Niagara is the largest wine production region in Canada.
Niagara is the largest wine production region in Canada. With a steady annual 3.2% growth rate in sales, Ontario’s wine industry is a reliable accelerator for economic growth and job creation in the Niagara Region and the province. In 2019, our industry contributed over $1 billion to Canada’s GDP. Today, Niagara is primed to become a flourishing, robust economic region and a world-class wine and tourism destination.
Ontario Craft Wineries, Tourism Partnership of Niagara and Wine Growers Ontario have come together to commission a Deloitte report that reveals the Ontario wine sector is well positioned to drive sustainable economic growth for the region, the province and the country. The purpose was to assess the potential value and contribution of the Ontario wine sector and its ecosystem to the Niagara Region. Research shows that the wine industry plays a unique and leading role within the “Niagara Cluster,” a region made up of an extensive network of industries where intense economic activities can boost innovation and growth. The analysis demonstrates how the Ontario wine sector is well positioned to drive sustainable economic growth for the region, the province and the country.
The economic contribution of the wine sector reaches far beyond the basic economic footprint stemming from its direct activities. Research of comparative, world-class wine-producing regions shows that wine sectors accelerate growth and generate economic benefits in entertainment, food, transportation and hospitality; education and skills to work in these industries; and suppliers for manufacturing, agriculture, and construction. Additional benefits could be realized from adjacent sectors: economic enhancement to sustainable practices in farming; economic development and construction opportunities; transportation; visitor support; education infrastructure expansion; and improved sustainable practices within the manufacturing sector. All are part of Niagara Region’s economic ecosystem, where growth in one area of the economy flows to all areas, creating a ripple effect that is felt throughout every corner of the region’s economy.
The Niagara Cluster
UNCORK BEST PRACTICES
The Deloitte study included a scan of the world’s leading wine regions in North America and Europe to identify global industry best practices that support cluster growth and development.
The study identified four critical global best practices for wine industries:
- Dominate domestic market share
- Connect with tourism to create world class destinations
- Incentivize investment in the wine sector through competitive tax policies
- Incentivize and support capital investment in agriculture and hospitality
The wine industry as a catalyst for growth in other leading jurisdictions
A study in opportunity: Kelowna B.C.
A comparison between Niagara and Kelowna is telling: Despite its steady sales growth over the last 15 years, Ontario’s wine industry lags significantly behind B.C.’s in terms of overall growth and stage of development. Between 2009 and 2019, Niagara’s real GDP grew by only 9.7% compared to Kelowna’s growth of 41.4%. At the same economic growth rate as Kelowna, investment in Niagara’s regional economy during those 10 years would have been an estimated $4 billion more, and real regional GDP $4.5 billion greater than the amount realized in 2019. Cumulatively, from 2009 to 2019, Niagara Region would have gained an additional $20.5 billion in real GDP. Increasing the Ontario wine sector’s share of the domestic market to equal B.C.’s could provide a cumulative $800 million in additional GDP to Ontario’s economy over a 10-year period.
Best-in-class wine regions around the world have this in common: Governments champion their wine sectors.
Our provincial and federal governments are critical partners in advancing growth and development of the wine industry and other key sectors in the Niagara cluster. Investment and supportive policies, grounded in global best practices, will help the wine sector reach its economic potential, and create the opportunity for broader regional economic development and innovation.
UNCORK OPPORTUNITY
The Niagara cluster has the opportunity to become a flourishing and robust economic region with a world-class wine, tourism and agricultural economy. Cross-sectoral collaboration, greater investment and enhanced regional economic development policies could drive significant economic uplift for Niagara Region in the next 25 years. We need to uncork opportunity so Ontario and the Niagara Region can grow and flourish.
UNCORK POTENTIAL
Today, Ontario’s wine sector contributes to more than $1 billion annually to Canada’s GDP—over $650 million in direct contribution with indirect and induced impact of over $350 million. Given the right conditions, enhanced provincial and federal investment, and robust regional economic policies, future potential uplift for the Niagara Region could amount to at least $8 billion in additional real GDP in the next 25 years, a 35% increase in regional GDP above baseline projections.
UNCORK GDP
Leading wine jurisdictions have margin and distribution policies in place that enable them to dominate their domestic market share. Increasing the Ontario wine sector’s domestic market share by sales of 33% to that of British Columbia’s domestic market share by sales of 47% could provide an additional $70 million in GDP to Ontario’s economy now, and more than $800 million in additional GDP over a 10-year period.
