ANTI-SAQ and Why

In these times of wine salons, pink elephants and pure white-house drivel, I feel the urge to take on my greatest nemesis yet: The SAQ. The audacity surely comes from the bottle of Rita & Rudolph Trossen I’ve drunk. My goal is link together certain ideas and points of view into a cohesive whole. What we are dealing with is most definitely incoherent: a state monopoly managing alcohol. As I write this, the amount of sales from Private Imports continues to grow but the bulk of the wines made available to us directly through the SAQ come from a cartel of four big wine agencies that have more or less cornered the market.

My point is two-fold. Firstly, I wish to demonstrate how the SAQ is not competent to deal with changes in the wine market here in Quebec. Secondly, I want to highlight the role played by the cartel of few big agencies in flooding the market with industrial wines, with the SAQ’s blessing of course.

I’ll admit that I feel like a high school student attacking the unfair policies of the school administration. It does hearken back to those days when I had a Che Guevara patch on my backpack, an anarchist t-shirt and a mouth full of Rage Against the Machine lyrics. I am Ionesco’s character’s Béranger, from the play Rhinoceros, screaming out: “You won’t get me!” I am filled with contempt for those who are complicit in keeping this situation thus. I see your face, Philippe Lapeyrie, holding that damn wine-guide up at every photo-op. My ire is also directed at the ITHQ for omitted to even mention for my entire two year stay in your sommelier program anything anything about natural or biodynamic wines. Your Franco-centric curriculum doesn’t even reflect the local market trends.

Lucky for us, we have passionate and dedicated souls who took the necessary risks to bring us wines they believed in. Artisanal wines. Free wines. Wines in movement. Wines that are alive. Because of you, Quebec is now the one of the biggest importers of these wines in the world ! Great job !

Society changes, we change

Now before I begin, I wish to make a confession. The SAQ will probably dig my file out and have me blackmailed so I want to get this over with. I once applied to work for the SAQ. It was years ago, so many I don’t even remember. I had these dreams of being on the floor, a young dynamic wine expert dishing out recommendations and taking advantage of my employee discount. Well I was never called. I am glad indeed. I laugh at thee and your culture of promotions based on seniority. I smirk at your competitive salaries for cashier or warehouse work. No, I’m not a union basher. I do believe that a company has the work culture that it shapes and nourishes. I’m going off-point…

The one fashionable subject, outside of wine, that those in the know (sommeliers or wine enthusiasts) like to talk about is our common befuddlement with the SAQ. The event that got us all talking (or bitching) was the inventory crash that occurred in June. With this event, the entire culture of incompetence was revealed to all. What happened?

Well the SAQ central office decided it was time to transition from one type of inventory software to another, at one of the busiest moments of the year for the service industry.

When the system crashed, it was time for damage control. The delivery service for restaurants and bars is either on Tuesdays or Thursdays. Because the orders for Tuesday could not be carried out, those of Thursday were cancelled to make up for it.

Big deal right? It was only the beginning. The software « bug » showcased the inability of the SAQ to properly manage its growing inventory of Private Import products. Since these products are not organized by agency or import house, most personnel didn’t know where these products were. They were lost in the system. Each importer has an excel sheet to monitor their inventory (which they never see by the way, as they aren’t even allowed inside the warehouse on Futailles). Frequently, the importers’ numbers don’t match those of the SAQ. Suddenly the frailties of the edifice came crashing down, exposing the inability of the SAQ to deal with the issue in a credible, efficient and timely manner. Instead, as a result of being a government-run monopoly, it remained mired in a docile and incompetent trance.

The SAQ’s credo is three-fold:

  • To offer an efficient service (they only have two—customer service personnel to deal with restaurants in Montreal over the phone).
  • To deliver all merchandise that has paid for (how many times have we restauranteurs been billed for cases we did not receive and for which nobody can claim any knowledge of?).
  • To be held accountable when mistakes are made. Really? We will deal with this particular point further down. It seems to me that making money (an oxymoron for a public institution) trumps accountability all too often.

Making $$ Any Way Necessary

As I write this, I wish to make clear the following. I believe the government does have a role to play in managing economic affairs and that the government can be efficient in this role. I believe that regulations are a good thing and that the State is best positioned to deal with wealth-redistribution in a rational way. However, in the present situation, the state monopoly in regulating alcohol has reached a cross-roads.

In wanting to protect its turf, it has ceased to be able to do its job. There are now too many products, too many different import agencies (at last count there are 356) for the system in place. Think of all the time spent putting those damn stickers on the bottles for example. This will to control this ever-growing inventory needs to give way. The situation is untenable. The control of the inventories of privately imported products must be in the hands of those who imported them. It is the only logical way to move forward.

A hole was opened when the SAQ allowed wines to reach the Quebec market in the first place. Though these wines were not selected by the SAQ, it still imposed the price, two mandatory lab-tests (the second one it pays for) before the product is released. Yet the product is never really released. It has a 5 month storage period in which it can be sold, after which additional fees per bottle will apply for the 6th and 7th months. A product that isn’t sold in this time “destroyed” but exactly what that entails is a mystery to many.

Getting back to the 5 month grace period, imagine your product is a seasonal one like rosé, but the SAQ can’t seem to find it. You would imagine that the grace period would be extended to coincide with the SAQ’s inability to locate it. Wrong. The clock keeps ticking and your investment remains in limbo. The SAQ answers to no one.

We’ve talked about inventory incoherencies, but what about other types of penalties? Any mistake made by a wine agent during the ordering phase (for example a mistake in typing the wrong product or number of cases) is charged 20$ per case. Yet when the SAQ makes a mistake in putting together an order that is shipped out, there are no such consequences or penalties. The 20$ penalty is the fee to remove the sticker from the faulty bottles. If that isn’t ridiculous in itself, think about how the SAQ deals with sample bottles.

Sample bottles are what allow a wine agent to have his clients try out a new arrival or gain familiarity with a product. These samples are not paid for by the importer as the winemaker usually adds a case for free in the order (for example, fifty cases will be paid for but the 51st will be of “zero value” because it for use as sample only). The SAQ thinks otherwise. It treats the sample case as a regular case, the importer must pay for it. The caveat is that the sample case cannot be sold.

So here it is, the SAQ, without any of the usual responsibilities of marketing the product, skims at profits at every turn. It’s even more unfair when you realize they’ve already taken a cut that is included in the price of the bottle: the initial service charge! You must be crazy and brave to sell wine in Quebec!

Where Do We Go?

It’s all a numbers game. The share of the market that the private imports represent is constantly getting bigger. The amount of wine and the amount of money spent on wine in Quebec is also on the rise. Sales go up. Efficiency doesn’t. This is why nothing changes. No goals have been set in terms of productivity, something that no privatel-owned wholesale business could afford to do. “A whole-sale business that operated the way the SAQ has for the last 30 years—without an increase in efficiency in 30 years would be dead.” How is it that the LCBO with less employees ( 3 700 compared to 7 500) has bigger sales (1, 7 billion compared to just over 1 billion)? Bad management.

The SAQ is a relic of the prohibition era. It is no longer relevant in its current modus operandi. The SAQ claims to be an expert in alcohol. I can’t help but laugh at this. Just look at the level of training they give their employees (overall not very impressive, but look at the majority of what they have to sell). A few years ago The Bouchard Commission proposed the end of the state monopoly and a liberalization of wines and spirits. The SAQ’s response came out before the government’s, a resounding no.

One thing that is almost totally absent from the SAQ shelves should really raise the ire of all Québécois : where are the Quebec wines and why are they not sold at the SAQ? Great job promoting a local industry. Crony capitalism as usual I suppose.