Mind Your Own Business

The SAQ – Société des Alcools du Québec (it’s Québec’s equivalent of the LCBO) – has revealed that it’s going into the international liquor wholesale business. The idea is that the SAQ will increase its already significant buying power ($900-million annually) by acting as a wholesaler in liquor markets in other countries. As the buyer for both its customers in Québec and its new customers around the world, the SAQ will presumably get better prices all-around. The argument appears to be that huge buyers such as Costco (in the US), Tesco (in the UK) and emerging players in the BRIC countries are taking over the wholesale liquor business. It’s “go big or go home”.

Now, I believe, as a principle, that government has no place in running a business, either wholesale or retail. That includes the liquor business. I recognize that, in my grandfather’s day, many people viewed wine and spirits as the devil’s instruments. Yes, alcoholism can be a serious health issue. Alcohol also contributes significant health benefits. But there are ways for the government to play its role as protectors and promoters of public health without running everything from A to Z.

But, as we all know, principle is one thing. Practicality is something else. In Canada, liquor businesses run by the government have been a reality for generations now. Unwinding these operations, through privatization or deregulation, would be difficult and I haven’t yet come across a proposal that describes how government would accomplish this without significant disruption to the consumer. (Not saying government can’t do it, just haven’t seen the plan yet.) Not to mention that governments are addicted to the steady revenue stream from liquor and lotteries. That’s why every time that the Government of Ontario floats the idea of selling off the LCBO, it’s never too long before it quietly retreats.

We accept (grudgingly) the government’s current place in the liquor business within its jurisdiction. But it simply compounds a mistake when the SAQ – a government monopoly with all the benefits that bestows – moves beyond its borders and competes with private sector companies. Maybe the SAQ (and LCBO) should look at using Costco or Tesco as its wholesaler. I’m sure they’d like to get their hands on $900-million in business. In the meantime, SAQ, mind your own business!

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