TORONTO, ONTARIO–(Marketwire – Dec 7, 2012) – Sales of wine, beer and spirits are on track to hit a record high this holiday season and on an annual basis, according to BMO Capital Markets Economics. The pickup comes as the economy continues to improve and wine and beer producers continue to make new inroads with consumers.
“Over the first nine months of 2012, Canadian consumers spent almost half a billion dollars more on alcohol than they did over the same period last year – an increase of 3.6 per cent. If this healthy growth holds up through the holiday season, that would set the stage for record retail sales of more than $19 billion in 2012,” said Aaron Goertzen, Economist, BMO Capital Markets.
Sales of wine, beer, and spirits typically surge in December over 40 per cent above the monthly average – making it the highest volume sales month. By comparison, the retail sector is up 15-20 per cent from holiday shopping.
“Last December, the average Canadian adult spent just over $85 on alcohol; with around one-third of wine sales originating from domestic wineries, this represents a boon to Canadian producers,” said Mr. Goertzen. The increase comes from higher volume as Canadians serve more liquor at dinner and parties over the holiday, and buy more expensive premium brands for festive occasions and gifts. Spending $85 represents the equivalent of purchasing approximately 1.2 bottles of spirits, 2.6 bottles of wine and 27 bottles of beer.
Quebecers show the most pronounced holiday bump in alcohol sales, which rise around 65 per cent above average in December. The preference for wine in Quebec means that wineries should benefit. Ontarians also demonstrate a greater penchant for alcohol during December – much to the benefit of Ontario vintners, who have a strong presence on store shelves in the province. As for British Columbia, while its holiday bump of 30 per cent is somewhat lower than the national average of around 40 per cent, the province has an affinity for wine; Canadian wine accounts for nearly 50 per cent of wine purchased in B.C.
“Canadian wineries produce fine wines exhibiting unique and desirable characteristics that begin in Canadian vineyards with high quality fruit,” said David Rinneard, National Manager, Agriculture, BMO Bank of Montreal. “We anticipate that Canadian wineries will continue to reassert their position in Canada and showcase their quality products in other parts of the world.
“Despite some market challenges, our breweries have a long tradition of sourcing quality ingredients, including barley, wheat and hops produced here by Canadian farmers,” said Mr. Rinneard. “While there has been a rise in the price of many commodities, consumers can be confident that the Canadian food products that go into the making of their favourite beer continue to be among the best tasting, safest and highest quality in the world.”
Outlook for Canada”s Wine and Beer Sectors
Surge in Canada”s Wine Industry Blends Demographic and Geographic Strengths
- The Canadian wine industry grew an average of more than 11 per cent per year between 1995 and 2004
- Canadian adults in 2011 purchased an average of 22 bottles of wine, up from 13 bottles in 1995. One-third of wine consumed in Canada is produced by domestic wineries. The industry will continue to benefit as Canada”s population ages, and the adoption of bolder brands and marketing will likely reach younger consumers
- Sophisticated consumers are willing to buy more premium wines, providing an opportunity to produce higher-value products
- There is an increasing number of wine bars in Canada
Challenges Brewing in Big Beer Business Amid Opportunities for Growth
- Between 1995 and 2011, as wine rose from 18 per cent to 30 per cent of Canadians” total alcohol consumption, beer fell from 53 per cent to 45 per cent
- Traditional brewers face intensifying competition from wine and craft brewers. Since the 1990s, imports have tripled their market share in both Canada and the U.S., and domestic craft brewers have doubled production since 2003.
- Potential opportunities for growth include the virtually untapped female demographic, underscoring the importance of product specialization and branding that targets females – including low-calorie options and lighter flavoured beer-based beverages. At present, males account for approximately 80 per cent of beer sales
- Furthermore, rising commodity input prices will begin to pinch profits
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $525 billion as at October 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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