Liquor sales are up — and so are the prices

By | December 4, 2012 | 0 Comments

Liquor sales are up nearly 3 percent since the state got out of the liquor business in June. Prices are also up — a standard liter of liquor now costs an average of $2 more per bottle than last year.

About 13.6 million liters of liquor were sold from June through September this year, compared to 13.2 million during the same period a year ago, when state liquor stores were still in business.

Consumers purchased about 8 percent more spirits when compared to last year, according to figures released today by the state Department of Revenue.

Bars and restaurants, meanwhile, are buying less — there was a 13 percent drop in liquor purchases from businesses from June to September. The revenue department speculates that’s because businesses stockpiled in May, before the privatization law went into effect.

A year ago, the average retail price for a liter of liquor, including taxes, was $21.58. The same bottle now costs an average of $24.09 — a nearly 12 percent increase.

Entrepreneurs who bought state-run liquor stores struggle against competition

By | October 8, 2012 | 0 Comments

Since the state privatized liquor in June, overall liquor sales have jumped about 10 percent and tax revenue is coming in higher than expected. But the small, formerly state-run liquor stores are not faring as well — with some seeing a 50 percent drop in business.

The state collected $68 million in liquor revenue for the months of June, July and August. That’s about $4 million higher than expected, according to Drew Shirk of the Dept. of Revenue in an update to the House Ways and Means committee today.

Overall, liquor sales are up 10.2 percent higher than “pre-privatization levels,” Shirk said.

Voters approved I-1183 last year, which took the state out of the liquor business and forced the Liquor Control Board to auction off about 160 state-run liquor stores. Another 160 contract liquor stores, run by private individuals, were allowed to continue to operate.

Today, 1,420 retailers hold liquor licenses — including Costco, grocery stores and liquor superstores like BevMo, which has already opened two stores in Washington and is planning more.

The increased competition has been challenging for the entrepreneurs who bought the small state stores, said Liquor Control Board deputy director Rick Garza.

“Those smaller stores, both the auction stores and contract stores, are struggling to meet the sales that we had when the state had the monopoly,” Garza told the committee. “Their sales have declined as much as 50 percent, which makes sense because you have 1,200 more retailers and competition.”

Garza said the small store owners want the Liquor Control Board to exempt them from paying the board a 17 percent retail fee — an issue he said may need to be resolved during the next Legislative session.

On Nov. 1st, the Liquor Control Board is holding an auction to get rid of its remaining inventory of 130 lots of high-end liquor, pints and minis. The board is also readying to sell its distribution center, which has been appraised at $30 million, said director Pat Kohler.

Watch the full meeting here.

Categories: WA House, Ways & Means
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State liquor store auction nets $30.75 million

By | April 23, 2012 | 0 Comments

The state is set to bring in $30.75 million from auctioning the rights to apply for a spirits retail liquor license at 167 state-run stores, the Washington State Liquor Control Board said Monday. The state auctioned off the rights as part of Initiative 1183, which voters approved last year to privatize the liquor business in Washington.

Winning bidders get to apply for a liquor license at the existing state-run stores, which are exempt from the new law’s rule that says that liquor stores must be at least 10,000 square feet.

Online bidding for the liquor rights ended at 6:35 p.m. on Friday, with 121 successful bidders. The highest winning bid was for $750,100 for a liquor store in Tacoma. In total, the event drew 551 bidders casting more than 14,000 bids.

The bidders still need to secure a lease with the landlord because the state does not own the individual properties. If they can’t get a lease, they can sell the rights or apply for a liquor license at a different location within a mile of the existing store. The state’s new privatization law goes into effect June 1st.

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This week’s Q&A: What the new liquor privatization initiative means for the Liquor Control Board

By | November 10, 2011 | 0 Comments
Photo from Wikimedia Commons

Photo from Wikimedia Commons

Earlier this week, voters passed Initiative 1183, which would privatize the state’s liquor system. For this week’s Q&A, I spoke with Brian Smith, Communications Director for the Washington State Liquor Control Board, about what this change means for the WSLCB.

Q: Private stores will be able to sell liquor in June of next year – what’s happening before then in order for that transition to occur?

Smith: Immediately, there’s a number of things. We will need to do some emergency rule making to make sure that our existing rules and laws coincide with the initiative, because it goes into effect Dec. 8.

We need to do something about the trade area, which you may recall was an issue during the campaign.  We need to develop licenses for people to apply for: The spirits retail license, the distributor license do not exist. Then you have to have about 60 days to process them. So, for example, if you’re a grocer, you need to apply for a license, then through that process we work with local governments – all that takes generally about 60 days.

Q: You mentioned “trade area.” Is that a definition that will be established before any licenses are issued, or will that be a case-by-case basis?

Smith: We don’t know yet. We are contingency planning, but that is certainly something that’s going to have to happen very soon.

