Inside the Canadian market

Friday, 15. September 2017 - 10:30

Vancouver/Thom Quine

With a country as large as Canada, the second largest in area on the globe, one would expect a healthy and vibrant wine industry. Considering that for all its mass there are only 35m people (fewer than the number of sheep in New Zealand), Canada’s thirst is strong, and increasing all the time, partially fuelled by the country’s vibrant local wine, beer, and spirit industries.

But who is ruling what is being consumed, sold, and produced? The size of the country makes that tricky, as Vancouver, British Columbia, in the far west, has little to do with Toronto, Ontario, 3,500 km to the east. And then there’s Québec, with its francophone culture, and an entirely different focus on wine and beer than their anglophone Canadian kin. The 2016 Canadian Wine Market Landscape Report published that the main trends are divided between the nation’s two biggest cultural groups and two official languages. The long-held Québécois bias towards Old World wines remains true, with French wines by far the most popular in the province, followed by Italy and Spain. The Québécois are also more likely to drink rosé (more than half partake in pink) compared with just a third of regular wine drinkers in the English-speaking provinces.

Most of Canada is uninhabited land, or rural, agriculture-based communities, and the majority (estimated at 75%) of Canadians live within 160 km of the US border. A multicultural mosaic, the restaurant scene is strong in Canadian cities, with a healthy wine culture a natural pairing. Vancouver (BC), Toronto (ON), and Montréal (QC) lead in this regard, with top tier sommeliers and wine education opportunities. UK-based research and reporting company Wine Intelligence reports that that 87% of Canada’s regular wine drinkers reside in three provinces: Ontario (40%), Québec (28%), and British Columbia (19%). Smaller cities such as Victoria, Calgary, Québec City, Ottawa, and Halifax also have a buzzy and active wine scene. Consumers in wine producing regions, notably British Columbia, Ontario, and Nova Scotia, are well accustomed to drinking local wines, and locavore support is strong (sometimes fervent).

All of this is to show that what, or who, is influential in one part of the country is often entirely irrelevant in other areas. Wine media, shops, and sommeliers are localised and specialised, although there are some notable national exceptions that aim to bridge Canucks coast to coast.

Wine retail
The powerful monopolies still rule the liquor landscape in many provinces. British Columbia (BC Liquor Distribution Branch, BCLDB), Ontario (Liquor Control Board of Ontario, LCBO), Manitoba (Manitoba Liquor & Lotteries, MBLL), Québec (Société des alcools du Québec, SAQ), Nova Scotia (Nova Scotia Liquor Corporation, NSLC), New Brunswick (New Brunswick Liquor Corporation or Alcool NB Liquor, ANBL), and Saskatchewan (Saskatchewan Liquor and Gaming Authority, SLGA), are all monopoly dominated, fully or partially. Their category managers and buyers have great buying power and reach, often across hundreds of outlets.

In fiscal year 2014 to 2015, Canada’s largest monopoly and one of the most powerful buyers globally, the LCBO, passed C$5bn in sales through their 600-plus retail outlets. In Alberta, the sole province with no government liquor monopoly (though one exists for distribution), private retailers have the power though lack the reach. Liquor Depot is the largest wine retail chain in Alberta, with over 170 locations.

In British Columbia, there is a mix of private liquor stores and the BCLDB, and private stores have the ability to list and carry ‘speculative’ listings not carried by the BCLDB – one of the few benefits. These private stores are known as the place to find unique and boutique products that don’t fit into the monopoly’s mould. Vancouver’s Marquis Wine Cellars and Liberty Wine Merchants are two private shops that have been leading the way for decades. A few wine retail chains, like Everything Wine and Liquor Depot, span provincial boundaries, but with liquor laws being so restrictive and singular to each province, few have made the leap and spanned the fence.

Recently, there has been a move for increasing wine sales in grocery stores in many provinces, posing a potential threat to the monopolies. Grocery has been an important sales channel for alcohol in some Canadian provinces for many years, while others have just recently allowed or are considering the sale of alcohol through this channel. In 2015 and 2016, two of the monopoly provinces, British Columbia and Ontario, respectively, announced they would allow the sale of alcohol through grocery stores.

Wine importers
Most Canadian wine importers operate within their own province, building up relationships with the monopolies that largely control their livelihood. There are a few that span neighbouring provinces: Crush Imports, The Wine Syndicate, and Sedimentary Wines are active in British Columbia and next door in Alberta, for example. There are only a few agencies that have national representation, and even then, the portfolio will vary from province to province. Charton-Hobbs, Authentic Wine & Spirits Merchants, Trialto Wine Group, International Cellars, and Mark Anthony Wine & Spirits are strong agencies with national or near-national reach.
Treve Ring

This is an extract from a comprehensive article published in Issue 3, 2017 of Meininger's Wine Business International. The report is available to subscribers.