State liquor profits surpass projections

BOISE – Idahoans are drinking more liquor, but mostly, they’re just drinking better liquor.

State liquor profits this year are up more than $7.2 million over projections – a fact state lawmakers took advantage of this year when they tapped into the liquor fund to help pay for a water settlement. But even with that growth, Idaho’s per-capita liquor consumption remains far below the national average. While several factors are driving the state’s increased profits, the largest appears to be a growing preference for high-end, pricier liquor products.

“We’re selling a lot more premium-branded liquors than we used to,” said Glenn Harbig, financial manager for the Idaho State Liquor Dispensary. “Our No. 1 selling product used to be Canadian Black Velvet blended whiskey, a fairly inexpensive bourbon,” at just $8.70 a bottle.

Now the top seller is Crown Royal Canadian, $23.95 a bottle.

And Idahoans are increasingly choosing bottles of liquor costing as much as $60 and $70 apiece, Harbig said, though they’re not yet top sellers.

“There seems to be a lot of new money moving into the state, and people bringing their out-of-state tastes with them,” Harbig mused. “It’s not like Idahoans are just drinking more.”

The state Liquor Dispensary’s profits last year were $28.3 million, and this year they’re projected to hit $34 million – an increase of more than 20 percent. That’s on sales last year of $86 million, and this year of a projected $94 million-plus.

While bottle sales have risen 6.65 percent from the first nine months of the last fiscal year to the comparable nine months that have been tallied for the current fiscal year, dollar sales are up more than 10 percent, reflecting the increasing preference for higher-priced products.

Several other factors also contributed to the liquor windfall this year. One was that the dispensary finished paying off its warehouse in fiscal year 2003, cutting its annual expenses by $1 million a year. Another was that two new liquor stores opened later in the year than anticipated, also reducing expenses for the year.

A third major factor, oddly enough, was the state’s temporary, 1 percent sales tax increase. Idaho’s sales tax went from 5 percent to 6 percent for two years, and drops back down to 5 percent on July 1.

But at the liquor dispensary, sales taxes are just part of the profit, which is distributed to cities, counties, the state general fund, schools, courts, and alcohol treatment programs. The higher tax rate just meant more profits for two years – an extra $800,000-plus a year.

When state senators debated the legislation to divert the extra liquor proceeds to the water settlement, some claimed that their regions – particularly in North Idaho – were propping up the state funds with copious consumption of alcohol.

But dispensary sales figures show that the increases were roughly the same in North Idaho as in the rest of the state, though bottle sales increased a half-percent faster in the north than elsewhere.

According to figures compiled by the Distilled Spirits Council of the United States, Idaho’s per-capita consumption of liquor was 1.04 gallons in 2003, well below the national average of 1.32 gallons. Though Idaho’s consumption has dipped and then risen slightly over the past decade, the 2003 figure was identical to Idaho’s per-capita consumption back in 1993.

State Liquor Dispensary Superintendent Dyke Nally said that over the past five years, as Idaho’s population has grown, the dispensary’s bottle sales have risen only 17 percent, while its dollar sales are up 32 percent.