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Trade talks
There has been much more talk in the news lately about breaking down interprovincial trade barriers and specifically how that would affect alcohol sales across the country. And on March 5, the federal government issued a statement suggesting changes will soon be made to remove interprovincial trade barriers.
As it stands now, each province is responsible for setting and collecting tax on alcohol through each distribution monopoly. However, there are other provinces that produce award-winning wines and we here in Ontario have little to no access to them.
That is because for a retailer or licensee (such as a restaurant) to bring in wines interprovincially, the LCBO treats the wines just as they treat internationally imported wines, adding a 72 per cent duty. Thereafter the agency facilitating the order adds their fee, and then the store or restaurant adds their margin. And just like that, it becomes prohibitively expensive to sell wines from other provinces in Ontario.
Since 2019 things have been a little more welcoming in BC where they have direct-to-consumer rules. This allows Ontario wineries to sell direct to BC consumers via online purchases. However, Ontario wines have a hard time moving volume or building brand awareness if there is little to no retail presence.
Conversely, Ontario residents are not permitted to buy wine directly from British Columbia wineries, or from Nova Scotia, another prominent Canadian wine producer. There have been rumours that the Ontario liquor board secretly places small orders with BC wineries just to see if the wineries will try to deliver the product direct-to-consumer.
In 2024, the government-owned corporation that controls the wholesaling and distribution of wine in Alberta, where no wine is made, threatened not to carry any BC wines if BC wineries did not stop shipping wine directly to Alberta residents. The argument was that BC wineries were not paying the appropriate alcohol taxes. That move would have effectively ended the sale of British Columbian wine in Alberta liquor stores, which are an important retail channel for the wine.
The rule was over turned in January and new regulations were put in place so that the BC wineries could once again sell directly to consumers and to retailers.
Though direct-to-consumer is a step in the right direction, it remains limiting and there are still details that need to be worked out.
Will producers pay taxes to the receiving province? Will there simply be a federal alcohol tax? This would increase the price of wines, but certainly expand selections. And frankly, the VQA wines in Canada are on par with what you would find around the world at similar price points.
Of course taxes are generated from alcohol sales through the provincial distribution channels, and those taxes go to things like health care and education, so maybe a federal tax could be distributed to the provinces based on sales?
But without retail presence, it will still be difficult to earn a living operating a small to medium-sized winery in any province.
Alcohol distribution in Canada is a complicated mosaic. Perhaps with the recent swell in national pride, things will improve. Canada is one nation that is currently under threat, yet remains fragmented across many industries. Together we can do anything. Separated, we remain vulnerable.
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