Q: If you read the initiative, it’s talking about distributors and retailers. Can you describe how that system might look?

Smith: Right now, there are beer and wine distributors in Washington. They do the jobs of not only collecting the product from manufacturers, then move it out to retailers. Usually, they provide a service: They go in and stock the beer shelf, etc. I would imagine it’s going to be something like that under this scenario. They’ll bring in the liquor; handle marketing it on shelf space. The retailer is going to be just that – anyone that meets the criteria of the initiative, which is 10,000 square feet or larger, hasn’t had a public safety violation in two years. Contract stores are grandfathered in but they’ll have some changes: Right now, a contract store is a small business. We own the inventory and we pay them a commission on their sales. Under 1183, they will have to purchase their own inventory, and that runs, on average, $125,000, which is pretty steep for a small business.

Q: I also noticed in the initiative that, while state liquor stores will close next summer, there will be a one-year period for the state to get rid of all the assets. Does that mean the liquor stock? The buildings?

Smith: Assets like land and buildings. We’ll have the distribution center and we’re supposed to auction off the existing state store license locations. (more…)

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Election results so far….

By | November 8, 2011 | 0 Comments

So far, every initiative is passing — except Tim Eyman’s initiative 1125, which is behind by about 2 points right now.

There will be more batches of returns in the coming days and more updates, but for tonight it looks like the state will have privatized liquor stores, more training for home healthcare workers, a budget stabilization account and no residency requirement to vote for president.

This week’s Q&A: The arguments against Initiative 1183

By | July 22, 2011 | 0 Comments
Photo from Wikimedia Commons

Photo from Wikimedia Commons

Last week for the Q&A, I talked to Bruce Becket of the Washington Restaurant Association about why his group supports Initiative 1183. This week, I talked with Jim Cooper, president of the Washington Association for Substance Abuse and Violence Prevention.

Q: First, what does Initiative 1183 do from your perspective?

Cooper: Well, the first piece, the main piece for us is that the initiative increases the number of liquor outlets fivefold — from 328 to nearly 1,500. We know through a lot of research and evidence that when you increase liquor outlet density, crime and violence go up as well. The American Medical Association has a web site called Alcohol Policy, MD which compiles all the different resources and the CDC, for that very same reason (of increased crime), has recommended against any further privatization in any states that have a control system.

The current system is keeping communities safe and it would be irresponsible to add more liquor outlets.

The other side of it is, what part of No does Costco not understand? Voters said no in two different initiatives last year that went down overwhelmingly in almost every single county in the state. And Gov. Chris Gregoire commissioned an Elway Poll on the liquor system and found that most people like the current system and feel they have ample access to liquor. We’re kind of like, why do we need to do anything different? There’s not a grassroots groundswell, this is really just a big box corporate initiative.

Q: Do you think privatizing liquor sales would increase consumption and abuse?

Cooper: There will absolutely be an increase in consumption related to the volume of liquor stores. Anytime you increase consumption, you’re going to have some increase in abuse.

In our state, I don’t remember the exact number but we have a significantly lower rate of crime and violence per capita than California.

Q: So are you saying it will increase the crime rate in Washington?

Cooper: I know it will.

Q: Part of the pushback of this initiative will undoubtedly be from state employees. Can you say more on that point?

Cooper: Sure. Over a thousand living wage jobs would be lost if this passes. You know, and then you’re talking about what that means to communities and I don’t really have a lot more to say to that but there are the labor unions involved, faith-based organizations, firefighters, law enforcement and many others.

Q: Bruce Becket suggested in last week’s Q&A that those who lose their jobs at state liquor stores could work at the private-run stores.

Cooper: You know, I don’t want to pretend to know how that will happen, but I don’t see Costco or Safeway increasing their number of employees by very many on the floor. Costco doesn’t even have people on the floor. (more…)

Q&A with Bruce Beckett: Proponent of privatizing liquor sales via Initiative 1183

By | July 15, 2011 | 1 Comments
Photo from Wikimedia Commons

Photo from Wikimedia Commons

This week’s Q&A is with Bruce Beckett, Government Affairs Director of the Washington Restaurant Association and a spokesman for the Yes on Initiative 1183 campaign. I wanted to talk to him about this year’s effort to privatize liquor sales in the state. I’ll be following up next week with someone against the initiative. Here’s what Beckett had to say.”

Q: First, what does this initiative do?

Beckett: Well, it simply removes state government from its role as the sole retailer of liquor in the state and allows private retailers, distributors or even manufacturers to enter into the market. It does so by allowing a limited number of qualified retail stores to sell liquor. They have to be 10,000 square feet or larger, and it also will increase revenues to state and local government over and beyond what they’re currently receiving from the liquor distribution center in Washington. And it strengthens regulations on the liquor sales to minors in particular.

Q: You were involved in an initiative last year to privatize liquor. What are the main differences this time around?

