Canadian flag in vineyard2 Copy - Winning on the home front

Canadian wine needs to engage better with Canadian consumers

In one respect, Canadian wineries should be celebrating. From 2013 to 2014, Canadian wineries experienced a 4% growth in domestic sales, which isn’t bad considering that imported wines achieved only 2% growth during the same time period. However, that isn’t the whole story: Canadian wine has a long way to go to convert the domestic population to its cause.

Some context here: Canadian wine holds a meagre 28% share of its domestic wine market, which remains dominated by imports from Italy, the USA, France and Australia. For comparison, most mainstream producing countries dominate in their respective domestic markets; France (98%), Australia (83%), New Zealand (75%) and USA (75%). Even Switzerland, with a comparable level of domestic production to Canada and its close proximity to the largest wine producers in Europe, owns a higher percentage of its domestic wine market with 37%.

I’ve spent the past couple of months working on a new market segmentation of Canadian consumers, and we published the results last week. The report identified a new grouping of consumers in Canada that are younger, more motivated by wine’s story, and willing to spend more on wine. They are present in other markets, most notably the USA, where they are now some of the key consumers in on-premise and higher value wine categories.

On the surface, this change must be good news for the Canadian wine market. The problem is that these Millennial consumers are not really in tune with what’s on offer in their own back yard.

We recently asked Canadian wine drinkers about their experience with Canadian wine and the results may help to explain the low domestic market share currently held by the local industry.  Supporting domestic producers is an important purchase driver, but identifying which are 100% Canadian isn’t always clear to consumers – especially this emerging younger group. Most were unable to identify the International Canadian Blends designation and had little understanding of what it meant. Once explained, however, ICBs were met with mixed emotions.

Some consumers were understanding of the necessity to source grapes from elsewhere:

Blending between international and Canadian wine doesn’t particularly concern me…I can understand if a Canadian winery wants to make a particular wine, it probably needs grapes from elsewhere. It’s not a positive or a negative; I understand that it’s just the nature of making wine in Ontario as we don’t have the climate to make all wines.

Others were sceptical of the controls and regulations behind the blends:

My preference would be to go all Canadian or from a different region entirely. Once you start mixing wines from Europe and US and all over I start thinking how are the different wines going to be, what kind of controls do they have over it?

The Vintners Quality Alliance (VQA) designation is more familiar to consumers, who appear to have a basic understanding that it is reserved for 100% Canadian wines of higher quality as indicated by this respondent:

I am not sure exactly what it stands for or what the definition is, but to me VQA means a type of Ontario wine that comes from a certain region. I believe there are certain requirements that the wine needs to meet to be classified as VQA. I think that they are the better quality Ontario wines.

Brand name is not always a tell-tale sign of local production either. Even with highly involved consumers, only the most prominent domestic brands are recognised as Canadian.

In general, there is a positive quality perception of domestic wine, but it can also be seen to offer less value for money when compared to wines from more established producing countries. As explained by one respondent:

I generally find that they’re more expensive, a Canadian bottle may be more expensive than an award winning French or Italian wine. If there’s a Canadian wine that has a good rating or recommendation and isn’t overly expensive I’ll try it. Unless I know they’ve got a very good recommendation, I won’t buy a Canadian wine.

Learn more about the key findings from our consumer interview programme and online wine drinker tracking study (Vinitrac®) in the Canada Portraits Report 2015. Contact Mike for more details.

Author: Mike Werner