SAQ to remove spirits from shelves as local distillers struggle

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MONTREAL — The number of microdistilleries in Quebec has skyrocketed in the last decade, going from less than a dozen to about 70.

But the Quebec liquor corporation’s decision to remove up to 200 local products from its stores is a sign of the growing pains felt by an industry struggling with stiff competition, onerous regulations and a tough economy, distillers say.

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The Société des alcools du Quebec (SAQ) announced last week that it plans to remove between 150 and 200 lowest-selling Quebec spirits from store shelves by winter 2025. The SAQ currently stocks more than 600 Quebec spirits .

“The current shelf space they occupy will be freed up for products that customers demand but struggle to find space in an overly large assortment,” the provincial Crown corporation said in an email. He added that he was working with the Union Quebece des Microdistilleries, a group representing distillers, to draw up new rules in the coming months.

Paul Cirka, president of Montreal-based Cirka Distilleries, said the situation at SAQ is the result of an industry that has expanded rapidly, with no more shelf space available and almost no other opportunities to sell. The result, he said, is that some producers “throw products” at the SAQ, which, he said, put them indiscriminately on shelves to see what resonated.

“To some extent, the SAQ created this problem and now they don’t know how to manage it because they don’t have a clear creative or management perspective looking for a solution,” he said in a telephone interview. He fears that the SAQ lacks vision over what products to stock where, which could result in some promising products being removed because they have not had enough visibility or publicity.

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And even if distilleries sell their products directly to consumers from their own facilities (the only other way allowed), they still have to remit about half of the sales price to the SAQ, not including taxes. He said that amount is much higher than what other provinces charge small distilleries.

“If they are removing products from retail shelves, and those are still viable products that you can sell at your distillery, there is no reason why the margin should be given to the SAQ,” said Cirka, whose distillery produces gin, whiskey and vodka. that SAQ sells.

Samuel Gaudette, co-founder of the Comont distillery in Quebec’s Eastern Townships, said the SAQ made a mistake by not regulating which spirits it stocks from the beginning.

However, he said that suddenly reducing products, without allowing producers another outlet, “will definitely suffocate smaller players and especially those just starting out.” He said it would also stifle creativity.

“By wanting to eliminate more niche products that necessarily have fewer sales, the message they send to distilleries is simple: they look for mass products to maximize sales and satisfy the general public,” Gaudette wrote in an email.

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Joelle Bolduc, co-owner of les Esprits Tordus microdistillery in l’Assomption, north of Montreal, says she’s cautiously optimistic that SAQ’s plan to be more discerning about what it offers could create more room for new and innovative products.

“There are distilleries that offer six different types of gin,” he said. “Do we really need that many gins from one distillery? Beyond that, do we really need 300 types of Quebec gins?

But she says tweaking SAQ’s offerings won’t be enough to solve the industry’s problems.

He notes that in the last year several well-known distilleries have closed or filed for bankruptcy. She says the COVID-19 pandemic, an economic recession and an “explosion” in the number of distilleries haven’t helped, but neither has Quebec’s restrictive sales model.

He points out that he has to pay half of his sales to the SAQ even though they do not have stock of his bottles.

“Our products are sold only at the distillery, but I still have to send 52 percent of the price of my bottle to the SAQ, even if they do not offer me a single marketing service,” he said.

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Bolduc and her husband, who have been in business for two years, produce a brandy-like spirit made from grapes, elderflower and raspberries they grow themselves, as well as a whiskey-like spirit made from leftover beer. They collect from local breweries.

It would like to have its products on liquor store shelves, but that would require significantly expanding its operations to create the volume the Crown corporation requires.

“Our business model is that we are a small line in an agricultural environment, we want to stay human scale,” he said. “A business model like that is very difficult in the current environment.”

The three distillers say the easiest way for the province to help small distilleries (and free up SAQ shelf space) would be to give distillers more freedom to sell their products, including in restaurants, farmers markets and directly to online customers. They also believe that distillers should get a discount on the amount they must remit to the SAQ for bottles sold without the corporation’s help.

The SAQ says it is evaluating the possibility of implementing “alternative channels” for sales as part of its changes, but did not specify what these might be.

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