The uncertain future of Quebec's micro-distilleries

The uncertain future of Quebec’s micro-distilleries

But this extraordinary development has a perverse effect: they have to fight to sell their products and denounce the weight of the taxes that they have to remit to the government.

Alcohol is a very, very competitive sectorsays the president of the Union Québécoise des Microdistilleries (UQMD), Joël Pelletier.

The competition is very fierceadds Origine Québec sourcing and product manager, Simon Bourbeau, to the SAQ. Obviously some suffer in terms of distribution and sales.

In addition to gins and vodkas, micro-distilleries develop many products. the SAQ confirms the regular marketing of around 650 Quebec products.

a problem of space

All these products do not easily find a place in the branches. For imported spirits, the SAQ ensures that you have a diversified offering on the shelves that meets the demand.

For the spirits of Quebec, the SAQ decided, in an effort to promote local products, to open the floodgates. They all have their place on the shelf.

More than 70 vodkas and 200 gins distilled in Quebec are offered at the Société des alcools du Québec (SAQ).

Photo: Radio-Canada

We do not have elastic shelves.explains Simon Bourbeau of the SAQ.branch offices. Our challenge is to have the right products in the right place for the right customer”,”text”:”As much internationally as Quebec products, no product is available in all of our 400 branches. Our challenge is to have the right products in the right place for the right customer”}}”>Both internationally and Quebec products, there is no product available in all of our 400 branches. Our challenge is to have the right products in the right place for the right customer.. However, all products are offered online.

Therefore, growers have to fight to get the space they need for their many products. Cirka Distillerie Marketing Director Victoria Slodki says: It is very, very difficult. There is no room, and not only for us, but for all the distilleries.

In collaboration with theUQMDthe SAQ You are considering implementing supply management. The more customers choose a product, the more likely it is to stay on the shelves. But the SAQ wants to reassure consumers: Therefore, it is the customer who will be at the center of these decisions.

Taxes too high?

L’UQMD It also denounces the weight of the taxes levied on its products.

In 2021-2022, the SAQ returned $1.35 billion to the Quebec Treasury, an increase of 10.7% over the previous year.

In Quebec, all taxes are about half the price of a bottle. During a sale at the manufacturing site, microdistilleries must deliver, in addition to the GST and the QST, a specific tax from the Quebec government and excise taxes from the federal government. Finally, there is the increase in SAQwhich includes its operating expenses and the dividends it remits to the Quebec government.

What micro-distilleries cannot bear is having to pay the operating costs of the SAQ even when they sell their products on the site.

Since 2018, distilleries have the right to sell their products at the place of manufacture. An advantage, but which represents costs: handling, labor, warehouse maintenance, etc.

However, micro-distilleries, even when selling on-site, must return to the SAQ amount estimated at $6.52 per bottle that corresponds to the company’s operating costs, which obviously did not incur any costs since the product was sold on the site.

In Quebec, does a gardener who sells carrots on site, IGA or Metro go into his pockets because he sells his carrots on site? This is totally absurd! »

a quote from Joel Pelletier, president of the UQMD

the SAQ states that he no longer receives this amount. In fact, he remits this money to the Government of Quebec.

For on-site sales, micro-distilleries benefit from an additional $2 per bottle. Which is not enough, according to theUQMD. It barely covers terminal fees and credit charges.observes Joël Pelletier.

L’UQMD conducted a survey of its members earlier this year. Three quarters of them note a plateau or decline in their profit margin compared to previous years.

For its part, the Ministry of Economy, Innovation and Energy (MEIE) claims to help the industry. The support envelope for the alcoholic beverage sector doubled in 2022-2023 to $10 million.

But the micro-distilleries lament the lack of support from the Ministry of Finance, under which the SAQ. On the one hand, there is a part of the government that is adding gasoline to the fire. On the other hand, there is the Ministry of Finance that comes to put a blanket to make sure that the entire industry is well suffocated.says Joël Pelletier.

A person pours spirits into a glass.

Three quarters of Union Québécoise des Microdistilleries members say they are in financial difficulty.

Photo: Radio-Canada

Abolish the markup?

In New Brunswick, since the pandemic, the government has removed the required markup for local spirits sold at the manufacturing site.

In Quebec, the government says it can’t do the same because of international trade agreements.

L’UQMD would not you agree. SAQ and the government has been designing for years, I think they have not done their homework correctly. We did our homework.”,”text”:”Despite what the SAQ and the government have been saying for years, I think they haven’t done their homework properly. We did our homework.”}}”>despite what SAQ and the government has been designing for years, I think they have not done their homework correctly. We have done our homework.

Joël Pelletier considers, with the support of a legal opinion, that the application of theUQMD reducing the margin does not contravene international trade agreements.

The grocery store We requested interviews from the two ministries involved (MEIE, Finance), which were denied.

No price drop in sight

And if micro-distilleries saw their tax burden lightened, would it be in favor of the consumer?

SAQ“,”text”:”We couldn’t start selling products cheaper than in the SAQ”}}”>We couldn’t start selling products cheaper than in SAQobserves Joël Pelletier. SAQ what’s more. The links are there. If things haven’t changed in micro-distilleries, it’s really because of money and international trade. Now that we have resolved these issues, I think that should get things moving.”,”text”:”Now we have talks almost every month with the Ministry of Finance, with the Ministry of Economy and Innovation, also with the SAQ. The links are there. If things haven’t changed in micro-distilleries, it’s really because of money and international trade. Now that we’ve resolved these issues, I think I should get things moving.”}}”>Now we have conversations almost every month with the Ministry of Finance, with the Ministry of Economy and Innovation, with the SAQ what’s more. The links are there. If things haven’t changed in micro-distilleries, it’s really because of money and international trade. Now that we’ve resolved these issues, I think that should get things moving.

L’UQMD he fears that several micro-distilleries may have to close their doors. SAQ. All the strategies that we establish on a daily basis are to ensure the sustainability of the industry.”,”text”:”It is the last thing we want to see distilleries closed, answers Simon Bourbeau of the SAQ. All the strategies that we establish on a daily basis are to ensure the sustainability of the industry.”}}”>It’s the last thing you want to see distilleries closed, says Simon Bourbeau of the SAQ. All the strategies that we establish on a daily basis are to ensure the sustainability of the industry.

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