Online sales spike, but can’t overcome hit in restaurant and bar orders
But loss of orders from restaurants, bars ‘hurting our results,’ CEO says
Online sales are soaring at the Société des Alcools du Québec, but it’s far too early to talk about a vintage year for the state-owned monopoly.
Orders on Saq.com from April 1 to May 10 were triple what they were in the same period a year ago as consumers rushed to purchase wine and spirits for home delivery, chief executive officer Catherine Dagenais said.
Still, with online orders only generating about two per cent of 2019 revenue, the surge is too small to make up for the halt in sales to bars, hotels and restaurants during the lockdown. Permit holders such as restaurants typically account for about 12 per cent of the SAQ’S annual revenue.
“Business is good, but it’s still being affected by the lack of sales to bars and restaurants. It’s hurting our results,” Dagenais said. “There is some compensation, but we’re not clawing back 100 per cent of the revenue.”
Activity overall has cooled off from the last two weeks of March, when Premier François Legault put the economy on pause and briefly stoked fears that SAQ stores would shut down. The SAQ was later deemed to be an essential service and has remained open throughout the COVID -19 crisis.
Business in the last two weeks of March was “similar to what we see in the run-up to Christmas,” Dagenais said. “Our stores were stormed. It was Christmas in March.”
Local wines and spirits makers would appear to be among the lockdown’s beneficiaries. Sales of Quebec wines are up 60 per cent since the start of April, while those of Quebec spirits are up 80 per cent, Dagenais said.
“It’s clear that people are buying more local products,” she said. “Obviously, they’re also buying other products. If you drop by one of our stores, you will see a few holes on our shelves.”
The SAQ buys from more than 3,000 wine producers in about 80 countries. It spent about $1.6 billion last year on alcohol, transport and taxes, and ranks as the world’s biggest single buyer of French and Italian wines.
Demand for home delivery is such that Saq.com has moved to a 24 hour-a-day, seven-day-a-week operation by adding shifts. The company has also opened a second warehouse and hired staff to help process orders, Dagenais said. The temporary warehouse, located on St-zotique St., previously focused on restaurant orders.
“COVID-19 has really pushed online sales to a new level, and we don’t think that they will go back to what they were before,” Dagenais said. “We’ll need to organize things differently.”
Speed is a casualty of the boom. Orders now require up to 10 business days to be filled, compared with the three to five days normally, Dagenais said. That’s a problem when 40 per cent of what SAQ consumers buy is for same-day consumption.
“Our goal is to get back to three to five days as soon as possible,” Dagenais said. “The second warehouse is going to help. If we want to keep growing our online sales, eventually we’ll need to move to one-day delivery.”
COVID-19’S impact will also be felt at SAQ headquarters. When the pandemic began, office staff had just begun working from home one day a week as part of a plan to reduce the traffic headaches associated with the Louis-hippolyte La Fontaine tunnel renovations.
“People weren’t sure if telecommuting was going to work, but the answer is yes,” Dagenais said. “They’ve gotten used to working from home and they like it. Now we’ll have to see how far we can go as an organization. Our employees expect us to be more flexible.”