Alcohol industry | Distilleries are crying out for help

A quarter of artisanal distilleries in Quebec plan to close shop in the coming months because they are unable to make their activities profitable.

The industry is calling for help from the Minister of Finance in a brief submitted by the Union québécoise des microdistilleries (UQMD) as part of the pre-budget consultations. “Despite record sales volumes, the industry is on the brink,” the document summarizes.

The young industry seems to have the wind in its sails, but it is on the contrary in very bad shape, explains Vincent Lambert, spokesperson for their group, in an interview with The Press. According to the UQMD, which has about fifty members, two-thirds of Quebec microdistilleries are loss-making and their financial situation continues to deteriorate with the increase in the price of inputs.

However, the problems did not come with inflation.

The rapid increase in competition in a tight market is part of the problem. “Five years ago, there were 12 microdistillers in Quebec and there are 70 today,” he explains.

Their production is varied, but there is especially gin, a lot of gin. “Gin, everyone makes it, agrees Vincent Lambert. We need distinctive products. »

A saturated market

Gin, the Distillerie du Fjord also makes it. It is even its flagship product, its cash cow, according to Jean-Philippe Bouchard, co-owner of the family business in Saint-David-de-Falardeau. However, he is aware that the craze for Quebec gin is running out of steam. “The bulk of the wave has passed,” he says.

His company has no intention of abandoning gin, but is developing other products, such as a blueberry brandy, to secure its future.

find some air

“Very few microdistilleries can actually live off the fruit of their labor, or even recoup their costs,” said the Union québécoise des microdistillateurs, which is asking the Minister of Finance to reduce the markup for the Société des alcools du Québec (SAQ). on bottles sold at the place of production.

The SAQ deducts a percentage of the price of each bottle sold in Quebec for its selling, marketing, distribution and administration costs.

This increase on products sold on site by distillers is the highest in Canada, specifies the general manager of the group. Only 20% of Union members’ sales are made on the production site, and the reduction of the mark-up would not mean the end of the industry’s problems, recognizes Vincent Lambert. “But it will allow you to breathe a little,” he says.

For the Distillerie du Fjord, the reduction of the SAQ mark-up on sales made on site is not crucial. About 80% of the company’s sales are made at the SAQ. Jean-Philippe Bouchard nevertheless believes that this increase should be reduced, because it is not normal for on-site sales, with the costs associated with labor and transaction fees, to be less profitable for producers than sales at the SAQ.

Samuel Gaudette, president and co-founder of the Comont Distillery in Bedford, also believes that on-site sales are extremely important for microdistillers, who do little because it is not profitable.

In the world of distillers, products made from A to Z in Quebec are treated in the same way as so-called “bottled” or “prepared” alcohols in Quebec, which are cheaper to produce and have a higher volume, which is also part of of the problem of craftsmen.

“The first microdistilleries to close in the coming months will be those that present a high added value to the Quebec economy, namely those that cultivate their raw materials, enhance them and transform them “from grain to bottle”, since this model of business does not allow for profit margins that are as high as the average”, emphasizes the industry, which also calls for better differentiation of types of business.

In recent years, the SAQ has reduced the space devoted to microdistillery products, which affects the profitability of companies that are large enough to have access to them.

Can the Quebec market support all the companies that have entered this new market?

The question arises, according to Jean-Philippe Bouchard. “We are passionate, but what matters is finding a balance between the pleasure of doing what we do and being viable,” he says.

Living your passion or living off your passion is also a question that Simon Gaudette asks himself for the future. When he went into business with the Comont Distillery, he knew it wouldn’t be easy. “But I was hoping for that to change,” he says.