W I N E G R OW E R S C A N A DA
To Support
Wine Growers
Across Canada
It’s time to take a page out of our
competitors’ handbook
By Dan Paszkowski, president and CEO, Wine Growers Canada
In a year plagued by COVID-19, Canadian grape growers, win-eries,
hospitality, tourism and retailers, like their counter-parts
around the world, have been working with government
to address the overwhelming impacts of the pandemic. This is
not surprising considering the value-added economic impacts of
the Canadian wine and grape industry, which contributes more
than $9 billion to the national economy, including 38,000 jobs
and more than four million tourists each year.
On July 27, Canada announced that over the next two
years more than 700 Canadian wineries will have a longstand-ing
excise benefit repealed in response to an Australian World
Trade Organization challenge. Not surprisingly, this challenge
was supported by the world’s largest wine producing countries
which represent 70 per cent of wine sales in Canada.
Sadly, this is only the most recent example in a pattern of
aggressive moves by global wine producers. The decision to
repeal the excise benefit will hurt the financial sustainability of
local producers, but help international wineries achieve even
greater wine sales across Canada.
The reality is stark, Canadian wine producers are subject
to high levels of taxation. This hampers the ability of producers
to compete in an intensely competitive market. Canada’s excise
rate on wine is towards the upper end of major wine produc-ing
countries. For example, France’s excise rate is at least 22
times lower than Canada’s, while other major wine producing
countries like Italy and Germany pay no excise tax. Further,
Canadian import tariffs on wine are among the lowest of any
major wine importing country, with 92 per cent of imports
entering Canada tariff free.
When talking about a level playing field it is important to
recognize that Australia and the United States, which together
represent 28 per cent of Canadian wine imports by volume,
both rebate excise equivalent taxes to their wine producers.
Further, the European Union, which represents an additional 48
per cent of Canadian wine imports, supports their wine sector
with an average $1.9 billion in annual wine support programs.
Moreover, on August 5, France announced it will raise
its support plan to wine growers to $394 million. These funds
have been set aside to support French wine businesses after
the COVID-19 lockdown closed restaurants and bars, and U.S.
tariffs curbed exports.
These are only a few examples why a younger, smaller wine
industry like Canada – with record high import competition –
has struggled to grow amid the high level of public support and
infrastructure (including brands and reputation) in established
wine regions.
The fate of the Canadian wine industry now lies in the
hands of the federal government. The time has come to level the
playing field by taking a page out of the foreign wine competi-tors’
handbook and implement growth programs, which also
foster investment and job creation, and allow Canadian winery
businesses to compete and grow in their home market.
Photo courtesy of Arterra Wines Canada
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