option, the premium rosé sector is in major growth. Significantly more popular among younger drinkers, rosé is expected to grow further. With packaging aimed to appeal to those under 35, and success due to its ‘Instagrammable qualities’ trade experts see it becoming a perennial drink and that the ‘cheap’ label will fall away as it has began to do in the US (see more in our Rosé and Blush Wine Drinkers in the US Market 2018 report and article)
Overall, the future is bright for wine in Canada. Domestically produced wines (particularly in British Colombia) are growing in stature, wine is becoming more accessible than ever before – either as part of a weekly shop or from an expanding array of online purchasing options – and consumers (notably so in Québec) are becoming more involved in wine.
It’s also wine o’clock six times a day.
Author: Luke Catterson