Thank you, Mr. Chair. I'm Jan Westcott, and this is my colleague, C.J. Helie.
Before I address the topic on today's agenda, I'd like to extend our appreciation to the committee for its recommendation in its food supply chain report to address the discrimination against spirits under the federal Importation of Intoxicating Liquors Act, and the Excise Act. Thank you. The committee's support is greatly appreciated.
We're pleased to appear today in support of the Canada-European Union comprehensive economic and trade agreement, CETA.
Spirits Canada is the only national organization representing the interests of Canadian spirits manufacturers, exporters, and consumers. We are primary manufacturers. We source locally grown cereals such as barley, corn, rye, and wheat, and transform them into high value-added consumer products.
We are tied directly to the farming community. Many of our companies have decades-old relationships with local farming families to grow specific commodities to very exacting standards. Companies are seeking the best of the best in order to produce the highest quality spirits.
Spirits annually represent more than 65% of all Canadian beverage alcohol international exports, significantly more than beer, cider, and wine exports combined. The total export of spirits during calendar 2012 were worth over half a billion dollars, and fortunately, were 33% greater in value in 2012 than in 2008.
The industry is founded on our signature products of Canadian whisky and Canadian rye whisky, but we produce and market a full range of spirits products, including gin, rum, vodka, liqueurs, and ready-to-drink products. In fact, the value of Canadian liqueurs alone exported internationally is almost twice the value of all of the Canadian wine exports last year.
Many Canadian spirits manufacturers are investing heavily to expand their exports, and these expensive investments are showing concrete results. The industry's international exports for the first nine months of 2013 are 20% higher than last year. Canadian spirits manufacturers would be considered relatively small-scale operators compared to some of our competitors in the scotch and bourbon industries, and we're certainly restrained by lower profitability in our home market, but we tend to punch quite a bit above our weight class internationally.
Canadian spirits brands have a great reputation internationally for quality and authenticity. Our members have invested heavily in recent years in developing new brands, premium brand extensions, and new packaging, as well as enhancing our productivity.
Canadian spirits offer tremendous potential for growth both here at home and abroad, and CETA in particular offers another important step in the evolution of the bilateral alcohol trade between Canada and Europe.
CETA builds on the previous 2004 wine and spirits agreement, which Dan mentioned, and will provide further positive forward momentum. I'd like to highlight for members four key sector specific initiatives within CETA that will be beneficial to Canada.
First, spirits consumers in this country will benefit from the elimination of remaining import tariffs.
Second, most of the growth in the market these days is in the premium and super premium end of the business. People in fact are drinking less, but they're drinking better quality materials. These premium brands will benefit from the conversion of the liquor board service fees from the ad valorem that Dan mentioned, a basis that penalizes higher value products to a new flat rate volume-based price structure.
Third, Canadian spirit manufacturers now will also be able to source spirits in bulk from the European Union and bottle them here in Canada, providing greater flexibility and potential cost efficiencies to the Canadian business, as well as additional value-added activities here in Canada for certain companies.
Finally, CETA will ensure greater transparency and marketplace disciplines in regard to state trading enterprises engaged in various aspects of liquor importation distribution details, or as they're more commonly known, liquor boards.
Last year's spirits represented over 80% of all Canadian beverage alcohol imported by the 27-member state EU. Our principal current markets in Europe include France, Germany, Finland, Spain, Sweden, and the U.K. These six countries represent the majority of our sales. That said, there are great growth opportunities for us in many EU states, including the Czech Republic, Estonia, Hungary, Latvia, Lithuania, and Slovenia, as these eastern European consumers migrate, as we're seeing across the world, from vodka to brown spirits, particularly whiskies.
Some trade critics are concerned that free trade agreements encourage offshore production in lower cost countries. This concern does not apply to spirits. Under Canadian law, all Canadian whiskies must be mashed, fermented, distilled, and matured in Canada.
More importantly, fresh and pure Canadian water and Canadian-grown premium barley, corn, rye, and wheat are essential to creating the unique taste profiles of our loved iconic brands, brands that in a number of cases have been produced and sold continuously for over 150 years, such as Canadian Club and Wiser's, among others.
The growth in international exports of Canadian spirits translates directly into more jobs here in Canada on Canadian farms, in Canadian spirits facilities, and in hundreds of small and medium-size businesses that serve and support our production and maturation facilities.
We'd like to extend our appreciation to the Canadian government and ministers Ritz and Fast for their leadership through the negotiation, as well as to Canadian trade officials. The bilateral communications that took place between industry and Agriculture and Agri-Food trade officials were really excellent, and we felt very well informed throughout the various stages of the negotiations.
I'd also like to recall for committee members the Canadian spirits industry request for a modest reduction in the excise rate per litre of absolute alcohol in spirits excise duties. The impact of the 2006 excise rate changes has dramatically escalated the federal fiscal burden on spirits versus those of our direct competitors.
Such a modest decrease in our tax load is a critical precursor to the industry taking full advantage of new emerging trade opportunities that are being created through the government's trade agenda and for us to reach the full potential of the Canadian spirits industry.
Thank you very much for your time.