Wednesday, July 6, 2011

More Canadians are Expanding into the Wine Business. How to Invest in Canadian Wine.

An increasing number of Canadians are choosing to make their fortune an old fashioned way, in the wine business. In this country, growth in the wine industry is outstripping growth in the other beverage sectors. Having grown at annual rate 7.6% since 1998, growth in wine production in Canada is outstripping many other areas of the economy. But beer, however, remains the beverage of choice for Canadians as this country has about 10 million beer drinkers. 
The dominance of beer in the country, however, is coming under attack, and producers like Molson Coors (NYSE: TAP) are taking note. The stock is essentially flat on the year, but profit margins have been coming under increasing pressure from foreign competition, spirits, and now wine. 
"However, domestic vineyards are facing a number of challenges and are going to have to fight to retain their share of the Canadian market," says the Bank of Montreal. Our industry is heavily reliant on domestic consumption. This basically means that it is mostly Canadians who buy Canadian wine, with little being exported abroad. Indeed, between 2001 and 2010 exports actually dropped from 15% to 4% of production volume. With countries like Australia, Argentina, Italy, and France all producing very good wine, it is difficult for Canada to compete.
But for those investors looking for something different in their portfolio, there are a couple of Canadian stocks you could look at:
Andrew Peller Ltd. (TSE: ADW. A)
Magnotta Winery (TSE: MGN)

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