With the recent return of a federal tax on domestic brands, Canadian wine prices are expected to rise by about 4%. This change comes after the government was able to resolve a dispute with Australia at the World Trade Organisation (WTO) that allowed for the repeal of an excise duty exemption for 100% Canadian wine. However, the impact is likely to be softened thanks to a new Agriculture Canada support program.
This program which is expected to last two years, will not be a rebate, rather it will provide subsidies to producers. It will provide short-term financial help to struggling wineries, with the amount being pegged on the winery’s production during the previous year. The amounts are expected to compensate for the return of the excise duty, allowing consumers to keep enjoying similar pricing on wines, for as long as the program runs.
However, wineries that generate less than $50,000 in sales of packaged wine will be exempted from paying the excise duty and will not be able to apply to the Agriculture Canada program. The funding will benefit about 104 million litres of annual wine production.
Canada is home to an estimated 800 licensed wineries, a majority of which are based in British Columbia, Ontario, Nova Scotia and Quebec. The first phase of the program recently opened and is expected to last for six weeks. During this time, $166 million will be made available to wineries. Those that apply may receive up to 80 cents relief per litre for 2021 and 2022 vintages.
The wine industry has suffered multiple setbacks in the last few years including trade challenges, the effects of the pandemic and extreme weather. According to the president and CEO of Wine Growers Canada, Dan Paszkowski, the government has failed to provide the sector much support despite serious competition from imports. He applauded the new program saying it would increase demand for Canadian grapes.
Federal agriculture minister, Marie-Claude Bibeau, stated that the support would go to wineries of any Canadian wines made using primary agricultural products. This includes grapes, other fruit, dandelions, sake and rice from any origin. This means that besides all wine types made from grapes and other ingredients, any beverage classified under winery licenses, such as sake and cider could benefit from the program.
Paszkowski is hopeful that the program will lead to the growth of the industry and jobs, boost the quality of wines produced, drive wine country tourism, and increase demand for Canadian grapes. Grape Growers of Ontario chair, Matthias Oppenlaender, echoed similar sentiments, saying that though the program should last longer, the support would help bring certainty to the industry.
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