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National Post: Think the Beer Store is bad? Check out the SAQ

In a recent article published in the National Post, British ex-pat Daniel Rouse proclaimed that Ontario’s “Beer Store is worse than any of my nightmares.” Thank goodness he hasn’t travelled to Quebec! While many Ontarians, or visitors to that province, may assume that it couldn’t get any worse, as a Quebecer, let me assure you: It can.

Rouse’s article does make a valid point: The Beer Store is a cartel of three multinational companies controlling a monopoly that stifles domestic competitors, with a stamp of approval from the government, even though the Beer Store provides no direct financial benefit to Ontario (outside of regular taxation, of course). It reeks of the archaic bureaucratic roadblocks from Canada’s prohibitionist past. Service stinks  and even with the recently uncovered sweetheart deal with the LCBO, selection is poor and craft beers are largely absent.

It’s easy to see why a provincial advisory panel suggested the Beer Store’s owners should pay a franchise fee to the government or else have their private monopoly revoked. Abolishing the monopoly would do wonders for craft breweries in Ontario, who would no longer have to pay the Beer Store’s owners — their competitors — a listing fee and handling fee just to have their products on the shelves.

But while the Beer Store is atrocious, it must be said that Ontario’s LCBO — the Liquor Control Board of Ontario, which is a delightful name for an organization that is constantly trying to drum up sales — is relatively well-run compared to its Quebec counterpart.

The SAQ (Société des alcools du Québec), a state-owned corporation best known as of late for its union’s argument that privatization would mean buying wine from “Pakistanis or Indians, who don’t know wine, who don’t even drink wine,” seems to make it its mission to gouge customers. As a recent book on the matter by Quebec political commentator Éric Duhaime shows, the price of beer, wine and sprits in Quebec can be upwards of 19% higher than in Alberta, and it’s also more costly than at its monopolistic counterpart in Ontario.

While a private company like Liquor Stores N.A. in Alberta has profit margins of 1.9%, the SAQ sees profits of upwards of 48%. The government cash cow annually brings in over a billion dollars of profit thanks in large part to these product markups, on top of another half billion in taxes on alcohol.

But it’s not just our wallets that are getting scoured; our taste buds are suffering as well. As Duhaime recounts, one of Quebec’s most famous vodkas could not even get on the SAQ’s shelves until it won countless awards for quality around the world. Pur Vodka — which the SAQ now shamelessly plasters in all its ads — was once shut out of the game in favour of big brands like Smirnoff who have larger distributors and deeper pockets.

It was only after years of laborious negotiations and winning the worldwide Vodka Masters Prize in 2013 that the SAQ decided maybe it should make some space for the homegrown success story next to the Stolichnaya. Regrettably, this is a familiar struggle for other distilleries and brewers in this province.

Regardless, Pur Vodka now has the privilege of selling its corn-based delicacy to the state for $11, which is then resold to customers for a whopping $42.50. The founder of the distillery says he prefers shipping his product to New Zealand despite the cost of transportation (you know, across an entire continent and ocean, rather than just down the street) because he makes a higher profit there. Nicolas Duvernois told Duhaime that if he had to start over again, he’d move his company to New York state. Which would be handy — Quebecers already travel to Plattsburg whenever they want cheaper booze.

Yes, it’s true Quebec is far ahead of Ontario when it comes to beer. Cheaper than in our neighbouring province, beer can be bought in grocery stores and convenience stores alike. Some depanneurs even make a name for themselves with their wide selection of artisanal brews, which can only seem like a dream come true for Ontarians. But Quebecers pay for that convenience through having to deal with the SAQ. Giving us a way to have a cold beer after thinking about the markups they put on their products is the least the government could do.

Whether it’s with craft beer in Ontario or micro-distilled vodka in Quebec, our current monopolistic system works against both consumers and small producers. It’s time Canadians in all provinces lacking liquor freedom demand elected officials tear down this century-old red tape with 21st century rationality.

National Post

Tom Kott is a consultant at HATLEY Strategy Advisors, a Montreal-based public affairs firm.

Original post HERE. Republished with permission from the National Post

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