User blog comment:FairyRaven/Fairy Tail Chapter 366: 1000 Souls, Review and Commentary/@comment-6904925-20140110110507/@comment-1359322-20140110120640

Natsu was still young so maybe his nose isn't so sensitive like now plus Gildarts constant job which made him away from the guild, so Natsu didn't have the chance nor the time to fully confirmed it, than Cana starts drinking alcohol like non-stop thus the alcohol stench covers her body thus Natsu never noticed it.