Canadian wine is produced in mainly southern British Columbia and southern Ontario. There is also a growing number of small scale producers of grapes and wine in southern Quebec and Nova Scotia. The three largest wine-producing regions in Canada are the Okanagan Valley of British Columbia, the Niagara Peninsula of Ontario, and in Essex County, Ontario (including Pelee Island). Other wine-producing areas in British Columbia include the Similkameen valley, the Fraser Valley region near Vancouver, southern Vancouver Island, the Creston Valley, in the Kootenay area and the Gulf Islands. Other areas in Ontario include Prince Edward County.
The Canadian wine industry also vinifies imported grapes and juice. These products are labeled Cellared in Canada and are not required to conform to the strict Vintners Quality Alliance content regulations.
Icewine, which can be produced reliably in most Canadian wine regions, especially the Okanagan Valley, is the most recognized product on an international basis. Canada produced 75.9 million litres of wine in 2002 (0.3% of world production).
Canadian wine has been produced for over 200 years. Early settlers tried to cultivate Vitis vinifera grapes from Europe with limited success. They found it necessary to focus on the native species of Vitis labrusca and Vitis riparia along with various hybrids. However, the market was limited for such wines because of their peculiar taste which was often called "foxy". However, this became less apparent when the juice was made into Port- and Sherry-styled wines.
During the first half of the twentieth century, the temperance movement and later consumer demand for fortified and sweet wines hampered the development of a quality table wine industry. However, during the 1960s consumer demand shifted from sweet and fortified wines to drier and lower alcohol table wines. At the same time, there were significant improvements in wine-making technology, access to better grape varieties and disease-resistant clones, and systematic research into viticulture.
After the repeal of alcohol prohibition in Canada in 1927, provinces strictly limited the number of licences to produce wine. A nearly 50-year moratorium on issuing new winery licences was finally dropped in 1974. During the same decade, demonstration planting began to show that Vitis vinifera could be successfully grown in Canada. Other growers found that high quality wines could be produced if Vitis vinifera vines were grown with reduced yields, new trellising techniques, and appropriate canopy management.
In 1988, three important events occurred: the free trade with the United States, the establishment of the Vintners Quality Alliance (VQA) standard, and a major grape vine replacement/upgrading program. Each of these events served in one way or another to improve the viability of the wine industry in Canada.
During the 1990s, Canadian vintners continued to demonstrate that fine grape varieties in cooler growing conditions could potentially possess complex flavours, delicate yet persistent aromas, tightly focused structure and longer ageing potential than their counterparts in warmer growing regions of the world.
Canadian wines have a less than 50 percent share of the Canadian wine market, making Canada one of the few wine-producing countries where domestically produced wines do not hold a dominant share. Wine in general has been increasing its market share against other alcoholic beverages (beer and spirits): since the late 1990s wine has increased its market share from 21% to 28% and since 2007 wine sales have increased by 9.5% to $5 billion.
While there are many small Canadian wineries, the domestic wine market has long been dominated by two companies, Vincor International and Andres Wines. In 2006, Vincor International, which had grown aggressively in previous years by acquiring wineries in California, Australia and New Zealand, was itself acquired by Constellation Brands, a U.S. based company and one of the primary consolidators of the global wine business.
Some Canadian wine is exported to the United States, Europe and the Far East. Canada shipped US$4.9 million worth of wine to the United States in 2001. Icewine is a major export product for Canadian wineries. Much of the wine exported overseas is in the form of icewine. The largest importers are Asian countries, particularly China and Japan.
In late 2009, local and international criticism of the "Cellared in Canada" practice and the Liquor Control Board of Ontario (LCBO) emerged. Under the "Cellared in Canada" label, Canadian wine producers can import pre-fermented grape must from grapes grown in other countries to produce wines under their own wine label. In Ontario, producers are allowed to designate these wines as being made or "cellared" in Canada if they contain at least 30% local Ontario grapes. In British Columbia, growers do not need to have any local grapes at all in the wine. Grape growers in Ontario began protesting the practice as a threat to their livelihood claiming that thousands of tons of Canadian grapes are left rotting on the vine because producers are using imported grapes to make wine labelled as "Canadian". Wine producers who do not use the "Cellared in Canada" designation criticized the practice as tarnishing the reputation of Canadian wines and misleading consumers. Producers and growers in Canada have petitioned the government for several changes in the practices such as making the origin of grapes more clear on the wine label and increasing the visibility of 100% Canadian wines produced by members of the Vintners Quality Alliance (VQA) in province run liquor stores. As of August 2009, the province stores of the LCBO featured less than 2.5% Canadian wine produced by VQA members with the vast majority of its wines produced under the "Cellared in Canada" designation with up to 70% foreign grapes.