Consumption | Behind the price of alcohol

The Freeland budget tabled on Tuesday gave a little respite to wine and other alcohol lovers: rather than the planned 6.3% increase, the federal excise tax on alcoholic beverages is going up by 2%. Taxes nevertheless continue to represent a very large part of the price of alcohol in the country and this increase highlights a request from Quebec restaurateurs who are demanding a preferential rate on their purchases.

Restaurant owners demand discounts

In Quebec, restaurateurs pay the same price for their bottles as the general population.

“We are the only market in the world where restaurateurs do not have wholesale prices and it is completely revolting”, launches Véronique Rivest. The restaurateur and sommelier is well placed to talk about this situation: her wine bar Soif is in Gatineau. Just across the Ottawa River in Ottawa, his colleagues are entitled to a 20% discount on their purchases at the LCBO, the Ontario monopoly.

1^er January 2022, the government of Queen’s Park has indeed introduced this discount for restaurateurs who buy beer, wine and cider. A measure that is equivalent to annual support of $60 million directly to the restaurant industry.

At Soif, 95% of the references on the menu are private imports. Véronique Rivest must therefore deal with the SAQ and pay the same price as her customers for her cuvées.

“It’s essential, it’s urgent: we must change the laws on alcohol in Quebec”, claims the sommelier, who collaborates with The Press since many years. She believes the provincial government should be consistent in its rhetoric about restaurants and buying local.

In an inflationary environment, restaurateurs have it tough, she says. Raising card prices becomes an impossible mathematical exercise: “We know that the restaurant industry doesn’t have big profit margins. Now it has become labor of love. »

The claim echoes in the middle. Several players in the Quebec restaurant industry also believe that the law should be changed quickly to allow volume discounts.

“I order around 50 cases of wine a week. At the end of the year, that’s a lot of thousands of bottles,” recalls Sébastien Muniz, co-owner of the Tapeo restaurant in the Villeray district of Montreal.

Mr. Muniz would like to be treated like “any other good SAQ customer”, in particular by being entitled to discounts on wine and by having the ability to reserve the products he usually uses, which is not not currently the case.

Although he left the Plateau Mont-Royal in April 2022, where he was the head of the Rouge Gorge wine bar, to devote himself to his vineyard in France, Alain Rochard continues to deplore the fact that the SAQ does not grant discounts to restaurants.

“It does not give them certain prices even if they are big buyers,” he laments. There is no discount on quantities purchased. »

Local vintages

In France, wines can also be expensive on the cards, but this allows restaurateurs to generate a greater profit margin, because they have a wholesale price, recalls Frédéric Laurin, professor in the department of economics at the University. from Quebec to Trois-Rivières (UQTR).

According to him, the request of Quebec restaurateurs is legitimate. If Ontario has opted for this avenue, Quebec should certainly consider it, especially since the effect would be reduced in the overall royalties of the SAQ.

For now, the only way for a sommelier to stand out is to offer privately imported wines or rare Quebec cuvées that consumers cannot otherwise obtain, says Frédéric Laurin.

Currently, restaurateurs here can obtain Quebec alcohols from the SAQ or directly from the winemaker, if the latter does not sell his vintages to the government corporation. In this case, it is the winemaker himself (or an employee, if he has one) who must deliver directly to the restaurant.

Associations support this idea

The Association Restauration Québec (ARQ) also believes that its members should get a better price for their alcohol than Mr. and Mrs. Everyone who goes to the SAQ.

The collective La Table ronde, which represents the gastronomic tables of Quebec, has already broached this subject with elected officials. “We find ourselves in a completely absurd situation where large buyers, private individuals, go to taste something in the restaurant and then go and get better treatment to find that thing. [à la SAQ] than the restaurateur,” says Félix-Antoine Joli-Coeur, Secretary General of La Table Ronde.

“We have entered into discussions with the government to present the idea that at least restaurateurs should have the same advantages as frequent consumers, he says, with their Inspire cards and discounts. »

The demands of the group have not yet found an echo with the Legault government.

“We feel that the government of Quebec understands the situation, we expect decisions to be made,” said Félix-Antoine Joli-Coeur. We hope sooner rather than later. »

Decant the price of a bottle of wine

Since this morning, 1^er April, the federal excise tax on alcohol is increased by 2%. In practice, will consumers see the difference? Probably not. In a product that is already heavily taxed, this increase is only a small drop in the bottle. Explanations.

More for the waiter than the winemaker

The sum collected by the winegrowers is far from being the most important to hide behind the price of a bottle. Of the 35% paid to the supplier, only a small share goes to the winemaker.

As surprising as it may seem, in the end, the server who will serve the wine in a Montreal restaurant could receive more money for his gesture than the winemaker who made the cuvée, explains Pascal Gerrits, of the Primavin agency. .

This importer has already had to explain to one of his winemaker partners how his bottle of Beaujolais could cost so much on the menu of a Montreal restaurant.

The calculation is simple.

A wine that will be paid 5 euros at the cellars will undergo an increase of around 3.75 times by the SAQ, which takes care of the logistics as soon as the bottle leaves the vineyard and even before, at the time of the order. So we end up with a wine at $28, SAQ price. Added to this are agency fees, which raise the price of a bottle to around $32. If the restaurant advertises it at $74, before taxes, there is a good chance that the waiter will receive a tip at least equivalent to the 5 euros received by the winemaker, at the beginning of the chain.

two to three times

The bottle mark-up varies a lot from one establishment to another, but we can say that the practice in the restaurant revolves around two to three times the price paid, with a tendency towards 2.3. It can be more, even much more in exceptional cases and depending on the value of the bottle – a rare wine gains in value.

Alcohol, a surcharged product

The share of tax paid on the bottle of wine may seem exaggerated, but alcohol, by definition, is a surcharged product. Two principles explain this reality, according to economist Jean-Marie Cardebat, professor at the University of Bordeaux.

First, it is an agricultural product. “The agricultural sector is the most taxed sector in the world in terms of international trade. If we go to the WTO site, we will see that the main barriers to trade are in the agricultural sector. And wine is part of the agricultural sector, so don’t escape it. »

Then, alcohol is targeted by public health issues. “Sectors that generate externalities, whether social or environmental, are taxed more than others, because it is a way of limiting consumption,” recalls Professor Cardebat, contacted this week in Léognan.

According to him, despite the freedom of management that comes with the monopoly of the SAQ, what is applied as a level of taxation in Quebec, as high as it is, is consistent with what is done elsewhere on the wine planet.

Yes to the specific tax, the others, on the other hand…

For economist Frédéric Laurin, professor at the University of Quebec at Trois-Rivières (UQTR), all taxes are not equal.

The specific tax applied by Quebec is what could be called the public health tax, which is directly concerned with the effects of alcohol. “I agree with that one,” explains the economist. I would even increase it, because it is there to fight against the negative consequences of alcohol. »

On a $16 wine, Quebec imposes a specific tax of $1.12, cites Professor Laurin as an example, who considers that the multiplication of taxes and their constant increases are difficult to justify. And that the speech is full of contradictions, and drives up the price of wine.

“At a price of $16 it’s a regular wine,” he says. It’s what a Frenchman would call a Wednesday wine. It’s not piquette, but it’s not the wine with which we are going to receive guests. But this wine, in a supermarket in France, it is sold for 3.5 euros. With operating costs and supermarket margin. »

When will we pay more?

As of this morning, 1^er April, for sales made in grocery stores and other businesses where alcohol is sold, but from May in the SAQ network when the other price increases will be announced.