The SAQ in the process of drowning microdistilleries

A new outcry from the heart of Québec’s microdistilleries – unleashed by the Union québécoise des microdistilleries (UQMD) – is ringing out over the excessive price premium being pocketed by the SAQ. The Quebec government has announced that it will introduce a bill that promises regulatory relief for these small businesses. The future will show us the sincerity of this claim.

Those distilleries that produce local spirits have to pay a mark-up of around 50% of the selling price of the bottle at the SAQ, even if the product is sold from the production workshop. So $20 is paid to the Crown Corporation for a bottle that’s listed at $40. In other words, despite the total lack of SAQ intervention in transportation, storage, or retail sale, the company receives the lion’s share of the sale of a product from a microdistillery, even if that sale occurs at the point of manufacture.

As an aside, the reason for the mark-up according to the SAQ is: “The mark-up makes it possible to absorb the costs of sales and marketing, sales and administration and generate a net result”. Then how to justify its application in this context ?

We know Quebec’s strong taste for regulation, but it’s time to act. The government needs to take note of the situation: 70% of these companies see this increase as the main obstacle to their growth. Given this situation, the first step would be to eliminate this excessive financial pressure when selling products on the premises of the manufacture. Why pay a premium for the SAQ when its intervention is not required? Because of the law? let’s change it!

This situation, which is stifling these businesses, could well cause many of them to close. Nothing to encourage the next generation to get into the business. Will young entrepreneurs looking to enter this sector make the leap knowing that the SAQ will earn 50% of the final price of the product sold at the point of manufacture if they do all the work?

It is the Quebec government’s responsibility not to impede entrepreneurship in young Quebec start-ups with measures that eat away at their profitability, especially as the pandemic has brought its share of difficulties for SMEs: at the beginning of the year, almost one in four thought that it might close in 2022.

Microdistilleries have also become a kind of tourist attraction, making them actors of regional development and making it possible to attract tourists to the region, who particularly appreciate this type of product. Because the Quebec government attaches great importance to the regional development dossier, it must take action to withdraw this increase, which is harmful to businesses.

Luckily, there’s a miracle cure for this nonsense: a mix of liberalizing the alcohol sector and removing the surcharge on microdistillery sites.

Selling spirits from these premises would allow small business owners to offer their product without bearing the cost of an unjustified price hike by the government. In this way, Quebec entrepreneurship becomes richer and consumers could then benefit from discounts.

Gabriel Giguere

Chantal Poirier / JdeM

Gabriel Giguère, Public Policy Analyst at the Montreal Economic Institute

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