BOISE – Idaho state liquor stores had an estimated $10 million in additional sales – 6 percent of their total – from bargain-hunting Washington customers in 2013, the head of Idaho’s liquor division told lawmakers Friday.
The bump followed Washington’s transition into privatized liquor sales in June 2012, which included enough of a tax hike that customers poured into North Idaho from across the state line.
“It’s not so much that we’ve sold a lot more volume,” Jeff Anderson said. The increase, instead, came in higher-priced “premium and super-premium” liquor products.
Idaho already had a price advantage over Washington in lower-tier products, Anderson said, but previously a bottle of Patron Tequila that sells for $52 in Idaho might have sold for $53 in Washington, not enough to get a customer to make the trip across state lines. Now, with Washington’s new tax structure and fees on liquor, “It could be as high as $70 or more out the door,” he said.
“There are instances where they have lower prices than us on certain items,” Anderson said, but overall, “We still retain a pretty significant price advantage.”
Questioned by members of the budget-writing Joint Finance-Appropriations Committee, Anderson said he thinks the sales increase from Washington has peaked, and those numbers likely will remain stable now.
Idaho’s liquor division is projecting $170.4 million in sales this year, up from $164.5 million in 2013 and $153.6 million in 2012. Sales have been rising for years; 2010 sales were $137.6 million; 2005 sales were $95.2 million. Proceeds from state liquor sales go to the state general fund, cities, counties, courts, schools, community colleges and substance-abuse treatment.
Anderson said Idahoans’ per-capita consumption of distilled spirits remains well below the national average and the long-term sales growth has been driven by population increases. Also, Idaho has followed a national trend in which consumers increasingly are moving from beer and wine to distilled spirits.
“They’re just trading,” Anderson said. “Someone might say, ‘OK, I’m going to have a strawberry sorbet vodka martini instead of a glass of chardonnay or a beer.’ ”
As part of that national trend, the number of liquor products has been “exploding,” Anderson said. “Product innovation is one of the reasons why we’ve seen challenges at retail – if we get 500 new products proposed and we accept 150 of them, that’s 150 products on the shelf that we have to find room for.” That’s part of the reason the division is proposing remodels or relocations of seven state liquor stores next year, including stores in Coeur d’Alene and Sandpoint.
The innovation wave started with vodka products, Anderson said. “Consumers have discovered that the flavored items are lower proof, they have less calories, and they taste better. Now it’s migrating into brown spirits, with flavored bourbons and tequilas.”
One other change Idaho’s liquor system has seen: 31 of the state’s 44 counties now allow Sunday liquor sales, after the state gave counties the option in 2004. The most recent was Boundary County, which approved the change the year before last. The 13 that still don’t allow Sunday sales are concentrated in eastern Idaho.
Anderson said Idaho’s state-run liquor sales system is “efficient and works.” Because state liquor stores serve only those 21 and older, they see less theft and more age-restriction compliance than broader-based retailers in other states, he told lawmakers.
“I think the Legislature recognizes that what we do has value to the people, and our prices are competitive.”