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(Last updated: 30 Oct 2008)
Trends and opportunities
The market
Canada continues to hold its position as Australia’s third largest market for wine exports. The Canadian market for Australian wine continues to show strong growth. In 2007, the total value of imports of Australian wines was C$306 million, an increase of approximately five per cent compared to the previous year.
The Canadian market for imported alcoholic beverages operates in a highly regulated environment. Provincial Liquor Boards have sole authority to import alcoholic beverages into Canada, with the exception of the Alberta Liquor Control Board.
Wineries, liquor stores and agencies sold C$5 billion worth of wines in fiscal year 2007 – up 9.5 per cent from the previous period. Imported wines continue to dominate the market – 75 per cent of all wines consumed in Canada are imported.
Consistent with the trend over the last few years, red wine continued to assert its dominance over white wine.
According to the Liquor Control Board of Ontario (the largest purchaser of alcoholic beverage in the world) it is stated that “as more people discover wine, there's been a ‘trading up’ phenomenon, where people step up to higher quality wines as they grow more knowledgeable about the products”.
Opportunities
There are opportunities to educate the consumer about the Australian wine industry, regions, varietals vs regions, new and interesting boutique wines from Australia. For example, the launch of Wine Australia’s four brand strategy, in particular, the focus on ‘Regional Heroes’ has been successful in educating and highlighting the diversity and regional character that Australian wines have to offer.
The emphasis on the environment coupled with food safety and allergy concerns is contributing to the increase demand for organic wines. There are increased buying decisions based on their ethical and environmental values.
Waste reduction has also been highlighted and this has led to the Provincial Liquor Boards implementing a number of eco-friendly initiatives, ie. innovative, lightweight and convenient alternative packaging, (eg. tetra packs, PET bottles and other options) for wine.
Competitive environment
The overwhelming success of Australian wines over the last 10 years has been impressive given the very challenging and competitive environment in Canada. However, in view of the maturity of the Australian category and emerging New World Wine countries competing for market-share – focused and creative strategies and promotional activities are required to take Australian wines to the next level.
The growing sophistication of the Canadian wine consumer combined with their willingness to try wines from a much wider spectrum has also contributed to the rise in demand for wines from new origins such as New Zealand, South Africa, Argentina, Spain and Chile.
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Tariffs, regulations and customs
The Canadian market for imported wine and spirits operate in a highly regulated environment characterised by government monopolies. Provincial Liquor Boards have sole authority to import wine into Canada.
With the exception of the Alberta Gaming and Liquor Commission, which has privatised its entire retail network, the other provincial liquor boards import, warehouse and distribute imported wines through their various retail outlets.
While similar in operation, each Liquor Board has its own procedures and regulations governing the listing, pricing, packaging and promotion of wine to which suppliers must adhere.
It is the responsibility of the manufacturer or importer of the alcoholic beverage to ensure that a label is in compliance with both the Food and Drug Regulations and the Consumer Packaging and Labelling Regulations.
The Canadian Consumer Packaging and Labeling Regulations stipulate that all ‘mandatory’ label information must be shown in English and French, except the manufacturer’s name and address, which can appear in either language.
Mandatory information which must be shown in English and French includes:
- Common name by which the beverage is known
- Net quantity – must be shown in metric units of volume
- Alcohol by volume declaration
The government of Canada levies four distinct taxes on distilled spirit products:
- Customs import duties – levied on spirit products imported into Canada
- Customs duty – equivalent to excise duty, levied on spirits imported into Canada
- Excise duty – levied on domestic spirit products
- Goods and services tax (GST) – levied at seven per cent of retail price
- In addition imported wines are also subject to provincial levies, taxes and mark-ups.
Industry standards
All products imported in to Canada must comply with:
- Canadian Federal packaging and labelling regulations
- The Canadian Association of Liquor Jurisdictions product identification standards for use in the distribution of beverage alcohol (standards for the use of the Universal Product Code (UPC) or EAN bar codes, in the distribution of beverages)
- The Liquor Boards product packaging standards
- The Liquor Boards laboratory guidelines for chemical analysis testing of wines
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Marketing your products and services
Market entry
The Liquor Boards require that wine exporters sell their products through registered Canadian agents. Any winery wishing to import wine or liquor into Canada must do so through a local liquor agency or representative, who must be registered with the respective provincial liquor authorities.
To achieve success with a new wine brand, potential Australian exporters need to establish the right combination of price, package and quality and then negotiate distribution. Active generic in-market promotional activities via written media, television and radio are effective aids to increased consumer awareness.
Liquor Boards are increasingly focusing their buying decision on wines that:
- Have won international awards (some Australian domestic awards are recognised).
- Received good reviews from well known international and domestic wine writers/media.
- Are considered iconic, including wines with high demand and limited supply.
Every product that is submitted to the Liquor Boards to assess for purchase is required to be accompanied with information on awards and third party reviews.
Australian wine exporters should consider the following:
- A foreign supplier wishing to export alcoholic beverages to Canada must do so through a local liquor agency/ representative, who must be registered with the respective provincial liquor authorities.
- Local representation is important when doing business with the Liquor Boards. Australian suppliers are strongly encouraged to arrange for a local licensed agent to represent them.
- It is highly recommended that you visit Canada to meet and interview prospective agents.
- Consider participating in Austrade Canada’s annual ‘trade only’ event that focuses on new wineries seeking representation in Canada.
- The appointment of a good local agent to represent your wines is one of the most important decisions you are likely to make as it can determine the success or failure of your export strategy.
- A listing with the Liquor Boards should not be your only marketing tool, as product promotion and exposure play an important part in the wine industry and directly affects the volume of sales. You should work with your agent to determine potential for your wines in restaurants via the private importation/consignment system.
- In view of the competitive and challenging nature of the Canadian wine market, it is very important that wineries develop a long-term business/marketing plan in concert with their local agents.
- Create an information pack with award records, wine critics’ reviews and a list of your major accounts (eg. a major hotel group or leading restaurant) that may be known to an international buyer or consumer.
- A key element for new Australian wine exporters to bear in mind is the time between appointing an agent, submission of products to the Liquor Boards for review and receiving their first purchase order can vary anywhere from 6 to 24 months.
Distribution channels
The Liquor Control Boards are the government agencies responsible for all importation and distribution of imported wines, spirits and beer in their province and set prices and quotas.
The Liquor Boards require that wine exporters sell their products through registered agents.
Most provincial Liquor Boards will deal only with agents directly appointed in writing by a manufacturer. Therefore, in order to conduct business with a Liquor Board, Australian wine exporters must appoint a local agent to represent them in the respective provinces.
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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Sources
Statistics Canada – www.statcan.ca
Business Monitor Internaional Q3 overview for Canada |
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