Quebec liquor authority expands big into small towns

After overseeing a wildfire expansion of the Societe des alcools Quebec (SAQ) that will see 50 new stores opened by 2003, including warehouse-style locations specializing in bulk sales, the head of the Quebec liquor board has begun to think small.
By the end of next year, SAQ president and CEO Gaeton Frigon, plans to have established over 400 SAQ branded mini-agencies located in grocery stores in communities with a minimum of 750 citizens.

After overseeing a wildfire expansion of the Societe des alcools Quebec (SAQ) that will see 50 new stores opened by 2003, including warehouse-style locations specializing in bulk sales, the head of the Quebec liquor board has begun to think small.

By the end of next year, SAQ president and CEO Gaeton Frigon, plans to have established over 400 SAQ branded mini-agencies located in grocery stores in communities with a minimum of 750 citizens.

It is the zenith of a three-year transformation that saw the SAQ, like the LCBO in neighboring Ontario, turn itself into one of the top retailers in the province and make everyone forget that it is in essence a government agency.

‘What the SAQ is doing is simply doing business as if it were privatized,’ Frigon says.

Frigon says he has been watching the LCBO closely since taking over as SAQ boss in 1998. Of particular interest was the Ontario retailer’s success with its Vintages sections devoted to the sale of high-end wines.

Hoping to mimic Ontario’s success in the wine category – last year the LBCO sold $897 million in wine – the SAQ expanded floor space in 70 stores last year and renovated other locations largely to accommodate a broader inventory of wine. Some stores now carry over 4,000 different types of wine.

‘We’re spending $40 million to $50 million a year to upgrade stores,’ Frigon says. As a result, ‘In the last three years we’ve increased sales by $600 million.’

Total sales were $2 billion in fiscal 2000.

The chain has accomplished this to a degree through aggressive marketing in-store, including promotions, discounted specials and targeted sampling programs. Some stores have devoted floorspace to kitchen/sampling areas – similar to what is employed in Ontario – where chefs, sommeliers and dieticians are invited to present lectures, workshops or tastings.

The chain has also launched a series of TV, print, billboard and radio promotional spots created by Montreal-based Marketel focusing on products and services.

Expansion has also included the building of SAQ Depots in Quebec City, Hull and Montreal, specializing in bulk sales, designed to offer consumers savings through volume purchases. The agency also opened high-end SAQ Signature stores in Montreal and Quebec City that sell vintages for up to $30,000 a bottle.

The emphasis on wine retail is not surprising considering the category accounts for two-thirds of the SAQ’s total sales. The chain saw wine sales increase by 13.5% last year topping $800 million.

The SAQ’s main competition comes from grocers who account for 95% of beer sales. But these outlets are limited to only selling wine bottled in Quebec.