Trade Dispute Impacting Wineries In U.S. And Canada

Sales of alcoholic beverages in both the U.S. and Canada have been declining.  All categories, including spirits, beer, and wine, have seen an erosion of volumes and customers in favor of non-alcoholic drinks.  Canadian grape growers and wineries have struggled for the past couple of decades.

But in March of this year, provincial premiers responded to President Trump’s trade war by pulling American alcoholic products off the shelves of government-owned outlets.  Canada’s largest market, Ontario, was the first to order U.S. products off the shelves of its LCBO stores, and a couple of days later, British Columbia’s premier, David Eby followed Ontario’s lead.

“We are removing American liquor products from the shelves of the B.C. liquor stores," Eby said.  "That’s wine, distilled products, and beer. I have received many emails, letters, and interactions with people. They don’t even want to see American products right now in our government liquor stores.”

Canadian Wines Have Enjoyed New Consumer Interest

Since that time, with the lack of American retail competition, along with Canadian tourists deciding to see what’s closer to home this year, wine sales have seen explosive growth.  The Liquor Control Board is reporting sales of locally grown red wines increasing by as much as 71%, and sales of white wine up as much as 67%.

Southwestern Ontario has the largest vineyard acreage, but other regions, including south-eastern Ontario, have seen a resurgence of both vineyards and wineries over the past 25 years.

Tim Keupfer owns Broken Stone Winery on the north shore of Lake Ontario and within sight of New York State.  Keupfer said this has been a good year for sales, but he does not think it’s the new normal.

Without American Wines, Consumers Are Forced To Try Something New

“I never thought that international trade would have such a large impact, but it has," Keupfer said.  "It’s been very positive for us, because people have been forced to try something new.  We’re just enjoying the ability to compete a little bit better while it lasts.”

The north shore of Lake Erie is home to dozens of wineries.  In extreme southwestern Ontario, Sprucewood Shores Winery is within sight of the Windsor-Detroit skyline. Sprucewood owner Steve Mitchell said that he sees many locals who have never been in his tasting room until now.

Mitchell is enjoying his current success, but his local region is also home to Canada’s primary automotive manufacturing center.  So, he’s also hearing his customers’ concerns about the lingering specter of ongoing tariffs.

“This has been a huge tailwind for Ontario wineries," Mitchell said.  "I think this is great to have all these sales. We’re seeing a lot of people who hadn’t considered or tried Ontario wines in the past. But the truth is, I want to see Canada do well in general.”

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