Beckett: Last year, the voters responded quite strongly to the campaign that was put out in opposition. (The opposition) focused on public safety and on revenues to state and local government. There were some legitimate issues raised by stakeholders. This initiative responds to those concerns in a number of ways.

(Initiative 1183) will increase revenue to state and local government by the imposition of license fees on retailers and distributors. The fee is 17 percent for retailers on gross sales, 10 percent for distributors or wholesalers. (The 10 percent rate) does decline to 5 percent once there’s the replenishment of the revenue the state would lose. So on the revenue side, that’s how that’s been addressed.

On the public safety side, there’s a number of things. First, it limits retail outlets to 10,000 square feet or more. That’s a pretty good-sized grocery store. That’s to eliminate the concern over liquor being in convenience stores or gas station mini-marts. Second, it increases education and training requirements for those employees that will be handling liquor in those stores. Third, it doubles the penalty for selling to a minor — doubles it over what would occur on beer and wine sales.

The revenue increase, which is being evaluated right now, is projected to be over $200 million more in the first biennium and then 10s of millions of dollars thereafter. Ten million of the increase is dedicate to public safety. (more…)

Bottoms up! Senate approves liquor sampling

By | March 30, 2011 | 0 Comments

With a  31-17 vote, the Senate just passed a bill to allow a pilot project for spirits sampling in 30 liquor stores around the state. The measure passed the House 80-18 on earlier this month.

“The whole purpose of this is to allow consumers to become familiar with new products,” Sen. Jeanne Kohl-Welles.

“I think its just a creep of the liquor board and the state liquor monopoly into what the private industry should be doing,” said Sen. Tim Sheldon. He said that while the legislature should be moving toward privatizing the sales of spirits, it instead is trying to pass several small bills that are trying to turn state liquor stores into grocery stores.

The pilot would take place under the direction of the Liquor Control Board and would last one year, starting on September 1. Stores could only hold one sampling per week and could not charge for the service. Only those who are over the legal drinking age and don’t appear to be intoxicated could participate, and they could only have four samples. The sample amounts would be restricted to a quarter-ounce each and they would have to be served by someone who has gone through an alcohol server training program. Sponsors, not store employees, would host the event and customers could not take their samples with them out of the store.

The board could exclude stores within  an “Alcohol Impact Area” from the pilot program and would provide notice to schools, churches and others that are within 500 feet of a liquor store if a sampling is going to take place there.

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Auditor’s office: Privatizing liquor sales could be loss or gain, depending on the model

By | January 11, 2010 | 0 Comments

One of the hot topics in the days leading up to the legislative session was privatizing the state’s liquor sales. Currently, the state owns and operates all liquor stores in Washington.

But, there are many ways that could work. The state Auditor’s office analyzed them to see how much money would be saved. The results can be found on page 14 of the slide show here.

One way: Convert all state-owned stores to contract stores. But that would actually cost the state $47 million between 2012 and 2016 — and that’s on top of the $2.36 billion the current system would cost if it goes unchanged.

The most cost-effective option, according to the Auditor’s office, is to privatize the distribution center in Seattle, privatize stores and increase the number of stores in the state by about 60. That would generate an estimated $163 to $277 million between 2012-2016.

Of course, as Larisa Benson pointed out, they did not address the social cost of any of the plans. And: There are enforcement, labor and unemployment costs to factor in.

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Get out of the liquor business to raise money? Maybe, Linville says

By | January 6, 2010 | 0 Comments

Rep. Linville said in the House, they’re looking at cuts in terms of “suspension.” She said there are “dust mites in every corner,” like a percentage of state funding for art. “We have to look at every dust mite because it creates a dust ball,” she said. “So we’re going to look at things we can suspend, we’re going to look at things we can do differently,” she said, like Gov. Chris Gregoire’s concept of combining natural resource agencies.

“We’re going to be looking at what people potentially don’t think are priorities.” One of her ideas: “Should we be in the liquor business? … I value the work that our state employees do. If I had my choice of hiring a teacher, a CPS worker, a classified worker in a school district or someone to sell alcohol for us, I think … as long as we tax the heck out of it and regulate the heck out of it. We don’t actually have to do the job.” To audience chuckles, she said, “Well, that’s true.”

She also mentioned the state printer and technology: “When the state auditor did his findings, they were areas that they said we should look at.”

Back to Tom: “We understand that families are making very difficult decisions around the table … one of the misnomers out there is that when we make a cut to a program, that means that it’s a bad program or that program didn’t work. That’s simply not true in this environment,” he said.

Zarelli: “I applaud Rep. Linville’s comments… if all four caucuses agree that what we first ought to do is not talk about cuts but about reform … to me, that’s the beginning of solving our problem. Because, as I said, this isn’t a temporary problem… the economy is rebasing itself.” He said to address that, the scope and size of government needs to be reduced “considerably.”

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