My name is Dan Paszkowski, and for those who don't know me, I'm the president and CEO of the Canadian Vintners Association, better known as the CVA. As the national voice of the Canadian wine industry, our members represent 90% of all Canadian wine production and are engaged in the entire value chain, from grape growing and wine production to retail sales and tourism. We have more than 700 vertically integrated grape wineries located in six provinces across Canada, with 31,000 acres of vineyards supporting 1,800 grape growers.
As you may know, wine is the highest value-added agrifood product in the world. Unlike the case with other sectors of the economy, once our vines are planted, it's impossible to move our agrifood operation to another jurisdiction. The Canadian wine industry produces high-quality, award-winning wines, contributes more than $9 billion to the national economy, supporting 37,000 jobs, and attracts almost four million tourist visitors to wine country each and every year.
We are the second fastest-growing wine market in the world, with wine consumption growing three times faster than the global average. Over the past decade, per capita wine consumption in Canada has increased by 27%, with by comparison, a drop of 1% for spirits, and a decline of 11% for beer, making wine the beverage of choice in Canada.
This is an opportunity, but it's also a challenge, as Canada is also the sixth largest importer of wine in the world, and the past decade has seen imports capture 75% of the 150 million litres of wine sales growth across Canada. Additionally, legislating the annual indexation of the excise duty on wine to the consumer price index, as proposed in budget 2017, will impact the competitiveness of Canadian wineries, impact demand for grapes, and threaten not only the growth of wine sales in Canada but also our ability to create new export markets.
With a U.S. WTO trade challenge looming over concerns about B.C. policy on grocery wine sales, and an EU notice last week that implementation of the proposed excise duty escalator in the budget implementation act could trigger a new trade challenge, it's clear that the industry is facing many obstacles.
This is all taking place at a time when we face the implementation of CETA and the renegotiation of NAFTA. These two trade agreements include the largest wine-producing countries in the world, representing 61% of total wine imports into Canada. The Canadian wine market is of the utmost importance to both EU member states and U.S. wine-producing states, given that wine is the highest value EU agricultural export to Canada and that this year the U.S. wine industry became the largest exporter of wine to Canada by value.
From Nova Scotia to British Columbia, vintners support a competitive and fair global trading environment, recognizing the numerous benefits to industry, consumers, and the greater economy. Canadian vintners are actively engaged in global trade, with $85 million in export sales shipped to 40 countries in 2016, up from $20 million in 2005; however, it's important to emphasize that our export growth realization is tied to our domestic success. The Canadian wine industry's domestic market share is a mere 32%, the lowest of any wine-producing country in the world. Further, our premium VQA wine sales have less than a 5% market share in eight out of 10 provinces across Canada.
Yet, with the exception of three provinces, I'm sad to say that 81% of Canadians cannot legally have wine delivered to their homes from an out-of-province winery. Clearly, the retail world has changed, and removal of the remaining interprovincial barriers to wine trade would help the Canadian wine sector adjust to, take advantage of, and prepare for a new state of global trade.
We are hopeful that the hearing of the Comeau case at the Supreme Court this year, together with the federal-provincial working group on beverage alcohol to be launched on July 1 under the auspices of the Canadian free trade agreement will help address this barrier to trade.
Globalization is an increasingly important factor affecting producers of all sizes. As Canadian wineries enter the world of international trade, they must manage a myriad of economic costs, ranging from import tariffs to more complex non-tariff trade barriers. Working with Agriculture and Agri-Food Canada and Global Affairs Canada, our industry has been actively addressing non-tariff barriers to trade through our participation in various fora including the World Wine Trade Group and the APEC Wine Regulatory Forum. Through these groups, the CVA works with a number of wine-producing countries to support a climate free of trade-distorting factors, through sound science and the harmonization of regulatory standards covering definitions, labelling, oenological or winemaking practices, and composition.
The harmonization of regulations are crucial, given that winemaking practices are not uniform, vary across jurisdictions, and can create costly barriers to trade. Let me provide you with a few examples.
Geological and other conditions require winemakers around the world to sometimes use different winemaking practices to enhance the stability, longevity, or consumer acceptance of wine. Different approaches are used to define which and how much of an additive or processing aid may be used in the production of wine. Restrictions are implemented on the use of certain pesticides, including differing maximum residue limits for agricultural chemicals.
Multiple export and food safety certificates are often required, even though the food safety risks from wine are miniscule and the wine in question already meets the requirement for sale in Canada. Labelling differences include country of origin, alcohol content, alcohol tolerance, expiration dates, nutrition labels, ingredient labels, health labels and a broad range of other information, often in multiple languages. Packaging differences include lightweight bottles and restrictions on the materials that contact the wine. Environmental issues range from the definition of “sustainability”, to carbon and water footprint and acceptance of organic standards. There are intellectual property restrictions on the use of traditional terms such as “reserve”, “champagne”, “port”, and “sherry”, as well as geographical indicators.
Those are but a few of the issues that create costly non-tariff barriers and complicate trade in wine. Through the World Wine Trade Group and APEC, the CVA has worked hard on adopting mutual acceptance of oenological practices, harmonization of labelling standards, the definition of “icewine”, an agreement on counterfeiting, addressing additives through the Codex Alimentarius Commission, and other efforts in supporting a global wine-growing industry characterized by freedom from trade distortions.
Those intergovernmental efforts have paid dividends through the World Wine Trade Group's endorsement of analytical methodology and regulatory limits, as well as the adoption of a wine annex in the trans-Pacific partnership agreement, which we believe is a crucial standard for inclusion in the negotiation or renegotiation of trade agreements.
The CVA has worked in co-operation with the federal government on a range of groundbreaking principles for nations to use when establishing wine regulations. These harmonization efforts, if adopted, would remove unnecessary obstacles to international wine exports that delay and add to winery costs, resulting in restricted market access and trade.
In conclusion, the regulatory efforts undertaken through the World Wine Trade Group should be advanced by the federal government to facilitate international trade in wine, whether through APEC or bilateral trade agreements with China, Japan, Mercosur, India, and so on, as an important foundation in bringing regulatory coherence with our trading partners.
Thank you. I look forward to answering any questions you might have.