Have LCBO and SAQ become too good?

—The LCBO and SAQ have written a textbook case in retail excellence, but are they acing the social responsibility test? Éric Blais wonders if it’s time to take a page from the Swedish playbook.

“Would you like to try our tequila?” I politely declined, as it was too early in the day for a cocktail. The nice in-store sampling person at the Ontario government-run LCBO quickly found another customer ready for a shot.

I wasn’t there to browse or sit at the wine-tasting station. I was there on a time-limited mission to buy two bottles of wine. Still, from the moment I walked in, I was encouraged to discover a world of wines, spirits, beers, and a sea of coolers and seltzers. Upon exiting, I was rewarded for my loyalty with Aeroplan points. I could also have earned extra points if I had spent $50 or more on Ontario VQA wines.

Had I been there a few days earlier, I would have likely run into Mark Wahlberg, who was in town to pitch his Flecha Azul Tequila at the Summerhill location: “One of the most beautiful stores I’ve ever seen,” according to the video posted on his Instagram.

The next day, I visited an SAQ store in Montreal (Quebec’s government-owned liquor store). I was inspired by the Inspire perks, the name of SAQ’s points program, which also provides personalized wine and spirits suggestions based on my tastes, keeps track of all the products I love “without having to remember their names,” and gives me chances to win prizes.

Both the LCBO and the SAQ are best-in-class examples of retail brands excelling in-store and online.

Their strategies and executions are paying off. The LCBO saw its net sales increase 2.2% and delivered a record dividend of $2.55 billion to the Government of Ontario according its 2021-22 Annual Report. In Quebec, the SAQ is expected to remit a dividend of $1.4 billion to the Quebec government.

The merchandising and promotional programs of the SAQ and LCBO are always well-orchestrated, but should they be?

Chances are most of you have never heard of Systembolaget, Sweden’s government-owned chain of liquor stores. It is the only retail store in the country allowed to sell alcoholic beverages that contain more than 3.5% alcohol by volume.

Systembolaget’s website doesn’t invite you to raise a glass or try free home delivery. Instead, the landing page reminds visitors that “with limited access to alcohol, public health improves.” It prides itself on being different: “Because alcohol is not like other goods, we are also not like other companies: we have limited opening hours, are age-focused, and have no promotional prices.”

Systembolaget doesn’t place any alcohol by the checkout tills. In its online store, there are as few steps as possible from shopping cart to order. No prompts like “Others have bought” or “Products related to this item” appear. There’s no bestseller lists or advertising. No bulk offers, discounts or loyalty card with bonus points.

And Systembolaget takes every opportunity to remind Swedes that “the downsides of alcohol affect young and old, rich and poor. And also those around them—children, partners, friends, and colleagues.”

Interestingly, Systembolaget advertises. The tongue-in-cheek ads use an American retail consultant explaining how and why it could increase sales, while a bemused Systembolaget employee listens, knowing that their mission is not to sell more.

I’m not advocating for Canada to adopt Systembolaget’s approach, but I’m asking how far provincial liquor control boards should go in promoting sales to deliver much-needed funding for government programs in healthcare and infrastructure.

It’s a question SAQ’s new boss appears to be wrestling with. Jacques Farcy previously headed Quebec’s government-owned cannabis stores (SQDC), which, unlike the SAQ, has no commercial mandate. Its objective is consumer health protection. It is not allowed to do any form of advertising.

In an interview in La Presse this week, Farcy commented on a 1.2% drop in sales last quarter, a first in 10 years. He faces a dilemma: generate sales without inciting Quebeckers to drink more.

It could be argued that alcohol consumption in Quebec is generally stable. The SAQ does much, along with industry-funded organizations such as Éduc-alcool, to promote responsible drinking. Not to mention the funding liquor boards provide for much-needed government programs and community-based organizations.

Still, it’s fair to ask about the role of marketing initiatives that clearly go beyond simply responding to the demand. Is it the role of a liquor board to advertise and promote to create demand and increase consumption?

Farcy is clear on this, sort of. “The line for us is clear: if it’s a minor, we don’t sell; if it’s a person who is intoxicated, we don’t sell. In all other cases, our mandate is to sell.” He added that “the role of the SAQ is responsible selling. It is not responsible consumption.” To be clear, “we’re not here to stimulate sales; we’re here to meet demand.”

Perhaps it’s semantics, but promotional tactics such as discounting cases of twelve bottles to reward customers, or promoting Caesars with real vodka, will stimulate sales. If they don’t, what’s the point?

I love browsing through the LCBO’s Summerhill store. Marky Mark is right. It’s spectacular. But his publicity stunt at that location, or most of its displays encouraging you to buy, are not what I would call responsible selling by the LCBO. It’s the kind of sales promotions the retail expert in the Systembolaget campaign would be proud of.

Éric Blais is president of Headspace Marketing, a consultancy that helps marketers build brands in Quebec. He can be reached at feedback@headspacemarketing.com

Eric Blais