Microdistilleries ask Quebec to reduce its tax burden

Interviewed on the show Economy zone on Tuesday, the president of the Union québécoise des microdistilleries (UQMDQuebec Union of Microdistilleries), Jonathan Roy, maintains that two microdistilleries out of three are loss-making in the province and that several of its members are in great difficulty for two years.

On a bottle sold at a retail price of $40, the markup collected by the SAQQuebec liquor company represents $20.30. The specific tax on alcohol ($0.98), the QST ($3.47), the federal excise tax ($3.53) and the GST ($1.74) complete the tax picture. The amount received by the manufacturer is $9.98.

L’UQMDQuebec Union of Microdistilleries recently proposed to the Government of Quebec to review this sharing. In return for the abolition of the increase collected by the SAQQuebec liquor company on sales at manufacturing sites, the association proposes to increase the specific tax on alcohol to $9.13 for a bottle sold at a retail price of $40. The other taxes remain as they are. In this scenario, the amount received by the manufacturer would be $22.13, which would boost microdistillery profit margins, which have been declining since 2017.

Half of the increase is used to cover the operating costs of the SAQQuebec liquor companyexplains Jonathan Roy, president and co-owner of the Fils du Roy distillery, located in Saint-Arsène in the Bas-Saint-Laurent region.

And that’s where they say it’s not fair. This is not a correct transaction because the SAQQuebec liquor company does not intervene in the transaction. There is no distribution, no marketing and no saleshe says.

Jonathan Roy is president of the Union québécoise des microdistilleries.

Photo: Fils du Roy microdistillery / JHAPhotographie

Even though the microdistillery sector is booming, a large majority of companies have lost more than a third of their space on the shelves of the SAQQuebec liquor company.

This is our only distribution network and the network is full. In fact, there are too many Quebec products and there isn’t enough shelf space. And there, what happens is that our products are no longer distributed correctly and we would like to have a way of selling or participating in the local economy.argues Jonathan Roy.

The entrepreneur believes that volumes are favored on the side of the SAQQuebec liquor company, which means that the large distilleries will be able to survive. Distilleries that bring multiple new products to market will also survive, Roy says.

Distilleries that want to produce a stronger product, with a well-presented brand image, have a lot more difficulty surviving now, when it should be the other way around.he adds.

For now, the Fils du Roy distillery is surviving, but Jonathan Roy says it quietly eats its working capital. Not all distilleries are lucky enough to have a woolen sock, says Mr. Roy.

If nothing changes, distilleries will announce their closure by the end of the summer. We are asking the Department of Finance to intervene to save the young Quebec spirits industry.

In a consultation conducted with its members, 70% of microdistilleries believe that the greatest obstacle to their development is the increase in the SAQQuebec liquor company on home sales.

It is impossible for the vast majority of microdistilleries to develop, or even survive, in the current contextconcludes theUQMDQuebec Union of Microdistilleries in a press release.