Alberta lifts ban on American liquor imports — but local demand for U.S. booze isn't the same
Tariffs, buy-local sentiment likely to limit American liquor purchases
The Alberta government has lifted its ban on American liquor imports, but that doesn't necessarily mean there will be more U.S. booze landing on shelves anytime soon.
Following the province's lifting of a three-month ban on American liquor imports, provincial alcohol regulator Alberta Gaming, Liquor and Cannabis (AGLC) announced on June 6 that it will once again accept liquor products from the United States.
But with a 25 per cent tariff on all American alcohol imports, the buy-local sentiment by Canadian consumers may not be going away anytime soon.
Andrew Ferguson, owner of Kensington Wine Market, said that after over two decades in the liquor business, he hasn't seen anything like the consumer backlash stemming from the Canada-U.S. trade war.
"If people aren't buying American products like they were before, they're not going to buy them at a premium," he said on price mark-ups due to tariffs.
He said that his store's American liquor sales, which prior to the trade war accounted for around 10 per cent of business, have plummeted.
With that in mind, Ferguson's not eager to make any major purchases from down south.
"When there's no certainty for us in terms of what our cost is going to be, whether people are even going to want it, it's difficult to make a decision, so you don't," he said.
"If people aren't buying them, we're not gonna restock them."
He called the lifting of the import ban "a non-decision in some ways," as even with the ban lifted, the 25 per cent tariff on U.S. alcohol imports is unlikely to motivate local importers to purchase American liquor.
"Margins in the liquor industry aren't huge for either the importers or the retailers," said Ferguson.
"Maybe if you're Jack Daniel's, you can afford to eat that tariff cost and you're going to want to probably have your products in stock for Stampede," he said. "But for a lot of the small and medium-sized players, it's going to be too much of a burden to eat that, so they'll just wait until this passes over."
Matt Stortz, general manager of Cork Fine Wine, Liquor & Ale in Calgary, said he doesn't expect the lifting of the import ban to have a significant impact on retail operations at his store.
He said that while demand for American liquor has noticeably dropped, U.S. products have remained on his shelves.
"We did pause buying American products for a couple weeks, but in general, we carry the products that our customers love from the people that we know that make good quality things," Stortz said.
He said uncertainty remains around what retail pricing of American liquor will look like with tariffs, but pointed to a recent markup on Alberta wine prices as a more immediate issue for him.
Significant drop in U.S. liquor imports
Amid bans and restrictions implemented by other provinces, American liquor imports into Canada have taken a noticeable hit.
Canada, which according to the American Association of Wine Economists was the largest export market for American wine last year, has seen a 93 per cent drop in wine imports from the States.
Last November, U.S. wine exports to Canada were valued at $54 million. This April, they plummeted to $2.7 million.
U.S. liquor imports are down across the board in Canada — malt and beer imports have dropped 50 per cent since last April, while distilled liquors are down 56 per cent, according to data from the U.S. Census Bureau.
Yvonne Martinez, president of the Alberta Liquor Store Association, said the decline could largely be attributed to other provinces such as Ontario and B.C., but that the buy-local sentiment in Alberta has certainly had an impact.
"Here in Alberta, we definitely see people moving towards Canadian products … or made anywhere else but the United States," she said.
She said that "from the perspective of the liquor industry," the province's decision to lift the ban "was a good move."
But while stores with customers looking for American products may benefit, the buy-local movement across the province and country remains dominant — though it's unclear how long that will last, Martinez said.
"Whether that will change now that the premier made her announcement, and depending on what happens with the United States and Canada and their trade talks, I can see them changing their mind and maybe giving [American products] another look," she said.
Province encourages shopping local
While AGLC is now permitted to accept American liquor imports, the province is still promoting the buy-local sentiment, said Service Alberta and Red Tape Reduction Minister Dale Nally in a statement.
"As always, we encourage Albertans to continue supporting local producers, even as more U.S. options return to store shelves," the minister said.
He said the decision to lift the import ban "sets the stage for more constructive negotiations ahead of a Canada-United States-Mexico Agreement renewal, potentially leading to increased trade opportunities and economic growth for Alberta."
He also pointed to Prime Minister Mark Carney's efforts to reset the U.S. trade relationship, as well as Alberta's unique privatized liquor market, as being factors behind the decision.
"We are focused on highlighting Alberta's role as a responsible and collaborative trading partner and will continue working alongside other provinces to advocate for a tariff free relationship," he said.
ABOUT THE AUTHOR
With files from Arzouma Kompaore, Colleen Underwood and Robson Fletcher