Rise is good news for state, local budgets
OLYMPIA – Liquor sales in Washington have increased in the year since booze hit the shelves of grocery, drug and big-box stores, resulting in more revenue for the state.
Sales now average 2.7 million liters a month, compared with 2.5 million when liquor was sold only at state-run stores, the Olympian reported Friday.
Today marks the anniversary of the change that led to 1,400 retailers selling liquor instead of just 329 state-run or contract stores.
In March, prices were 7 percent higher than a year ago, according to the Washington State Department of Revenue.
Those sales will generate taxes and fees of $425 million for state and local governments in fiscal 2013, the state Economic and Revenue Forecast Council projected. That compares with $309 million in 2011. However, most fees on retailers and distributors will drop next spring.
Voters approved privatization in 2011 by passing an initiative promoted by Costco. Hundreds of former Liquor Control Board workers are still collecting unemployment benefits and liquor shoplifting is a growing concern.
Large retailers blame the higher prices on distributors who fought the initiative and lost.
“Distributors are taking a huge margin in the middle,” said Joe Gilliam, president of the Northwest Grocery Association, citing what he estimates as a 30 percent markup.
“Over time there will be competition, and distillers will complain,” said Gilliam, whose organization counts Costco, Safeway and other big grocers among its members.
The distributors disagree.
“My understanding is that (distributors’) margins in Washington are as low as anywhere in the country, and suppliers are not very happy about it,” said John Guadnola, executive director of the Washington Spirits & Wine Distributors Association.
“You started off with the highest level of taxation in the country and to that added two new fees,” said David Ozgo, chief economist of the Distilled Spirits Council of the United States.
The initiative included the new fees on retailers and distributors to ensure the state nets as much money as it did by running stores. The retailer fee is 17 percent.
Distributors pay 10 percent for the first two years they do business in Washington, then the amount drops to 5 percent. For most, fees will drop in spring 2014.