Ontario’s alcohol market presents an illustrative case of the opportunity in front of Canadian businesses should U.S. tariffs come to pass.ETHAN CAIRNS/The Canadian Press
Michael Miller is the director of strategy at Canadian media conglomerate Anthem Sports & Entertainment.
Alexander Baker has worked on a variety of mergers and acquisitions and joint ventures in Calgary, Palo Alto, Calif., and now Dallas, where he is an attorney at Vinson & Elkins L.L.P. The views expressed in the article are his own.
The exact economic fallout of the U.S.-Canada trade war, given the fluidity of the situation, remains uncertain. However, for Canadian brands, the initial bridle of nationalist sentiment – as seen with the boycott lists circulating on social media – and coming market changes present a clear opportunity. Businesses can seize the moment to reset consumer preferences and capture market share for the long-term.
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Ontario’s alcohol market presents an illustrative case of the opportunity in the wake of Premier Doug Ford’s direction to the LCBO to “clear off every bit of U.S. alcohol off the shelves” should tariffs be introduced.
The LCBO generated $7.5-billion in revenue for the fiscal year ended March 31, 2024, with U.S. alcohol sales being a material contributor. In the LCBO’s latest quarterly trade update for the period ending Oct. 12, 2024, U.S wine represented 20 per cent of all wine sold and four of the top 10 selling wines by net sales.
Notwithstanding the famed wine-making skills of the French and the whisky expertise of the Irish and the Scottish, the LCBO imports more wine and more spirits from the United States than any other country, generating sales of $867-million from U.S. products (excluding sales through specialty services) during their fiscal 2023.
Mr. Ford’s threat to remove an entire American product category would provide an extraordinary void for Canadian brewers, distillers and vintners to fill.
Such blanket product bans are also done by liquor agencies in other provinces, but they will not be the norm for other products. Nonetheless, other businesses can count on other retaliatory measures to hobble their competition.
With the countertariffs that have been announced, a swath of products will potentially see meaningful price changes, causing consumers to reflect on their long-standing purchasing patterns. Tariffs are a market disrupter, and made-in-Canada brands can exploit this disruption to their benefit.
They can, after all, exploit this moment even without any tariffs or other measures that make corresponding U.S. products less competitive. Amid the wave of “buy Canadian” sentiment, Canadian politicians are already trying to steer consumer habits. Both provincial and federal leaders are emphasizing buying Canadian-made products. Brands can lean into the nationalist wave but must actively communicate to consumers their Canadian roots if they want to win consumers willing to disrupt their long-standing patterns.
This can apply even if the company itself is not Canadian. We saw this when Kraft-Heinz Canada had to issue a press release on Jan. 23 emphasizing that their Heinz ketchup is in fact produced in Quebec and made with tomatoes sourced from Ontario (though the company later clarified that 10 per cent of their ketchup is imported from south of the border) after Prime Minister Justin Trudeau suggested consumers could switch to Canadian-made French’s branded ketchup. (The notion that Heinz ketchup is not Canadian was further echoed on CBC TV’s This Hour Has 22 Minutes, but we understandably hold them to a lower bar.)
In the wake of the potential tariffs, we should expect some corporate combat in brand promotion given the complexity at play. The Canadian and U.S. economies are deeply entwined, doing $3.5-billion in trade each day, and many U.S. brands’ products are made in Canada, while many Canadian brands’ products use American inputs.
Though the threat of tariffs looms large, there is opportunity in chaos, and Canada’s homemade brands should not pass up the chance to solidify their presence in the shopping carts of Canadian consumers for years to come.