Rethinking growth: How Canadian wineries can adapt to a shifting landscape

Canada’s wine industry is experiencing a shake-up. Economic pressure, changing preferences, and uncertainty around trade and regulations force producers to adapt faster than ever. While some challenges are beyond anyone’s control, others present a clear opportunity for those ready to act.

For many wineries, this isn’t uncharted territory. Margins have always been tight, while regulatory hurdles and distribution limits have long restricted domestic growth. The pace of change is faster. The risks are higher, yet the opportunities are real for those prepared to act.

Here’s what you need to know to stay ahead of the curve.

A market flooded with competition

Globally, the wine industry is dealing with a supply problem. There’s more wine on the market than demand can absorb, and countries with significant production capacity are feeling the pressure. Some are subsidizing market efforts to stay competitive, helping their producers secure premium shelves in international markets.

Canadian wineries, which already face higher production costs and complex distribution laws, are finding it hard to match the level of investment necessary to achieve economies of scale. Competing on quality and experience — not just a price — has never been more important.

Consumer tastes are moving on

While older consumers are still loyal to wine, younger Canadians are looking elsewhere. The rise of canned cocktails, hard seltzers, and alcohol-free beverages has changed the conversation.

Even among those still drinking alcohol, the trend is moving toward moderation. In 2018, more than 80 percent of Canadians said they had consumed alcohol in the past month. By 2023, that figure dropped to 75 percent. The decline isn’t catastrophic — but it’s steady, and younger generations primarily drive it.

Beyond product preferences, health trends are influencing choices. Many consumers are cutting back on alcohol entirely or drinking less frequently. These shifts are not just generational — they reflect broader conversations around wellness, sobriety, and balance. Wineries can’t afford to ignore this shift, and some have met this challenge by offering low or no alcohol alternatives.

Production innovation, branding, and direct engagement with this younger market will be key. A well-crafted pinot noir may not resonate with a 30-year-old the same way a low-alcohol rosé spritzer or a sparkling hybrid might. It’s time to experiment with your product mix and your messaging. Think about how you can meet consumers where they are rather than trying to pull them back to traditional formats.

Tariffs cut both ways

The threat of retaliatory tariffs continues to hang over the industry. In response to the latest U.S. trade actions, some provinces have pulled American liquor products from shelves, creating more room for Canadian wines. That’s good news — more visibility at retail can drive sales and boost awareness.

In just five weeks since tariffs re-entered the spotlight, Ontario wine sales have jumped by 30 percent. The Liquor Control Board of Ontario’s decision to pull American products from shelves, paired with the Buy Canadian sentiment, is putting domestic bottles in front of curious shoppers. This sudden spotlight offers a rare chance to win over new customers. And if even a portion of that market share sticks, it could mark a major turning point for the industry. 

But there’s a catch. The glass bottles used by many wineries are primarily sourced from Indiana and China. If American glass becomes a target in future tariff rounds, prices could rise sharply. Since American bottles are typically higher quality, there may be limited substitutes without further offshore purchases.

The impact of higher packaging costs and possible supply chain interruptions is magnified in an industry with already narrow margins. For many, a spike in bottle costs could make the difference between profitability and loss. If you haven’t already done so, this is the time to evaluate your supply chain. Understand where your packaging comes from and what your options are. Engage with suppliers and build contingencies.

Even if tariffs don’t affect your current stock, knowing your alternatives can give you leverage in future negotiations — and avoid last-minute scrambling that could delay production or impact quality.

Regulatory shifts (or lack thereof)

Another layer of complexity comes from the patchwork of alcohol regulations across Canada. In Ontario, speculation about potential changes to alcohol sales created uncertainty in 2024. Without clarity, many wineries are reluctant to make big investments.

Across the country, interprovincial trade restrictions remain a stubborn barrier. While Premiers have expressed support for removing them, meaningful reform hasn’t materialized. For the time being, most wineries can’t count on those changes to boost sales in other provinces.

Still, that doesn’t mean you should wait. Use this time to get ahead of the curve. If and when regulations do change, having your systems, logistics, and compliance processes ready could be the edge you need to expand into new markets quickly and efficiently.

Direct-to-consumer: A window worth seizing

The rise of local travel and tourism presents a unique opportunity. With fewer Canadians heading abroad, potentially more will explore their own backyards, including wine country.

This resurgence in domestic tourism could be a game changer. Wineries that provide a memorable, curated experience — tastings, vineyard tours, exclusive events — are more likely to convert casual visitors into loyal customers. But that connection doesn’t have to end when they leave the vineyard. Offering a seamless e-commerce experience, with easy access to online ordering and delivery options, can help you extend that relationship beyond the visit. 

Now may be the time to enhance your tasting room experience, reimagine how you engage visitors, and invest in wine clubs that keep customers connected well after they’ve gone home. Personalized communication, subscription options, and exclusive offers can keep your brand top of mind and encourage repeat purchases throughout the year. 

Direct-to-consumer sales not only boost margins but also create stronger brand loyalty. You may leave revenue on the table if you’re not actively promoting online orders, subscription models, or exclusive experiences.

Preparing for interprovincial growth     

The possibility of selling across provincial borders is a long-standing goal for many wineries. When those doors finally open, the opportunity will be significant — but so will the responsibilities.

You’ll need to manage taxes, remittance processes, and logistics. If your team isn’t prepared, the administrative burden can quickly become overwhelming. This is an opportune time to evaluate your capacity. Consider consulting advisors to help identify where you’ll need support and what systems will need upgrading.

Laying that groundwork today will put you in a position to take advantage of changes the moment they happen.

Profit starts with precision

Not all growth requires new customers or markets. Often, the most immediate gains come from understanding the numbers already in front of you.

Start by getting granular with your costs. Which products bring in the highest margins? Which ones consistently fall short? Identifying underperformers allows you to shift focus and free up resources for what’s working.

Evaluate every step of your operation, from packaging and production to vendor agreements and staffing. Even small inefficiencies can add up. When you know the true cost of production, you can make smarter decisions about pricing, product mix, and scale.

The more clarity you have, the more control you gain. In a tight-margin environment, that kind of insight isn’t just helpful — it’s essential.

The industry is not short on challenges, but it also isn’t short on potential. Canadian wine has a unique story to tell. It’s about how you adapt that story to today’s and tomorrow’s realities.

This is the time to get focused. Review your costs. Reassess your markets, and think about what your customer base will look like five years from now and begin building the business they’ll want to engage with.

Staying informed, acting early, and above all, staying flexible — is how Canadian wineries will persevere through uncertainty.