June 7, 2013 in City

Vestal: Liquor sales must age more to fully assess

By The Spokesman-Review
 

Shawn Vestal
(Full-size photo)

Private booze just had its first birthday. How’s this baby doing?

As might have been expected: Predictions of falling prices have not come true, on average. Predictions of dire public safety problems have not come true, either. We’re buying more booze, we’re buying it from a much larger variety of sellers, and the state is a little richer with booze taxes than it used to be. Restaurants and bars, meanwhile, have cut back on liquor purchases from distributors, and the big-box stores are killing the little guys.

The kinks aren’t all worked out. Distributors, retailers and restaurateurs are still wrestling through the system and, sometimes, blaming each other for this problem or that problem. Costco is now pressing to get the Legislature to eliminate a fee on sales from retailers to restaurants – a cynical flip-flop, given that the company had proposed the fee to ease concerns that privatization, via Initiative 1183, would rob state coffers of revenue.

Last summer, many of us who had paid insufficient attention to the issue found ourselves surprised – though we should not have been – by monster price increases. Despite efforts to blame it on taxes, the fact is that the state’s take of liquor sales stayed the same, and what we were seeing was primarily the effect of profit margins.

Many defenders of the magic hand of the market said critics are being too impatient – it would simply take time for competition to drive down prices, they said. A state Department of Revenue report suggests there may be some truth to that: While the average price of a bottle of liquor remains 7 percent higher than it was a year ago, that has fallen since immediately after the change last summer, when prices shot up 19 percent.

These averages are dubious, at best, because of the wide variety of booze they cover. You can buy a drum of the most popular liquor at Costco or one of the new booze emporiums and save, for sure. If you want something outside that range, you will probably pay more, and sometimes a lot more.

I have paid close attention to a single brand of Scotch – Laphroaig – ever since the switch, and it is no exaggeration to say that prices for that stuff have gone up by huge margins; in my neighborhood grocery store, it has been as much as twice as it was before. The store locks it up like it was Sudafed.

The Olympian recently examined a wide range of effects during the first year of privatization. Unsurprisingly, it found that when it comes to higher prices, everyone blames everyone else: stores deflect blame onto distributors, who deflect it back, and everyone blames taxes, just on principle.

No one, unsurprisingly, blames profit margins.

Here are a few other points from the Department of Revenue and the Olympian:

We’re drunker than we used to be. We bought 6.4 percent more booze, statewide, in the first 10 months under I-1183 than in the year prior.

Restaurants and bars have purchased 12.5 percent less booze in that time. One factor may have been that many of those establishments stocked up heavily on state booze before privatization took effect.

We’ve gone from 329 state stores to 1,400 retailers, selling just a bit more liquor than before: 2.7 million liters a month, compared to 2.5 million a month before privatization.

Jobs added in distribution facilities alone have probably surpassed the 902 state jobs that were lost, according to the Olympian’s reporting. Around half of the state workers laid off when sales went private remain unemployed.

There were 53 drunken-driving fatalities in the second half of 2012, which is lower than the same period in each of the last five years.

A University of Washington researcher is studying the effect of private liquor sales on attitudes about drinking among the young. This was a concern of opponents of privatization, that the presence of liquor everywhere all the time would make young people more inclined to view booze as more socially acceptable. Early research suggests this is true: “Significantly fewer students in eighth, 10th and 12th grades believe their peers think it’s ‘very wrong’ for someone their age to drink alcohol,” epidemiologist Julia Dilley told the Olympian.

A mixed bag, in other words, on the first birthday of private booze. It will be interesting to see how things change as this baby grows up.

Shawn Vestal can be reached at (509) 459-5431 or shawnv@spokesman.com. Follow him on Twitter at @vestal13.


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