UNCORK REVENUE
Ontario’s wine industry delivers consistent and impactful revenue streams. With a steady annual growth rate of 3.2% in sales—more than twice Ontario’s GDP growth rate—our industry is a reliable economic contributor and a stable anchor for future economic development.
UNCORK PRODUCTION
Niagara is the largest wine producing region in Canada, responsible for 90% of grape production in Ontario and 80% of Canada’s total grape and wine production. Investment in Niagara’s wine region will have a positive economic impact that will extend to Canada’s wine industry as a whole.
UNCORK BEST PRACTICES
Global best practices entail dominating domestic market share, connecting wine industries and tourism to forge world-class destinations, implementing competitive tax policies that incentivize investment in the wine sector, and incentivizing and supporting capital investment in agriculture and hospitality.
UNCORK IMPACT
When we consider the food and hospitality industry, cultural and entertainment industry, and tourism industry along with the wine sector, we recognize that the contribution of this ecosystem is much larger than the wine sector in isolation.
UNCORK COMMUNITIES
A thriving wine region plays a key role in creating a higher standard of living in beautiful surroundings, promoting growth while preserving local character. It provides compelling communities for housing, and creates jobs in the region. Today, there are more than 7,200 full-time equivalent jobs in the Niagara wine industry alone, before accounting for indirect employment in adjacent industries.
UNCORK GROWTH
Ontario’s wine industry is uniquely suited to leverage the Niagara cluster and the region’s strong infrastructure to facilitate future growth. Post-secondary institutions contribute economic benefits through employment, enrollment and research. Niagara Falls is an iconic, reliable international tourist draw. The region’s physical infrastructure provides a solid foundation for both travel and shipping, with access to major highways, international borders, international airports and the province’s largest port.
UNCORK COLLABORATION
The provincial and federal governments are critical partners with Ontario’s wine industry and other key sectors within Niagara Region—as investors in, and champions for, our regional potential and contribution to Canada’s economy. Collaboration with government and key industries in the region will foster the innovation, adaptation and growth needed to achieve success.
UNCORK BARRIERS TO SUCCESS
Despite the current success of our region, there are a number of obstacles and challenges to realizing the full potential of the Niagara cluster: the tax regime for wine; the need for greater representation for Ontario wines at the LCBO via marketing and distribution support; adaptation toward climate change and embedding global best practices; and, the Ontario government’s plans to expand wine retail into grocery and convenience stores, potentially changing the alcohol retail landscape significantly. The vertical integration of the industry means that changes to wine retail will impact the entire sector, including its profitability and production.
Now, more than ever, we need enhanced investment and supportive policies—prioritizing domestic industry, incentivizing investment, embedding best global practices—to achieve the level of growth, development and success enjoyed by Kelowna and other leading wine regions around the world.
The key to realizing greater economic opportunity in the Niagara region is to remove existing barriers that only the Ontario wine industry faces. Three key barriers:
The tax burden on Ontario wine is too high: Ontario’s wine industry is the most heavily taxed in the world. Ontario’s wine producers also don’t have direct delivery privileges in their own markets. What’s more, leading wine jurisdictions from around the world receive billions of dollars in subsidies.
Retail expansion must be done right or else it threatens the future of Ontario wine and further supports heavily subsidized, foreign wineries. The GDP impact of a private retail model on domestic wine sales and tourism was estimated to be a negative $760M in GDP at year 10 after retail expansion, before indirect and induced effects.
The LCBO holds the future of the domestic wine industry in its hands. It must make our domestic industry its priority—or stunt its growth. The market share for Ontario wines has remained relatively flat over the last 20 years. A major contributing factor is the lack of representation on LCBO shelves. If the Ontario wine’s market share by sales (33%) increased to that of B.C.’s market share (47%), it could provide $800 million in additional GDP over a ten-year period to Ontario’s economy.
It’s time to uncork Ontario by adopting best-in-class standards established by the world’s premier wine regions. Bringing these global best practices and policies to Niagara would mean billions for our region and all of Ontario.
Help Us Uncork Ontario
Download the Executive Summary or the Full Report to learn more about Ontario’s world-class wine industry and how it is a catalyst for Niagara Region’s economic growth.
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