Wine and spirits lovers will soon put more hands in their pockets when they purchase many of the products sold at the Société des alcools du Québec (SAQ). By May, it will take a greater gross margin on all its bottles priced above $15.
What there is to know
The SAQ will increase the gross margin – which it calls its “markup” – that it takes on each bottle sold, with the exception of wines priced at $15 or less.
On average, the increase in the markup will be 1.7%, which will have an upward impact on the price of products sold in stores or online.
This increase could be added to that requested by suppliers from the SAQ twice a year.
The average 1.7% increase in markup – which will affect around 75% of products sold on shelves – will come into effect at the same time as the increase in prices set following negotiations with suppliers. This is when consumers will know the real increases they will face at checkout.
“There are several elements that result in an increase at the end for the consumer,” explained the president and CEO of the SAQ, Jacques Farcy, during a press briefing held Monday at the head office of the state corporation. “The first element is the cost of purchasing a product from the SAQ. We negotiate this cost with the industry, we negotiate it with the suppliers. And there is a second element that is added, which is the margin that the SAQ can take once the product has been purchased. This margin is the increase. »
“This increase allows us to rebalance part of our costs,” he explained, adding at the same time that the SAQ wanted to release an additional $10 million. Its net profit reached 1.4 billion in the 2022-2023 financial year.
In May, a bottle of wine that currently costs $25 will be priced at $25.15, Mr. Farcy gave as an example. The increase in the mark-up in this case is 1.6% and corresponds to an increase in the price on the shelf of 0.6%. A bottle of spirits listed at $45 will cost $45.27. The mark-up – therefore the gross margin that the SAQ takes on each wine, cider and other ready-to-drink products – can vary.
It is determined based on a calculation based on the cost price, i.e. the amount paid by the SAQ to its suppliers. On average, the increase could increase by 1.7%.
Wines sold at $15 or less will not be affected by the increased markup. “There is, on the other hand, a clear decision on the part of the SAQ which is to ensure that we protect the least expensive wines, so as to ensure that, despite the economic situation, customers who wish having access to more affordable products in terms of price do not have to assume an increase in markup. »
“The last time the SAQ announced a movement on its increase was in 2017,” underlines Mr. Farcy. We had [alors] reduced our markup for the benefit of consumers, which represented approximately $1.40 off all bottles of regular wine. »
The current economic context has forced the SAQ to redo its calculations. “In 2024, it is necessary for us to adjust our increase. »
This decision is not unrelated to the drop in sales in the first and second quarters of the 2023-2024 financial year, recognizes the big boss of the state-owned company. “Indeed, we see that our volumes are not growing. We are in a slight, very slight decrease. That’s a new factor. But indeed our costs have been increasing since 2017, it is necessary to review the increase this year. »
Business decisions and collective agreement
While press conferences organized by the SAQ have become rather rare over the last 20 years, Jacques Farcy took advantage of his meeting with journalists to review the decisions taken since the start of his mandate, eight months ago.
After subjecting a slimming regime to the discounts granted to its Dépôt brand, the SAQ decided to close its CF Carrefour Laval branch, reduce the opening hours of certain stores and eliminate 64 positions.
In the wake of all these “business decisions”, Mr. Farcy assured that the SAQ Dépôt brand – which has 10 branches – would not disappear from the landscape. “The SAQ Dépôt banner is an important banner. We are one of the few retailers in Canada in our industry to offer a discount all year round. We hope it continues. »
Mr. Farcy also wanted to clarify that the various changes made in recent months were not linked to ongoing negotiations with the Union of Store and Office Employees of the Société des alcools du Québec (SEMB-SAQ- CSN), without a collective agreement since March 31, 2023.
“I will be very clear, these announcements have nothing to do with the negotiation that is underway. There is no connection. We are very mobilized, we want things to move forward. »
Concerning a possible strike vote at the end of February, he simply replied that it is a decision that “belongs to the employees”.
Burials
Jacques Farcy was also questioned about the possible presence of anonymous graves of orphans and indigenous children in an old cemetery located on a portion of the current SAQ land. These could affect and extend the duration of the $300 million work planned for the expansion of the distribution center. This work has been suspended since the beginning of January.
At the request of the Committee of Institutionalized Orphans of Duplessis and Kanien’keha: ka Kahnistensera, a group of indigenous activists commonly known as the “Mohawk Mothers”, the SAQ did not undertake the excavation work it requested. was about to do. Activities on the construction site have been interrupted. This is because the two groups signing a letter suspect the presence of human remains.
“We obviously want to do things well,” assures Mr. Farcy. We are in the process of developing an action plan. We are in discussions with several stakeholders. »
Although the SAQ assures that it wants to speak with the two groups, no meeting date has yet been set, confirmed Monday the anthropologist Philippe Blouin, who works closely with the Mohawk Mothers and who acts as a French-speaking interpreter. . He also accompanied a handful of demonstrators as well as representatives of the Duplessis Orphans Committee on Monday afternoon to the area where the expansion work on the distribution center will be carried out. The objective was in particular to increase the pressure so that a protocol was put in place as quickly as possible.
What is the surcharge?
“The mark-up is the percentage of margin that the SAQ takes on the cost of products,” explained Édith Filion, vice-president and chief financial officer, during a press briefing on Monday. “The cost of products includes the purchase price from our suppliers, the cost of transportation, the federal government excise tax. All these elements are added together and it becomes the cost of a bottle. » Currently, on a bottle of wine sold for $15, the mark-up is 40.9%. The SAQ therefore takes a gross margin of $6.14.
Price increase
In addition to the mark-up which will increase, consumers could pay for the increases requested by suppliers. These “price adjustments” take place twice a year, in May and November. However, from now on, requests for increases can be submitted in May and at another time of the supplier’s choice: in August, November or February. However, increases remain limited to twice per year.