New social phenomenon or simply a new temporary market dynamic? The sales volumes of alcohol – wines and spirits combined – were down last year in SAQ branches. A phenomenon which has also been observed everywhere else in the world and which has forced the state corporation to tighten its ways of doing things to create a little room for maneuver.
The latest financial results of the Société des alcools du Québec (SAQ) were tabled Thursday in the National Assembly and despite a 3.3% drop in wine sales volume and a 1.3% drop in sales volume spirits, the SAQ was able to deliver a dividend to its shareholder, the government of Quebec, of 1.43 billion, a very slight increase of 0.1% compared to last year.
To achieve such a net result, the SAQ had to pay particular attention to its expenses and investment costs, while sales of wines and spirits to consumers were down as were sales to grocery stores. Only sales to license holders (bars and restaurants) recorded a slight increase.
“We recorded higher traffic in our branches, but our customers bought less, even if they paid a higher average price than in the past,” observes Jacques Farcy, CEO of the SAQ, who has been in office for soon a year.
After having been vice-president of marketing and sales of the SAQ, Jacques Farcy did a two-year internship as CEO of the Société québécoise du cannabis (SQDC) before being appointed CEO of the SAQ in June 2023.
Thanks to a financial year which exceptionally included 53 weeks, the SAQ was therefore able to post sales increases of 1.3% whereas they would have been negative without this additional week.
That said, the SAQ managed to reduce its net expenses by 10 million during the 2024 financial year thanks in particular to a reduction in its international transport costs which it fiercely renegotiated with its suppliers.
“There have been considerable increases in transport costs during the pandemic. With the re-establishment of the supply chain, we were able to renegotiate these costs downward.
“We don’t make a profit on the costs we save, we return them to consumers. This is why we have just announced that the price increase of 1.7% which was announced last February was reduced to 0.7% last week,” explains the CEO of the SAQ.
A new business context
Jacques Farcy has a simple formula to explain the positioning that the company had to adopt to face the new market context, “we must deliver the expected value”, rather than waiting for it to be delivered…
In this regard, he is counting on the 7,042 employees of the SAQ who, according to him, have at heart the mission of the state corporation to serve the public well in order to deliver this expected value. In this regard, it must be said that the commitment of many SAQ employees allows it to post a rate of 93.4% of customers satisfied with their in-store purchasing experience.
“We often point out the advantageous working conditions of SAQ employees, but we want to be an employer of choice and we want to have committed employees,” submits Jacques Farcy, who wants a harmonious outcome of the negotiations with a view to renewing the agreement collective of branch employees.
Jacques Farcy believes that sales volumes of wines and spirits should still suffer a slight decline during the current financial year while rising costs and the tightening of consumer discretionary spending will slow purchases.
“We will still try to reduce our costs. In 2024, we limited sales fees to 14.7%, which we had never managed to do. This year, we expect to return to sales charges of around 15.2% because we must invest in particular in the construction of our new automated center which should begin operations in 2027,” anticipates the CEO.
This new automated center will make it possible to better process orders by the bottle made via the SAQ website and permit holders who want to purchase bottles individually. Employees will no longer have to circulate around the warehouse to fill orders; the machine will pick up the desired bottles from more than 20,000 different wine and spirits products.
Does Jacques Farcy cope well with the pressure of having to run a state-owned company like the SAQ which is the subject of a lot of media attention?
” I do not care. We have to pay attention to what our customers tell us. It is up to us to have to explain our decisions and to be able to modify them if necessary,” submits the CEO humbly.