Governments will have to rethink their reliance on this source of revenue for their coffers as Canadians shift their consumption patterns.
Canada is experiencing a notable shift in its alcohol consumption patterns.
The Société des alcools du Québec is the latest liquor authority to report a consecutive decline in alcohol sales by volume, a trend that mirrors what is happening across the nation. In the most recent fiscal year, alcohol sales by volume have dropped in all provinces, signalling a significant change in Canadian drinking habits.
According to the data, Quebec’s sales dropped by 2.5 per cent and Ontario’s by 2.0, while Alberta saw a steep 15-per-cent decline, based on estimates and liquor board reports. Nova Scotia (-4.2 per cent), Manitoba (-6.7 per cent) and British Columbia (-4.9 per cent) have also reported substantial drops.
Despite these volume declines, many liquor boards have managed to maintain or increase revenues through price hikes. However, the downward trend in consumption is undeniable. Inflation and the broader cost-of-living crisis are likely the primary drivers.
As household budgets tighten, consumers are forced to prioritize essential expenses like food and shelter, leaving alcohol purchases as one of the first discretionary items to be cut. Compounding this, federal and provincial taxes on alcohol have increased, making these products less affordable for many Canadians.
Another contributing factor is Canada’s evolving demographic landscape. With increasing immigration, many new Canadians come from cultures where alcohol consumption is moderate or avoided altogether for religious or cultural reasons. As immigration fuels Canada’s population growth, this influx is likely contributing to the reduction in per capita alcohol consumption.
The growing public awareness of the health risks associated with alcohol has also played a role. Over the past decade, numerous studies have linked alcohol consumption to serious health issues, such as cancer, liver disease and cardiovascular problems. These findings have spurred public health campaigns urging Canadians to reassess their drinking habits. What was once a stigma around heavy drinking has shifted into a more critical view of casual and social drinking. The rise of “Dry January” challenges, sober social spaces, and the increasing availability of non-alcoholic alternatives in bars and restaurants all signal a society that is rethinking its relationship with alcohol.
Legalized cannabis may be another factor influencing alcohol’s decline. Since the legalization of recreational cannabis in 2018, the market has grown rapidly, and some consumers may be opting for cannabis over alcohol. Studies have suggested a “substitution effect,” where alcohol is replaced by cannabis consumption.
The presence of a robust black market for cannabis, which remains cheaper and more accessible than its regulated counterpart, adds complexity to the picture. This underground trade is difficult to quantify but likely contributes to the shifting landscape of substance use in Canada.
As these trends unfold, the rise of the black market for cannabis and possibly other illicit substances indicates that consumption habits are changing in ways that official statistics might not fully capture. Alcohol may simply be losing ground to a wider array of recreational and illicit options.
This evolving landscape presents both challenges and opportunities for policymakers, businesses, and public health advocates. On the one hand, reduced alcohol consumption could alleviate public health burdens, potentially lowering rates of alcohol-related illnesses and hospitalizations. On the other hand, the economic implications of declining alcohol sales cannot be overlooked. As alcohol revenues decline, provinces that have relied on these sales to fund public programs may need to rethink their fiscal strategies.
While Canadians appear to be making healthier choices regarding alcohol, the increasing use of cannabis presents new regulatory and health challenges. Canada’s experience with legalized cannabis is still relatively new, and the long-term health and societal implications of this shift remain uncertain.
The data indicate that, eventually, alcohol-generated revenues will decline. In fact, this is already happening in some cases. Governments will need to reconsider their reliance on alcohol sales as a steady source of income for provincial coffers, especially as higher taxes continue to make alcoholic products less affordable for Canadians.
Sylvain Charlebois is the director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast.