SAQ and LCBO monopoly in Canada
Posted: Fri Aug 05, 2005 7:38 am
From Roy recommendation, I'll explain what are these two monopoly here in Canada that rule the commerce for almost all the alcoolic beverage to the exception of local beer and some cheap wine made most of the time from concentrate that can be sold in grocery and corner shop.
For the Québec province, it is the SAQ( Society of Alcool of Québec) that rule the commerce. Basically their mission is to provide to every citizen alcool availlability through their branch, around 400 I think. They are suppose to simply apply a calculation to the price they bought the wine to fix the price they are going to sell it. A quick calculation is to add 100% of the price they pay to know how much they are going to sell it. Sound a great system, yes, but not when you buy and love great wines.
Here are a few examples: The 2004 futures price have just been released today. 299$ can for the 1er GCC, around 230us$. Its a robbery!!! The thing is that sometimes it takes more than the 100% profit they are suppose to take when some other market lower their margin to sell more. SAQ knows we can't buy elsewhere because they have a monopoly so whatever the price people will always buy some.
If I want to buy wines from another country, I'm allowed to bring back only 12 bottles whatever the time I spent outside as long as I spent more than 48 hours. If you declare them at the customs, the first 2 bottles are tax free than the tax system comes in., with a 100% tax on the price you paid!
Every bottle that you buy at the SAQ has a broker that represent this wine. He deals with the owner of the wine for the SAQ. Most of the job is done by the broker and most of the profit goes to the SAQ. Again only products sold through the broker can be sold at the SAQ. If a broker want to introduce a new product at the SAQ, he must meet some quota to have the chance that is new product get accepted by the SAQ. Some products are designed as "Regular products" and if they don't meet a quota of around 325 000$ in sales each year it will lose its rights to be sold at the SAQ.
If a broker whant to sell a products without selling it through the SAQ, it can but again the SAQ takes all the taxes for doing almost nothing. It is called private importation. Sometimes you can get a few interesting products but you have to get great connections. As an example the Charme and Batuta of Niepoort get respectively 24 and 48 bottles here in Quebec. Half of these are sold at a restaurant, the importer takes a case and the remaining are sold to other restaurant. This year is the first year in 3 years that I tried to get Niepoort's bottling that I got some. Got 2 charme, 1 Batuta and 11 Redoma, because I call every day to see if a restaurant did cancel his reservation.
The good thing now, well, if you know your clerk you can know when the products are coming and you can get almost every hard to find bottle if you are willing to wait in line. For Masseto 2001, some people camp 24hours in front of some branch to get a magnum. Italian wines prices are very good compared to USA market. Normally what you pay in US$ we pay it in Can$ It is almost the reverse situation for older Port, taylor 1963 selling for 900$ can, around 700$ us!!!!
For the LCBO now: The liquor Comission board of Ontario, what I like the most with this monopoly is their transparency when they release new products. They release a catalog each month that they send to their clients who want to receive it. When there is a big demand for hot products release in those catalogs they split the bottles with the customer inside the store. They also keep some great allocation for hot products to be distrubuted in far regions, not only for the big cities. Also 3 times a year they release the Classics catalog with the big guns in it and you place your order. Then a lottery defines who gets certains bottles when they are a limited number of them.
Overall monopoly is good for diversity in the stores, sometimes for the price but since it controls everything it means you can shop and order from around the world to get exciting products like Douro wines or Columbia Valley wines that I like very much! Availability to new products is very limited at the SAQ. It is the only market in the World were the French wine buying is not dropping, it is stable right now.
Kinda long text, hope it helps you guy knowing more of what in going on in most of Canada and certainly in Quebec.
For the Québec province, it is the SAQ( Society of Alcool of Québec) that rule the commerce. Basically their mission is to provide to every citizen alcool availlability through their branch, around 400 I think. They are suppose to simply apply a calculation to the price they bought the wine to fix the price they are going to sell it. A quick calculation is to add 100% of the price they pay to know how much they are going to sell it. Sound a great system, yes, but not when you buy and love great wines.
Here are a few examples: The 2004 futures price have just been released today. 299$ can for the 1er GCC, around 230us$. Its a robbery!!! The thing is that sometimes it takes more than the 100% profit they are suppose to take when some other market lower their margin to sell more. SAQ knows we can't buy elsewhere because they have a monopoly so whatever the price people will always buy some.
If I want to buy wines from another country, I'm allowed to bring back only 12 bottles whatever the time I spent outside as long as I spent more than 48 hours. If you declare them at the customs, the first 2 bottles are tax free than the tax system comes in., with a 100% tax on the price you paid!
Every bottle that you buy at the SAQ has a broker that represent this wine. He deals with the owner of the wine for the SAQ. Most of the job is done by the broker and most of the profit goes to the SAQ. Again only products sold through the broker can be sold at the SAQ. If a broker want to introduce a new product at the SAQ, he must meet some quota to have the chance that is new product get accepted by the SAQ. Some products are designed as "Regular products" and if they don't meet a quota of around 325 000$ in sales each year it will lose its rights to be sold at the SAQ.
If a broker whant to sell a products without selling it through the SAQ, it can but again the SAQ takes all the taxes for doing almost nothing. It is called private importation. Sometimes you can get a few interesting products but you have to get great connections. As an example the Charme and Batuta of Niepoort get respectively 24 and 48 bottles here in Quebec. Half of these are sold at a restaurant, the importer takes a case and the remaining are sold to other restaurant. This year is the first year in 3 years that I tried to get Niepoort's bottling that I got some. Got 2 charme, 1 Batuta and 11 Redoma, because I call every day to see if a restaurant did cancel his reservation.
The good thing now, well, if you know your clerk you can know when the products are coming and you can get almost every hard to find bottle if you are willing to wait in line. For Masseto 2001, some people camp 24hours in front of some branch to get a magnum. Italian wines prices are very good compared to USA market. Normally what you pay in US$ we pay it in Can$ It is almost the reverse situation for older Port, taylor 1963 selling for 900$ can, around 700$ us!!!!
For the LCBO now: The liquor Comission board of Ontario, what I like the most with this monopoly is their transparency when they release new products. They release a catalog each month that they send to their clients who want to receive it. When there is a big demand for hot products release in those catalogs they split the bottles with the customer inside the store. They also keep some great allocation for hot products to be distrubuted in far regions, not only for the big cities. Also 3 times a year they release the Classics catalog with the big guns in it and you place your order. Then a lottery defines who gets certains bottles when they are a limited number of them.
Overall monopoly is good for diversity in the stores, sometimes for the price but since it controls everything it means you can shop and order from around the world to get exciting products like Douro wines or Columbia Valley wines that I like very much! Availability to new products is very limited at the SAQ. It is the only market in the World were the French wine buying is not dropping, it is stable right now.
Kinda long text, hope it helps you guy knowing more of what in going on in most of Canada and certainly in Quebec.
