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Canadian wine makers are feeling the squeeze from the recent drop in the value of the Canadian dollar.
While Canadian consumers are paying more for imported goods like grapes and other produce, wine makers have seen the cost of bottles, corks and barrels move higher – and that could force them to raise prices.
“Unfortunately we don’t have any manufacturing of glass bottles or corks or anything in Ontario, so we have to import those products,” said Klaus Reif, owner of Reif Estate Winery in Niagara-on-the-Lake.
A cabernet merlot that sells for $14.75 could sell for $15.50 next year, according to Reif.
It’s a similar story down the road at Pillitteri Estates Winery. The winery has already hiked prices on some of its wines and more could be coming, said Jamie Slingerland, director of Viticulture at Pillitteri Estates.
Price increases could be more dramatic in competitive markets like Alberta and Quebec where the market is more fragmented. However, Ontario’s liquor control board says its buying power could help cushion the blow for consumers.
Nonetheless, the weakened currency is already having an impact. The LCBO says it lost about $600,000 in currency trades last year. That’s down from a gain of $3.4-million in the previous year, according to its annual report.
There could be a pleasant finish for local wine makers – the low loonie is making Canadian wine more appetizing to U.S drinkers.
“Fifty percent of our products are exported across the world,” said Slingerland. “Our wines over the last three years are 33 percent lower and very competitive.”
But competition in the global wine market is heating up. While the loonie is making Canadian wine cheaper abroad, prices for wines from Australia, Europe and South America are also falling as their local currencies take a hit.