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Quebec liquor board starts global booze business

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The Canadian Press

Date: Tuesday Oct. 5, 2010 7:09 AM ET

MONTREAL — Quebec's liquor-commission board wants to play a bigger role in the international booze business.

It announced Monday that it plans to start a new company that would buy alcohol in bulk on international markets, then distribute to clients both inside and outside Canada.

The Societe des Alcools du Quebec will own half the shares in a new limited partnership and two of Quebec's main labour unions will own the rest. The provincial government is investing $12.5 million on behalf of the SAQ, while the unions will contribute the same amount.

The liquor board says the emergence of new markets -- like China, South Korea and Brazil -- is driving up the price of wine.

By teaming up with other buyers, it says, it can purchase at the lowest possible price. It could then, for instance, sell foreign wines to Canadian customers or distribute domestic wines abroad.

The new limited partnership will offer a variety of other services, including promoting the products of smaller vineyards.

The company will offer most of the services the board already provides, but will not open up retail stores abroad. Its intended services include wine selection, analysis, quality control, distribution, marketing and the startup and management of a sales network.

Quebec Finance Minister Raymond Bachand was on hand to make the announcement in Montreal.

The SAQ is already a major wine purchaser, buying more than $900 million worth of products annually, including 10,500 wines from 65 countries.

The Quebec monopoly touts itself as among the five major world players and, it says, it needs to keep growing to maintain the same purchasing power.

Bachand said that consolidating purchasing power means an impact on price, product access and variety.

"The wine industry is changing very rapidly and the SAQ's business strategies must adapt to this new situation," Bachand said.

Each of Canada's 13 provinces and territories has its own liquor board responsible for control, distribution and sale of alcohol.

Those boards had heard last February that Quebec was looking at the business model.

"(SAQ President Philippe) Duval mentioned in his strategic plan update that they were going to be exploring new growth opportunities in the alcohol beverage industry," said Rowland Dunning, executive director, Canadian Association of Liquor Jurisdictions.

Dunning said no other boards in Canada appear to be looking at the wholesale model.

Duval hopes for sales of between $50 to $100 million within the first three or four years of existence.

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