So near yet so far: Chelsea’s Distillerie du Jardin keeps a wary eye on interprovincial trade talks

Mia Jensen

March 26, 2025

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Like many distillery owners, Manuela Teixeira is waiting for news on interprovincial trade barriers and whether Canadian-made alcoholic beverages might be able to flow more freely across the country. Earlier this month, the federal government reached a deal with most of the provinces, including Ontario and Quebec, to address the obstacles that prevent alcohol from being sold in other jurisdictions. It’s a move the government said could add $200 billion to the Canadian economy, even as it navigates a trade war with the U.S. Teixeira is the CEO of Old Chelsea Square, which is a hotel and restaurant and a distillery, Distillerie du Jardin, on the Quebec side of the Ottawa River. While she is hopeful, she admitted that skepticism reigns as producers await details. “Everyone is waiting for the news,” she said. “We’re kind of afraid that, because it’s governmental, it’s going to take a lot of time. As summer is coming up, we just wish things would go faster. Between what politicians say and the reality, we don’t know how much time it’s going to take and how it’s going to evolve.” Selling alcohol is a complicated business even without trade barriers in place, according to Teixeira. In Quebec, she said distilleries and other other producers must work with the Société des alcools du Québec (SAQ), a Crown corporation that plays a similar role to the LCBO in Ontario. While distilleries can sell direct to consumers – Distillerie du Jardin has its own boutique – she said a large portion of products are distributed across Quebec by SAQ or sold at SAQ stores. All of this comes at a cost, she said. “In either case, each time a product is sold to a consumer or through their distribution, about 70 to 75 per cent of the money goes back to the government in terms of taxes and other measures,” she said. “We only keep 25 to 30 per cent.” With slim margins, the even pricier process of looking across the river to sell in the nearby Ottawa market has been out of the question, she said, due to interprovincial barriers. “If we want to go to Ottawa, we cannot go directly to the LCBO,” she said. “We have to go through an agency in Toronto and we would have to set up a whole process with them and then they can deal with the LCBO, which makes the whole process much more expensive. And you can guess that, at the end, it’s not worth it. It’s too much trouble and it’s not sustainable.” For distilleries located near the provincial border, it’s a problem that creates a unique type of frustration. While Ottawa residents may take an interest in the products, they aren’t technically allowed to drive 15 minutes to purchase a bottle and bring it back across the border to Ontario. “That’s kind of illegal,” she said. “You can’t just bring a product across the river. But, I mean, everyone does it. It just puts barriers where there should not be any barriers. As a company, we should be able to access markets that are local markets.” In Quebec, Teixeira said work is underway at the provincial government level to find ways to allow alcohol producers to sell directly to restaurants, rather than going through SAQ. It’s those kinds of opportunities that she would like to see open up in other provinces, including Ontario. “We would hope that we could go to restaurants in Ottawa and offer our products,” she said. “I’m sure they would love to have local products. It’s a really big market over the river, right across the way, that we cannot access right now. It’s a shame.” Teixeira said she’s excited at the possibility that things could change, despite the slow rollout. In addition to gaining access to the Ontario market through the LCBO, she said she’d also like to see regulations loosened on direct-to-consumer points of sale. “One thing that I can see in Ontario is that there seems to be a desire to make it easier for producers to sell, even though it’s not through the LCBO,” she said. “You have small, specialized liquor stores in the market, for example. If we could access those small markets, or be able to sell even in, you know, the Lansdowne (Farmers’ Market) – once you touch the person that purchases through different points of sale, they will find a way to purchase it. Next time, they will come here.”

Ontario a tough market for distilleries

Last November, Gatineau-based Artist in Residence Distillerie started production at a location in Hawkesbury, marking its first foray into the Ontario market. Though some snags and equipment breakdowns have held it back – production is expected to return to full force in late spring or early summer – founder Pierre Mantha told OBJ this week that business in Ontario has been better than expected. “We started selling at LCBO our whisky in November and it got sold out in two months,” said Mantha. “We did not see this coming. This was a complete surprise.” Before opening a location in Ontario, Mantha said accessing the province’s market would have been a significant challenge. While Ontario businesses can apply four times a year, he said producers from outside the market only get two chances. And he said factors like pricing have played a bigger role in the LCBO’s decision-making than a “Canadian-made” sticker. “LCBO is one of the biggest sellers of spirits in the world, so everybody looks to them,” he said. “They want to support local but they don’t want to pay too much … Now people are realizing that price point is important. And in the next two years, Canada is going to be in a tough spot.” Regardless of the specific market, he said the alcohol business has struggled in recent years. His distillery, despite its expansion, has seen its sales in Quebec cut by half. Three years ago, he said they could sell 3,000 barrels in a month. Now that number is down to 1,500. He added that the Ontario market has its own unique challenges, even if barriers are removed. “This is a tough business and right now LCBOs are seeing less traffic in stores,” he said. “Everything’s changing and they’re looking at their business model. People in Quebec looking at the Ontario market, I say good luck. I think in the next five years, half of distilleries will be closed. This is a tough, tough business.”