Thank you, Patrick.
Good morning, everyone.
I'd like to address three specific opportunities that we feel the federal government could consider.
First of all, the Government of Canada has been extremely supportive of our industry and should receive credit where credit is due. It has benefited our collective success. In this highly regulated industry, governments and the private sector have to work closely together in order for both to succeed in their objectives.
As Growing Forward 2 and related programs move forward, we would recommend a specific initiative or allocation that supports the domestic marketing and new product development of Canadian wines. We need to increase the pride and the awareness that Canadians have for domestic wine and ultimately create more demand over imports. Canadians are very keen to keep and grow jobs in this country. We can now quantify the impact of our industry in national support and local community and economic development.
As one specific example of building pride in our national products, we would encourage Air Canada, for instance, one of the world’s great airlines, to follow the lead of VIA Rail and serve only Canadian wines on their flights.
We also know through LCBO research that new wine products generate some 60% to 70% of the growth in sales of premium products. Wineries make significant investments in the development and launching of new products each year in order to be competitive. This should be encouraged through government programming so that constant private sector innovation is recognized. Together we can leverage the economic ability of our industry to produce new jobs and new revenue to government.
While domestic product wine sales keep increasing, today we still have only 30% of all wine sales in Canada, while imports continue to represent and dominate at 70%. By comparison, other countries own their domestic markets and therefore achieve economies of scale that enable successful exportation of product. For example, just to give you a couple of countries for comparison, in Chile, 100% of the wine consumed in that marketplace is Chilean; 84% of the wine in Australia is Australian; and in the United States, 66% is from the U.S.
With the results of the economic impact analysis, we can set quantifiable metrics that will measure the success and the return on investment for any new and updated industry programs that support domestic marketing and new product development.
Second, it is important for us to support market demand for Canadian, and Ontario, grapes. This needs to be done in a way that makes domestic wines more competitive and not less competitive. As a result, we would strongly support the excise tax exemption be applied to the Canadian grape content in international and Canadian blended wines, or some equivalent action.
This is a large segment of wine sales that take place in the market, representing 73% of all Ontario wine sales in this province. In fact, the majority of the wine grapes grown in Ontario are used for ICB wines. This proposed change would make the industry more competitive while sustaining and growing domestic wine grape production.
Third, we need to be cautious about any fundamental policy changes that may negatively affect Canadian wine sales and empower importer competitors to gain even more than their existing 70% market share.
We have been very pleased with our discussions with the Minister of Agriculture concerning the potential deregulation of container sizes through the Consumer Packaging and Labelling Act. We believe the government fully understands our concerns about such a change and the potential unintended consequences that could allow imports to flood the market and stimulate a race to the bottom. Our biggest vulnerability with such change is in the bag-in-the-box products. Today, they represent 31 million litres of sales each year. The economic impact of these sales is some $688 million to the Canadian economy.
In summary, the grape and wine industry serves as a great success story today in Canada. Its economic impact of $6.8 billion, 31,000 jobs, and $1.2 billion of government taxes and markups represents a significant opportunity for us to grow in the future.
We would like to thank you, the Standing Committee on Agriculture and Agri-Food, for the time to share these new opportunities to grow our Canadian wines sector.
Thank you so much.