The slow, stunning retreat of Canadian alcohol
Canada is sobering up, quietly but progressively. Ontario’s latest LCBO Annual Report offers a remarkably honest portrait of a province—and indeed a country—entering a new era of alcohol consumption. The topline conclusion is unmistakable: Canadians are drinking less. Not sporadically, not because of a temporary shock, but as part of a sustained behavioural shift driven by economics, demographics, social norms, and increasingly, the availability of legal cannabis as a substitute.
The numbers in Ontario are striking. Total alcohol volumes sold through the LCBO fell by 3.9 per cent last year, dropping from 622.7 million litres to 598.4 million litres—a 3.8 per cent reduction. Customers still walked into stores—transactions were actually up by more than two per cent—but they consistently purchased less. This is the classic signature of moderation: frequency remains stable while quantity shrinks.
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Each major category tells a similar story. Beer, long the anchor of the Canadian alcohol market, continues its gradual decline, with provincial volumes falling 7.1 per cent in 2023–24. Even within the LCBO’s own system, beer sales slipped by $7.3 million. Wine consumption followed the global pattern of contraction, down 5.9 per cent in volume in Ontario, representing a drop of nearly eight million litres. Premium wines were hit even harder: the Vintages segment declined by 5.3 per cent, a clear indicator that consumers are trading down—a familiar reaction in periods of high inflation. Spirits also experienced a downturn, with volumes falling by 4.3 per cent, driven in part by a shift toward smaller formats and lower price points. It is a broad, cross-category retrenchment.
Yet amid this retreat, one segment stands out: ready-to-drink beverages. While traditional categories struggle, RTDs surged with a 9.5 per cent increase, adding $64.5 million in incremental sales. These low-sugar, lower-alcohol, flavour-driven drinks have now captured roughly 63 per cent of all spirit-based volume sold in Ontario.
What’s remarkable is not that Ontario shows these trends, but that every province in Canada is now mirroring them. In British Columbia, beer consumption has fallen by nearly nine per cent over the last two years, and wine sales have contracted by more than four per cent. Alberta experienced a 5.4 per cent drop in beer sales last year, while its RTD category expanded by 12 per cent—its strongest performance across any alcohol segment. Atlantic Canada is moving in the same direction: Nova Scotia’s NSLC recorded a 3.6 per cent decline in alcohol volumes, including a 6.9 per cent reduction in beer and a 4.5 per cent decrease in wine. Newfoundland and Labrador saw similar decreases. Even Quebec, historically Canada’s most resilient wine market, is cooling. The SAQ reports a 2.3 per cent decline in total litres sold, with sparkling wines dropping by about eight per cent and still wines showing similar retrenchment.
READ: How grocers can prepare for Ontario's alcohol expansion
National retail numbers confirm what the provincial data already suggest. Statistics Canada reports that alcohol volumes declined by roughly 3.3 per cent nationally last year—marking the third consecutive year of falling consumption. Canada has never experienced a three-year slide of this magnitude in the postwar era. This is not a blip; it is structural.
Three forces are driving this transformation. The first is the rise of moderation as a social norm. Younger Canadians consume significantly less alcohol than previous generations; Gen Z drinks 20 to 30 per cent less than millennials did at the same age. This shift is profound and will reshape alcohol markets for decades. The push for warning labels—like Senator Patrick Brazeau’s Bill S-202—almost trails the trend rather than leads it; Canadians are already moderating on their own.
The second factor is economic pressure. With food inflation still elevated and rent rising, consumers are more price-sensitive than ever. The LCBO explicitly notes a pivot toward lower-priced brands and smaller formats, both classic signs of down-trading in a period of constrained disposable income.
The third driver is innovation in RTDs, which have effectively cannibalized consumption from beer and spirits. Their strong performance is not because Canadians are drinking more, but because they are reallocating their limited alcohol “budget” toward products perceived as lighter, more convenient, and more lifestyle-compatible.
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A fourth, often-overlooked factor is legalized cannabis. Since 2018, cannabis has become a credible substitute for many consumers—particularly younger adults—seeking relaxation without the calories, the hangover, or the social stigma increasingly associated with alcohol. Provinces with higher cannabis retail density have seen some of the most pronounced alcohol declines. This substitution effect is subtle but real, and it is now part of the competitive landscape.
The broader lesson is that Canada’s alcohol market is recalibrating. The country is moving toward lower-volume, higher-margin consumption, with a pronounced emphasis on moderation, wellness, and substitution. For governments, retailers, and suppliers, this demands a strategic rethink. Revenue models built on steady volume growth must adjust. Restaurants will feel the impact as high-margin drink sales soften. Producers relying on traditional beer and wine categories will need to innovate or risk irrelevance. And policymakers, who often treat alcohol consumption as a stable variable, must now grapple with how sustained volume declines will affect taxation, provincial monopolies, and public-health planning.
Canada is entering a new chapter—one where consumers drink less, think more, and choose differently. The industry, like its customers, will need to adapt.
