$166-million in government support up for grabs for Canada’s wine sector

The growth of Canada’s wine sector is a major success story, providing business opportunities for grape growers and wine makers, while contributing to the economic vitality of rural communities. But the industry has been hit hard by trade challenges, extreme weather and the lingering effects of the COVID-19 pandemic that saw wine tourism activity diminish and supply chain issues multiply.

As such, the recent government announcement of Wine Sector Support Program and the federal investment of $166 million in the Canadian wine industry is being welcomed as a much-needed boost that will help keep it competitive.

Beginning July 4, 2022, wineries across Canada were able to apply for a share of $166 million being offered to the sector over two years. Applicants will receive up to 80 cents per liter produced during the 2021 and 2022 vintages.

All licensed wineries in Canada that produce or contract out the production of bulk wine from primary agricultural products, such as grapes, berries, other fruit, dandelions, rice and sap, will be eligible for support under the program. Support will be provided in the form of a grant based on the production of bulk wine fermented in Canada from domestic and / or imported primary agricultural products in the previous year. Individual payments will be dependent on the total litres of eligible wine submitted to the program and individual applicants’ total eligible wine production.

A grape winery that produced 100,000 litres of wine in the past year for example, may be eligible to receive approximately $80,000 through the Wine Sector Support Program. This depends on the total eligible wine an individual applicant produces, as well as the eligible wine declared to the program through applications. Individual payments ultimately depend on the per litre payment rate for the program and applicants’ eligible production.

The launch of the program coincides with the June 30 termination of a 16-year excise tax exemption for wines sold within Canada and made exclusively with domestic fruit.

The tax exemption drew the wrath of several trading partners, including Australia, which filed a complaint with the World Trade Organization in January 2018 over what it saw as Canada’s preferential treatment of domestic wineries. Two years later, in July 2020, a partial settlement saw Canada agree to end the exemption.

Wineries are now required to pay the tax on all wines packaged from July 1, 2022, onwards. The rate is 68.8 cents per liter for wines with 7% or more alcohol by volume and 33 cents wines between 1.2% to 7%. Wineries with sales of less than $50,000 a year have been and will remain exempt.

The industry has been seeking support to replace the tax exemption, which is even more important now because the excise tax is set to increase at the annual inflation rate. With inflation hitting levels not seen since the 1980s, wineries could be paying upwards of 75 cents a liter next year.

The new grant program, while separate from the excise tax – government has been very clear about this with wineries – will neatly offset it and provide a little extra that producers can reinvest in their operations. It is a program that is similar to other programs that are used around the world to support the economic development, growth and quality of the industry.

There are approximately 800 licensed wineries in Canada, the majority of which operate in British Columbia, Ontario, Quebec and Nova Scotia. This investment and support is a critical step forward in helping restore certainty and confidence throughout the sector, and will enable wineries to reinvest in their businesses and employees. The program will run two years and producer participation will likely determine whether it is expanded or renewed.

Applications for the first year of the program can be submitted between July 4, 2022, and August 12, 2022. Licensed wineries must submit an application prior to the August 12, 2022 deadline to be eligible for funding.

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