The Canadian provinces’ decisions to pull U.S. spirits from their store shelves in retaliation to the trade dispute with the United States has resulted in a significant sales decline for U.S. spirits products as well as other imported and domestic spirits products, according to a new economic analysis by Spirits Canada.
The analysis shows that since March 5, when Canadian provinces announced they would no longer carry U.S. spirits products on their store shelves, through the end of April, sales of U.S. spirits in Canada fell by more than 66 per cent and total spirits sales in Canada declined by more than 12 per cent.
“The North American spirits sector is highly interconnected, and the immediate and continued removal of all U.S. spirits products from Canadian shelves is deeply problematic for spirits producers on both sides of the border,” said Cal Bricker, president and CEO of Spirits Canada. “The current disruption demonstrates the critical importance of maintaining open, reciprocal trade relationships that benefit consumers, businesses and government revenues in both nations.”
Several Canadian provinces pulled U.S. spirits from liquor stores following U.S. President Donald Trump’s imposition of a 25 per cent American tariff on certain Canadian imports. Though designed as a diplomatic rebuke, the policy triggered significant economic repercussions across Canada’s spirits sector. The analysis cited several key impacts since removing U.S. spirits products. From early March through the end of April:
- U.S. spirits sales declined 66.3 per cent
- Canadian spirits sales declined 6.3 per cent
- Other imported spirits sales declined 8.2 per cent
- Total spirits sales declined 12.8 per cent
In March, total spirits fell sharply by 20.6 per cent year-over-year following the immediate delisting of U.S. products. In April, Canadian spirits sales increased 3.6 per cent and other imported spirits sales rose 3.7 per cent, but the gains did not compensate for the significant losses from the U.S. product removal.
The overall spirits category remained down 3.3 per cent year-over-year in April, a decline of $13.9 million from $419.4 million to $405.5 million, demonstrating that substitute products cannot fully replace the market demand previously filled by U.S. spirits. Additionally, the replacement products tended to be lower-margin offerings, significantly impacting the profitability of the Canadian spirits sector.
Ontario, Canada’s largest spirits market, bore a disproportionate share of the impact with U.S. spirits sales plunging 80 per cent since removing the products in the province. Total spirits sales in Ontario were down 20 per cent, including a 12.8 per cent decline in Canadian products and 14.1 per cent decline in non-U.S. products.
“For decades, Canada and the U.S. have been the model of fair and reciprocal trade for spirits, and both the U.S. and Canadian hospitality industries have flourished as a result,” said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States. “It’s time to put American spirits back on the shelves throughout Canada. This data makes clear that the decision by Canadian provinces to pull American spirits products off their store shelves is not only harming American distillers, but it’s needlessly reducing revenues for the provinces and hurting Canadian consumers and hospitality businesses.”
Spirits Canada and the Distilled Spirits Council of the United States. are working together to urge their respective governments to negotiate an agreement that continues to foster a thriving spirits industry between the two countries through permanent zero-for-zero tariffs on spirits products.
