Unintended Consequences of Grocery Store Beer Law
by Steven Craig
Feb 12, 2009 | 699 views | 0 0 comments | 10 10 recommendations | email to a friend | print

In the spirit of full disclosure, I own a liquor store in Telluride. Additionally, I doubt my store or the other liquor stores in town will be severely impacted should this legislation pass. I would like to offer you a perspective from inside the industry to some sub-surface consequences that will impact all Coloradans so you can make a more informed decision. 

HB 1192 seeks to allow grocery and convenience stores to sell full strength beer. Great idea if you drink Budweiser, Coors or Miller products. However, if you would like to buy New Belgium, Odell, Left Hand, Ska, Deschutes, or imports your choices will greatly diminish. Why? Many of the state’s local liquor stores will quickly go out of business because beer sales account for a large percentage of their revenue.

Reduced choice – space is the issue: Grocery and convenience stores have a very small section dedicated to 3.2 beer. The Bud, Miller, Coors products will be replaced with their full strength counterparts. Where will they put even a moderate selection of beer? What lower margin products will be removed? Hot dogs? Toilet paper? Milk? Diapers? Greeting cards? Organic food? The stores were not designed to house large volumes of bulky beer cases. Think about the space needed to store a week’s worth of just 25 different beers.

Diminished state revenue: The state, already in a financial crisis, will lose tax revenue. As liquor stores close, all the current tax revenue from wine and liquor purchases also will be lost. Unemployment will increase adding to the state’s burden. Most, if not all, of the grocery and convenience chains are based out of state. Any profit after sales tax is paid flows back to HQ in another state. All liquor stores in Colorado are based in Colorado. All of their profits generally get reinvested back into our state. 

Other states: The states surrounding Colorado that allow sales in grocery and convenience stores have been that way since Prohibition. Those stores grew up and adapted in that environment. Those grocery and convenience stores were built with alcohol sales in mind. In Colorado, most grocery-anchored shopping centers include a liquor store. You can count on most of those closing.

Reality check: In 2007, South Dakota passed legislation allowing sales of beer, wine and spirits in grocery stores. Rapid City had 38 liquor stores before the law. Now there are three. If Colorado chooses to move in that direction, we need a 10-year transition plan. Otherwise the consumer loses.  

Temptation: Currently employees must be 21 years old to sell alcohol. HB1192 lowers the selling age to 18 for grocery and convenience store. How great is the temptation for an 18 year old to look the other way when an underage buddy comes through the checkout line? Due to this provision in the bill, Mothers Against Drunk Drivers (M.A.D.D.) recently sided with liquor stores in opposition to this legislation… strange bedfellows, indeed. What kind of a message does that send about this bill?

Impact beyond beer: Colorado has the most vibrant craft brewing industry in the nation. Our liquor stores provide a marvelous distribution channel that fosters the success of these entrepreneurs. This bill will impede, if not stunt, the growth of our craft brewers as well as Colorado’s fledging wine industry and growing craft distillers. Yet another ripple effect that will reduce state sales tax revenue.

Distributors association for it, distributors against it: While the Colorado Distributors Association supports the bill, a lot of the smaller distributors are against it. The smaller distributors feel they will be squeezed between narrower margins and increased labor cost. Currently, after delivery, the liquor store’s staff stocks the shelves. Many of the chain stores require distributors to deliver, stock and maintain the shelves. Since Kroger owns Loaf ’N Jug, many of the small distributors are concerned they may be responsible for Loaf ’N Jug shelves as well. 

Level the playing field: If convenience is the issue, let liquor stores sell grocery products. Often beer accounts for nearly 50 percent of a liquor store’s sales. Three-point-two percent beer accounts for 3-7 percent of a convenience store’s revenue and far less in a grocery store. Not a fair trade off. Again, if we are going in this direction, let’s develop a transition plan that is fair to all involved.

This bill is akin to opening all the cage doors at the zoo. It won’t be long before the zebra, antelope and pandas are all gone.
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