Death to the SAQ and Quebec’s Booze Monopoly

You've overstayed your welcome, SAQ. via WikiCommons.

Whenever Quebecers need cheap booze and lots of it, there are a couple of options: make our own, or go to the States. Otherwise, we’re shit out of luck.

That’s because the provincial liquor corporation, the Société des alcools du Québec, has a monopoly on most of the wine and all of the hard alcohol sold in the province. And the SAQ has for years been very profitably soaking drinkers for as much as they can.

The latest example: the great SAQ rebate scam. Last week, La Presse revealed that the discounts offered by the SAQ on products are actually added to the wholesale price in order to make up for losses when sold retail at a discount.

Confused? Here’s how it works, according to Huffington Post Quebec wine blogger Yves Mailloux.

In order for producers to be shelved at SAQ outlets province-wide, he says, suppliers have to add a significant amount of money to their wholesale price in order to be used to pay for rebates on their products. The monopoly then marks the wholesale price up several times as usual, but with the rebate cost included in the mark up.

“So for example, there’s a nice Spanish wine called Pago de circus that just became a regular product,” says Mailloux. “It used to be sold for $15.30. Now it’s $17.95. Why? Because $200,000 [used to pay for discounts and related publicity costs] is spread over the 300,000 bottles they expect to sell. So instead of selling it [to the SAQ] for four dollars a bottle, they’ll sell it for $4.65. But that price, when it comes to the retail price, is multiplied three or four times. That 65 cents becomes $2.60. So in fact, each time you’re buying a product at the regular price, you’re overpaying. And wine you buy at a special discount of a dollar or two once or twice a year will get you all excited. You’ll only pay $15.95 but before, you used to pay $15.30. So we’re paying for the cost of the promotion, which is included in the regular price of the bottle.” And considering that almost 80 percent of the SAQ’s business is in table wines—that’s a lot of juice being squeezed from winos in Quebec.

Mailloux says the SAQ is happy to pay a bit extra because they profit from the marked-up price. I asked him if he thought other Canadian liquor commissions did this and he said that while he couldn’t be sure, he imagined they probably did. But not to the extent the SAQ does it.

According to La Presse, the SAQ nearly doubled its profits in the past decade, from about $540 million in 2003 to nearly a billion last year.

If the allegations are true—and an SAQ rep told me that it isn’t, that producers and suppliers have promotional budgets set aside for the discounts—it’s just the latest example of board’s long-term abuse of its customers.

Over the past couple of years, the SAQ has closed several outlets that they said weren’t profitable—but I find that hard to accept. Critics say the outlets were profitable, but closed because they weren’t profitable enough. Which might pass as a shitty excuse if the SAQ was an entirely private enterprise. If its shareholders looked at the numbers and decided that the return on investment of running an outlet in, say, the low-income neighbourhood of Montreal’s Pointe St-Charles wasn’t cutting it, they’d be well within their rights to close it and sucks to be the citizens of Pointe St-Charles. (And never even mind residents in the province’s smaller towns.) But taxpayers in Pointe St-Charles are, theoretically at least, part owners of the SAQ since it’s a government body. They should have access to the goods they’re paying for, and since the SAQ is a monopoly, it’s not like a competitor can come in and fill that gap.

Then there’s the issue of price-fixing, which was a major scandal back in 2006, in which two SAQ VPs resigned after trying to get European producers to raise their wholesale price after a drop in in the euro.

Mailloux says the SAQ’s problems are getting worse. He thinks the provincial government is squeezing the corporation for more money. The price of alcohol in Quebec, he says, “is twice as much as in the States and three times as much as in Europe.”

But in its greed, the province may be killing off the golden goose. Mailloux estimates that Quebecers bought 1.2 million less bottles in the last nine months compared to the same period last year.

And while he doesn’t have a problem with the SAQ as a concept—their staff is knowledgeable and courteous, and they do offer decent products—some competition from the private sector is needed.

“Maybe some competition will force them to use their imagination and give better service and better wine at a better price.”

Follow Patrick on Twitter: @patricklejtenyi

More about the crappiness of Canada’s liquor laws:

Death to the LCBO

Tim Hudak Wants Ontario’s Corner Stores to Sell Booze