Fine wines and liqueurs: what Canadians are thirsty for

Throughout the month of November, we’ll explore global patterns in agricultural and food trade, and the role Canada plays in that trade. These posts will build on the insights from our recently released trade ranking reports for agriculture and manufactured foodWe examine Canada’s rankings as a world exporter, the commodities in which we have an export advantage, and the opportunities ahead for agriculture and manufactured food exports.

Have you ever found yourself searching the country-specific aisles of the liquor store for the best wine to pair with dinner? Whether it be a Bordeaux from the Blaye region of France, or a bottle of Malbec from the Argentinian region of Mendoza, the beverage export market is an example of how connected the world has become.  Canada’s role as a world exporter is much smaller than our role as a major importer of beverages and that’s not an indication of our weakness in the market. It signals our growing population with higher incomes, who have specific preferences for luxury goods. We purchase Champagne from France and mineral water from Switzerland because of our access to options.

Who’s in the lead?

The world export market for beverages was a US $99.5 billion industry in 2016, largely dominated by a few players. Non-alcoholic beverages account for 18.8% of all beverage exports. The growing demand for the two largest markets, wine and alcoholic spirits and liqueurs, is an example of the world’s growing income and taste for luxury goods.

France dominates this market. Their exports of beverages in 2016 reached US $16.5 billion, or 16.5% of world beverage exports (Figure 1). The French exports of wine (which includes Champagne) account for 55% of their total beverage exports. This means French wines account for 9.2% of total world beverage exports.

Figure 1: France leads the world in export value of beverages

Source : UN Comtrade Data, September 2017

Canada’s role in global beverage trading

Canada’s 2016 trade deficit in beverages was nearly US $3.8 billion. This deficit is due to our role as a significant importer of luxury beverages including wines, liqueurs, and sweetened mineral waters. In fact, the overall trade deficit for Canadian agri-food products is largely contributed to by beverages.

Canada imported 5.6% of the world’s supply of wines, the majority from France and the US. As our exports of beverages are much lower than our imports (Figure 2), Canada’s role as an importer outweighs our role as a player in the export market. Canadian wine exporters have however been able to leverage opportunities on the global stage, growing our exports of wine from $44.9 million to $68.3 million from 2012 to 2016. The global craft beer market is also expanding, potentially offering opportunities for Canadian barley producers and craft brewers.

Figure 2: Canada’s imports of wine overshadow other beverages

Source : UN Comtrade Data, September 2017

For the bigger picture, check out our FCC Ag Economics Trade Ranking Reports for agricultural commodities and manufactured food.

Amy Carduner
Agricultural Economist

Amy joined the FCC Ag Economics team in 2017 to monitor agricultural trends and identify opportunities and challenges in the sector. Amy grew up on a mixed farm in Saskatchewan and continues to support the family operation. She holds a Master in Applied Economics and Management from Cornell University and a Bachelor in Agricultural Economics from the University of Saskatchewan.