TORONTO — At the Canadian Food and Drink Summit 2015 held yesterday in Toronto, Beth McMahon, VP, Government and Public Affairs with Canadian Vintners Association (CVA) presented the association’s strategic plan to build the Canadian wine industry’s export market while “determining how we fit into our own domestic market.”
An economic impact study conducted by CVA in partnership with regional wine associations across Canada shows the Canadian wine industry had an economic impact of $6.8 billion in 2011. This included two sectors —100-per-cent Canadian VQA wines that are exported and blended wines produced for the domestic market.
“We have a vision over the next five years to grow to $10 billion in annual economic impact,” said McMahon, noting that the number does not include exports. “In a global context, we’re tiny, only accounting for 0.5 per cent of the world’s wine production. We can’t compete — nor would we want to compete — with the low cost, low quality segment in the world. We have to be a premium wine producer and exporter — that is where we can make our impact.”
In 2014, the largest segment of Canadian wine exports came from icewine (60 per cent). “Canada is the largest consistent producer of ice wine in the world,” said McMahon. “It’s an important part but it’s not what the industry wants to solely focus on. We have close to 700 wineries in Canada and the majority of them are not producing icewine so we need to cast a broader net and champion our premium wine products.”
The Canadian wine industry has shown significant domestic growth but, according to McMahon, only about 10 per cent of the country’s wineries are exporting.
“A lot of these wineries are newer business still getting to know their [domestic and international] markets,” she says, noting that wine is a very capital-intensive industry. “At home, with our monopoly system, each province is like its own country and if you’re not a producer in that province you are treated as an international or foreign wine so it’s really difficult to build domestic market share.” As a result, she said, the country only has about 10-per-cent market share for its 100-per-cent Canadian premium wines nationwide. In fact, in 10 out of 13 provincial/territorial liquor boards, 100-per-cent Canadian wines account for less than five per cent of sales.
The CVA has set a lofty goal when it comes to building a stronger export market. “Our goal is to increase our premium wine exports by 15 per cent over the next four years,” said McMahon. “We’re challenged within Canada to build up our own sales and profitability so decreasing our internal trade barriers is a huge focus for our industry. In order to build our profitability we need to maintain and develop international markets.”
Instead of focusing on specific countries, McMahon and her team looked at metropolitan markets that recognized the value of Canadian products, had high levels of imported products in their region and were key influencers outside their own city borders. CVA has set its sights on Hong Kong, Tokyo, London and the U.S. “With exception of U.S. these areas are not major wine producers themselves so that is an advantage to us,” she said. “In terms of New York and San Francisco, there are a lot of influencers there and, of course, their proximity to Canada and understanding of our region was certainly a motivating factor in our strategy to include the U.S.”
The other part of the export strategy highlighted was supporting international winery tourism as a mechanism to support international markets. “The majority of our wineries are not exporting so we’re trying to find other benefits for them,” said McMahon, citing a recent Deloitte study showing for every one- per-cent increase in Canadian arrivals (tourism), there is a corresponding $17-million in exports. “The Canadian wine industry welcomes three million visitors a year and we know that we can grow that. So we’re working with the Tourism Industry of Canada to highlight the link between export opportunities and tourism — building an affinity for Canadian products and the culinary experience so when [tourists] go back home they become our ambassadors.”
According to McMahon, the plan is working and three Canadian wineries have opened facilities in China.