December 9, 2022

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Canada, two-sided market: Value is rising, but young people are “running away” from alcohol

Canada has climbed ranks after ranks in recent years and has become the fifth outlet for Italian wine exports, with imports reaching 134.5 million euros in the 4 months to 2022, thanks to growth. 26.7% during the same period last year. A country that enjoys a certain economic stability and widespread well-being is in continuous development, but looking at it more closely and focusing on alcohol consumption, it is more complicated than one might imagine. The words used by “Vine Intelligence” in their analysis of the North American country: irony.

But let’s go properly. The Canadian wine market represents both the best and worst possible, depending on the perspective. Marked by glass-half-full consumption, it focuses more on sparkling wines and premium wines and is represented by a demographic profile with almost two-thirds of regular consumers (those who drink wine at least once a month) under the age of 55. On the other hand, the other side of the half-empty glass coin: the overall number of wine lovers has been steadily declining since 2017, and the consumption of wines has stagnated for five years and the next five. At the same time, unpopular ready-to-eat drinks, popular among young people, continue to grow, eroding the share of both beer and, to a lesser extent, wine.

Turning to young people, 19-24 year olds accounted for 9% of drinkers in 2017, a drop to 5% five years later. The dynamic is particularly stark among the French-speaking population in Quebec, Canada, which has dropped from 10% of the total to just 3%. In this environment, the weight of the epidemic and the closures of the premises are evident, where children, apart from socialization, learn to know and appreciate alcohol. In this sense, Generation Z has a decidedly positive opinion of wine, which they consider fashionable and sophisticated, but also too expensive and complex, which is why 40% of them drink it only 1-3 times a month. Winning over Generation Z in Canada, as in other markets, is a real challenge that includes a certain ability to innovate.

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Perhaps by focusing on sustainable and organic viticulture, Canada has more admirers and therefore consumers, which will double between 2019 and 2021. Generation Z leads the way: 25% of them bought organic or natural wine in the last 12 months. But the opening goes much further, and embraces alternative formats such as cans and single-serve bottles, in addition to non-alcoholic wine, which is purchased by 12% of youth. Interesting, albeit paradoxical, areas where the wine industry should focus to reach younger consumers.

On the other hand, in the mass market, the most clear success story of the last five years has been Prosecco: the volume imported increased by 14.9% from 2016 to 2021, and the projections for the next five years speak for more. + 11.6%, a slowdown that does not affect the state of Italian bubbles, will be lively in the sparkling wine market. On the other hand, the trend is different for still wines, a stagnant market, which records a decline in New World countries – Chile, Argentina, Australia and the United States. Canadian wine is also faring worse, with a difficult five-year period expected after ten years of growth in volumes consumed.

Broadening the analysis of alcohol consumption in general, the performance of wine, which has grown by 23% in the last five years and will increase by 7% in the next five years, is better than beer, losing ground to spirits, ciders and ready-to-drinks. Although still wine consumption is flat, average prices continue to rise, so that premium wines (above 14 Canadian dollars) represent 25% of the market, and the forecast is for steady and continued growth. Price is medium.

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In addition to price, some interesting trends are resisting, the most obvious of which is the broadening of horizons away from the most popular flags and towards something else. In the past six months, significantly less regular wine drinkers have opted for core whites such as Sauvignon Blanc, Chardonnay, Riesling and Pinot Grigio, while the share of those betting on Albariño, Torrance and Vognier has grown. The same has happened to reds, with Merlot, Pinot Noir and Shiraz seeing a decline, while Grenache seems to be enjoying something of a renaissance. Canadian consumers have entered a “discovery” phase, despite the fact that knowledge levels have declined over the past 12 months, and the further negative effect of restrictions on purchases during Covid and lockdowns.

At the channel level, retail accounts for 90% of total sales, with monopoly liquor stores being by far the most used channel., but finally there are the first signs of a new online industry: 18% of regular wine consumers bought wine online in the last six months, 4% more than the previous year. A very vibrant e-commerce sector, combined with a willingness to innovate and promote different formats and styles, will help the Canadian wine world (and beyond) achieve what seems to be one of its main objectives: winning over millennials and Gen Z consumers..


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