By Savyata Mishra
BENGALURU, July 22 (Reuters)
The alcoholic beverage industry in Canada has shown its fair share of growth these past few years. This has been fueled by a bigger demand for a wider range of alcoholic products, shifting preference towards the craft and premium options, as well as changes in social trends. Alcoholic beverages in themselves encompass quite a broad range of products, such as wine, beer, ready-to-drink (RTD) beverages, and others. The growth dynamics of each of these sectors are varied.
Changing influences of a different kind
Certain challenges can have an influence on the alcoholic beverage market. Changing social norms as well as health concerns can be a bit of a challenging hurdle in the industry. This can become very prevalent, especially with awareness campaigns about the negative health effects of excessive alcohol consumption. Recent issues related to trade disputes between Canada and the United States have also affected this.
Canadian provinces’ boycott of U.S. spirits amid a trade dispute with the United States has caused a sharp drop in sales of American imports, as well as other imported and domestic spirits across the nation, a Canadian liquor trade group said on Tuesday. Sales of U.S. spirits in Canada dropped 66.3% between March 5, when provinces announced they would stop carrying the products in retail stores, and the end of April, according to an analysis by Spirits Canada.
A notable boycott of the industry
The group, which represents Canadian manufacturers and marketers of distilled spirits, said total spirits sales in Canada fell 12.8% during the same period. “The North American spirits sector is highly interconnected, and the immediate and continued removal of all U.S. spirits products from Canadian shelves is deeply problematic for spirits producers on both sides of the border,” said Cal Bricker, president and CEO of Spirits Canada.
Several Canadian provinces pulled U.S. spirits from liquor stores in response to U.S. President Donald Trump’s imposition of a 25% tariff on certain imports. Most recently, Trump’s threat to impose a 35% tariff on Canadian goods starting August 1 has raised concerns about an escalating trade war and spurred a “Buy Canadian” movement among consumers and businesses.
Serious consequences of hard decisions
In early March, Jack Daniel’s maker Brown-Forman Corp BFb.N called the removal of American bourbon and whiskey from Canadian liquor stores worse than Canada’s retaliatory tariffs and described it as a disproportionate response to Trump’s levies. According to Spirits Canada, sales of U.S. spirits in Ontario, Canada’s largest market for spirits, plunged 80% after the products were removed from shelves.
Two provinces, Alberta and Saskatchewan, have since resumed selling U.S. spirits, the group said. The decision to pull U.S. spirits has hurt American distillers, as well as Canadian revenues, consumers, and hospitality businesses, Spirits Canada added. Currently, U.S. tariffs are suspended on imports from Canada that comply with the U.S.-Mexico-Canada Agreement (USMCA). Spirits produced in Canada fall under this trade pact.
This boycott had quite a ripple effect. On the US side, the impact hit with an immediate blow. Canada is considered one of the second-largest export markets for the American spirits industry. During 2024 alone, it was approximately $221 million. With the excessively high tariff increase, products could be priced out of their affordability range.
On the flip side of things, this may have opened a whole new playing field for the Canadian market. A good example of this forthcoming entrepreneurial spirit is Quebec’s SAQ, which started selling some local spirits and wines to try and fill the current gap in the market. British Columbia and Ontario are not far behind in their push to drive brands such as Wayne Gretzky Estates and Crown Royal onto the market. This surely seems to be the time for brewers and craft distillers to strut their stuff.