National Post: The only liquor stores that truly belong in this century are private

In an interview this week with Les Affaires business newspaper, the president of Quebec’s state booze monopoly outlined his vision for the future of the state-owned business.

Alain Brunet’s goal, he proudly stated, was to have the Société des alcools du Québec (SAQ) “be part of people’s daily lives in every way possible.” Already spending $30 million a year on advertising and marketing, the government’s liquor peddlers are developing a new digital strategy and app that will cost countless millions more (in true government fashion, Mr. Brunet won’t tell taxpayers what the actual price tag will be), all to ensure a day doesn’t go by when Quebecers don’t think about this “restricted” product.

The irony here is too rich: isn’t this exactly the type of behaviour that state-run liquor monopolies were supposed to help prevent? Government control over liquor sales used to be justified as a “social responsibility.” Now the provinces don’t even pretend to be believe this anymore.

The SAQ’s predecessor was established in 1921 at the height of the temperance movement. Quebec, which had the most liberal liquor laws at that time, decided only to restrict access to alcohol, not prohibit it. The state monopoly was meant to control the flow of alcohol and ensure its sale was conducted in a responsible manner — more responsible than they believed the private sector could do it. In Ontario, this “social responsibility” argument is still used by the government to prevent convenience stores from selling beer (the height of government daring is to permit its sale, eventually, under tight restrictions, in large urban grocery stores). State control also helped prevent bootleggers from overtaking the domestic market.

Until 1970, in Quebec, bottles were not on display in stores. Only a clerk, protected by a counter and metal grid, could fetch you your bottles of booze. It’s the same logic that keeps cigarettes hidden in stores today – if you can’t see it, it won’t tempt you.

As archaic as this system was, it fit the philosophy of the time: the state was involved in the sale of liquor because it could control how it was sold and prevent capitalist tendencies towards encouraging consumption.

Fast forward to today, and the state’s actions no longer reflect their outdated rhetoric. Way past the goal of social responsibility, liquor monopolies act as cash cows for the state. Massive budgets for advertising and new efforts towards a “digital revolution”, as Mr. Brunet calls it, seek only to attract people into their stores and expose products to the consumers they were mandated to protect. Now the only thing the government seeks to protect is its own coffers.

Even that motivation is rubbish: Alberta’s government earned more from the sale of booze after privatizing it in 1993 than it did before. Letting the free market handle retail resulted in more competitive pricing, more points of sale, and better hours. Even though the state doesn’t pocket the full price anymore, the increase in sales associated with a liberalized environment more than makes up for it through modest but fixed markups that still remain. Cut out the salary of overpaid workers and the cost associated with maintaining physical stores, and that’s a win-win for the province. While Quebec has twice Alberta’s population, its liquor monopoly only brings in 29% more profit to the state ($1 billion versus $747 million).

Though some have raised fears that a free market will lead to more abuse, the evidence suggests otherwise. While 15.6 per cent of Quebecers are heavy drinkers according to Statistic Canada, the number is 14.8 per cent in Alberta.

So yes, it’s nice that the SAQ wants to join the twenty first century with new marketing tactics. But the only liquor stores that truly belong in this century are private stores.

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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