CANADA. Canada’s land border duty-free sector is facing a sales impact similar to that during the COVID-19 pandemic against the backdrop of recently-announced US tariffs on Canadian imports and the prospect of a protracted trade war between the two countries.
That’s according to Frontier Duty Free Association (FDFA) Executive Director Barbara Barrett, who said that some stores were facing sales declines of up to -80% as traffic between Canada and the US stalls. Some members are also looking at limiting opening hours to save on operating costs.
“There has been a dramatic impact on our members,” Barrett told The Moodie Davitt Report. “Unfortunately the border is being used as a political football and that impacts us. We are repeating our message to government to support our industry by eliminating red tape and adjust regulations to allow us to compete with our US counterparts. We also want land border duty-free to be included in the measures announced last Friday to support Canadian business.”
This is a reference to the C$6.5 billion (US$4.5 billion) of financial aid and reliefs from the government that will be made available for Canadian businesses to absorb the impact of sales losses and allow them to access loans and retain staff.
The duty-free sector across Canada is also being hit by restrictions on the sale of US wines & spirits, with liquor boards following the lead of provincial governments in ceasing supply in many cases, including to duty-free stores.
A high-profile example is the Ontario government’s direction to the Liquor Control Board of Ontario (LCBO) to place restrictions on all US alcohol, announced last week. The LCBO supplies all alcohol for sale in the province. Similar policies have been put in place in other states, including British Columbia and Quebec.
Barrett said that the directive by liquor boards to withdraw US products varies by province, but added that the restrictions were a mirror of Canadian consumer sentiment.
“We had hoped that this was a moment, but it has become a movement,” she said of the boycotting of US goods by Canadian shoppers. “People are simply refusing to buy US products. If they are buying, they are switching to Canadian products. We cannot quantify the impact at the moment as we are in the middle of a fluid situation.”
The Moodie Davitt Report understands that US wines & spirits are still on display in some Canadian duty-free locations, including at selected airports, though retailer feedback suggests this is translating into only limited sales.
As noted above the picture differs province by province, with some liquor boards not yet formally imposing restrictions. Among the most vocal about withdrawing supply have been the boards in Ontario and Quebec.
The LCBO announced last week that it has “ceased the purchase of all US products, retail customers are no longer able to purchase US products, and wholesale customers, including grocery and convenience stores, bars, restaurants and other retailers are no longer able to place orders of US products online.
“Furthermore, spirits, wine, cider, beer, ready-to-drink coolers/cocktails, and non-alcoholic products produced in the US will no longer be available in our retail stores or LCBO Convenience Outlets.”
The LCBO said customers should seek alternative products from Ontario and around the world.
LCBO is the importer for all US alcohol products into Ontario, with annual sales of up to C$965 million (US$671 million). It currently lists more than 3,600 products from 35 US states. LCBO said it would not purchase US products until it is directed to resume normal business.
In Quebec, the Société des alcools du Québec (SAQ) also stopped supply of US products last week.
SAQ said: “We will cease importing all American products intended for the Quebec market. This includes wines, spirits, locally bottled American products, and beers in transit intended for brewers. We are also suspending all promotions of these products and their highlighting in our communications to customers.
“In our stores, US products will eventually be replaced mainly by Quebec and Canadian products, depending on availability.”
