Robillard Commission Report
Updated August 31, 2015, at 5:05 a.m. | Published August 31, at 5:00 a.m.
The SAQ was not invited to take part in the work of the Commission, which decided to limit itself to studying public documents.
In connection with the release of the report of the Ongoing Program Commitee (aka the Robillard Commission), we would like to put into context and perspective various points that will help you better understand today’s SAQ.
The SAQ’s performance
The SAQ is in solid financial health and has made significant productivity gains in the last 10 years.
- Sustained growth: profits have nearly doubled over the last decade, going from $546 million in 2005 to $1.034 million in 2015.
- All profits are remitted to the government. They therefore benefit all Quebecers.
The SAQ performs well: in the last 10 years, its sales growth was higher than the average for all Quebec retailers.
- In the last decade, the SAQ’s sales have increased 53%, compared with 31% for all Quebec retailers and 21% for all food stores (Statistics Canada).
- Between 2004 and 2014, SAQ stores experienced, on average, sales growth of 6.4% a year. In this respect, the SAQ ranks second among Canadian liquor control boards (1st place: Newfoundland) (Statistics Canada).
The SAQ is constantly improving its productivity. In 2005, it cost 25 cents to generate $1 of sales; today it costs less than 19 cents. Due to sound management of its operations:
- the distribution centres currently handle eight million more cases than they did in 2001 while productivity has risen 85%;
- in stores, productivity has increased 23% since 2008.
The SAQ is constantly evolving and is often a retailing trailblazer. For example:
- its Taste Tag initiative now applies to all product categories;
- its customer experience, which has integrated the shift to online and mobile access (the SAQ.com website has more than 20 million visits a year and the SAQ mobile app has been downloaded one million times since 2010).
A mixed “public-private” model in Quebec
- While the SAQ sells wines and spirits, the beer market is in the hands of private companies and accounts for nearly half of all beverage alcohol sales in Quebec (43% market share).
- The SAQ also acts as a wholesaler for grocery and convenience stores. The store owners choose the products, market them and set the sales prices in their stores.
- In other words, a mixed “public-private” market already exists in Quebec.
Business models in other provinces
The models differ from province to province. The markets and consumption behaviours are different, which makes comparison difficult.
When it comes to privatization, a concrete example exists in Canada, namely Alberta (in 1993). Despite what many people think, this has not always been advantageous for Alberta consumers.
One has only to take a closer look:
- prices have gone up, almost twice as fast as they have in Quebec
- the Alberta government reportedly had a $1.5 billion revenue shortfall between the start of privatization in 1993 and 2011
Parkland Institute 2012
- Alberta consumers pay more for beverage alcohol products than do people who live in markets where there is a government monopoly
Parkland Institute 2012
- many fewer products are available to consumers (around 29,000 in Quebec, including private imports, versus 16,000 in Alberta)
- there is regional disparity in pricing.
In Quebec, regardless of whether you are in the Gaspé or the Mauricie, the prices are always the same and consumers have access to a broader selection of products.
The Ontario market is centred on spirits while Quebec is more of a wine market.
For $30 in spirits sales, double the number of wine bottles have to be handled, stored and placed on shelves. This has a significant impact on labour force ratios.
Also, the LCBO sells 24% of all the beer purchased in Ontario, approximately $1 billion in annual sales. For all intents and purposes, the SAQ does not sell beer (< $15M).
- If similar sales were added to the SAQ, its operating expense and compensation-to-sales ratios would be comparable to Ontario’s (16.3% for the SAQ versus 16.2% for the LCBO).
Total or partial privatization: impacts to consider
Several myths persist. For example:
- Competition would lower sales prices. This is false, as the Alberta experience has shown.
- A wider range of products would be available. This is false, as Quebec already offers one of the widest selections in the world. What’s more, the products are available in every region of Quebec and at the same price.
- The SAQ is an outdated business model. False. The SAQ has been adapting to its market for decades. This has been recognized by its customers as well as its partners. As a result, the SAQ has enjoyed enduring success.
Today, the SAQ has a proven record of solid financial performance, a customer satisfaction rate of 93% and a much admired retail dynamism. Could we do better? Our results speak for themselves and demonstrate our willingness to constantly improve.
A strong determination exists within the SAQ to continue improving its performance and creating wealth for Quebec.