Skip to main content

Scrapping retail tax should invigorate Ontario's wine industry

Elimination of the tax and new retail opportunities welcome news for wineries

Niagara's grape and wine industry is raising a glass in a toast to the provincial government for its recent announcement about the elimination of a 6.1% tax on products sold at winery retail stores.

This comes as part of a larger agreement that consumers will be able to buy beer, wine, cider, coolers, seltzers and other low-alcohol beverages at participating convenience, grocery and big box stores across the province, starting in 2026.

Since 2018, Niagara Falls NDP MPP Wayne Gates has introduced legislation three times at Queen's Park, targeting the 6.1% of sales that go to the government from retail sites at Ontario wineries.

Gates told The Local there were some wineries in the province that are so impacted by the "unfair" tax that they have been on the brink of going out of business.

READ:  Is Canada sobering up?

"We knew there was some urgency to this that's why we introduced it again," he said, also noting he believes that a media event with speakers from Niagara's wine industry in September at Queen's Park made a difference.

He called the recent announcement a "big win for everybody," adding that there were many people involved including Niagara-on-the-Lake Regional Coun. Andrea Kaiser, industry stakeholders, as well as organizations such as the Ontario Grape Growers, Wine Growers Ontario and Ontario Craft Wineries.

"We all worked together on it," said Gates, also pointing to involvement from the province's craft beer industry in the overall agreement.

Gates is hoping the wine tax will be done away with as soon as possible, telling The Local he would like it to become law by March 2024.

"We need this to happen immediately. We can't wait until 2026," said Gates, adding that this new relief will allow wineries to expand their operations.

Kaiser, a first-term regional councillor, has worked in the Niagara wine industry for 20 years. She is employed with Reif Estate Winery and also works as a consultant for various wineries. As well, she has her own brand of wine, Drea Wine Co., which is sold at Reif.

In late July, she brought forward a motion to regional council to petition the province to eliminate the 6.1% tax, which she said is something that doesn't exist in any other province or wine-making region of the world.

Her motion was supported unanimously.

"There was a lot of movement" on potential changes to how alcohol is sold in Ontario back then, she said, and the recent announcement is the result of a "perfect storm" of concerns being raised by wineries and industry groups, along with politicians.

READ: Three trends to watch in beverages

"It was just a matter of those things coming together, and all those industry voices coming together."

In B.C., VQA winemakers have a 19% share in the industry, while those in Ontario only 7.5%, said Kaiser.

Scrapping the 6.1% tax will allow Ontario winemakers to reinvest in their companies, a move that is "absolutely essential to the financial stability and health of small wineries."

Kevin Watson, owner of K.J. Watson Farms in Niagara-on-the-Lake, is also pleased with the recent announcement.

"When government and politicians are listening to your concerns, it's always a good thing," said Watson, whose family started their local grape-growing operation in 1978.

He said the tax going to the wayside, as well as plans for retail opportunities to expand into convenience and grocery stores, is also welcome news.

"It's about encouraging wine sales, and you can't sell wine without grapes," he told The Local.

Will this create more jobs? "I think in time it will," said Watson.

The incoming changes should breathe new life into the industry, he added.

"Wineries need to gear up, expand their brands, and maybe get some more listings in the LCBO and grocery stores," he said, also pointing to it allowing wineries to expand marketing and advertising projects.

Two-thirds of Ontario's grapes are grown in Niagara-on-the-Lake, said Watson.

READ: Non-alcoholic brands ramp up production amid surging demand 

The province also says it will enhance the Vintners Quality Alliance wine support program beginning in 2024-25 for up to five years, to 2028-29, to support the growth and sale of Ontario-grown grapes, a step praised by Ontario Grape Growers chief executive officer Debbie Zimmerman.

"It not only provides stability for both farmers and wineries, but it will also fuel growth," she said in a news release.

The elimination of the retail tax will invigorate Ontario wineries and make it possible for them to reinvest in their businesses and drive innovation. "Together, we toast to a thriving grape and wine landscape in Ontario," said Zimmerman.

A new, "more open marketplace" will introduce up to 8,500 new stores where ready-to-serve products like beer, wine and seltzers can be purchased, and is the largest expansion of consumer choice and convenience since the end of prohibition almost 100 years ago, according to the province's news release.

Spirits such as vodka, gin and whisky will continue to be sold at the LCBO, the province said.

Advertisement - article continues below
This ad will auto-close in 10 seconds