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View Full Version : Hope for those in liquor control states?



jburlowski
02-08-2010, 15:53
Looks like a number of states are at least considering getting out of the liquor business (http://www.msnbc.msn.com/id/35283605/ns/business-consumer_news/page/2/):

"Liquor sales just don't fall under the category of top government functions to be providing to the taxpayers..."

Old Lamplighter
02-08-2010, 19:28
For all my friends in AL, MS and PA that would be good news indeed.

ratcheer
02-09-2010, 04:46
For all my friends in AL, MS and PA that would be good news indeed.

The devil is in the details. :skep:

Tim

BourbonJoe
02-09-2010, 04:51
PA would never consider that. I remember when Governor Thornberg tried it and got badly shot down by the PALCB union, especially. Not only are they stupid but they're union.
Joe :usflag:

cigarnv
02-09-2010, 05:01
Certainly hope Virginia heads in this direction....

loose proton
02-09-2010, 05:09
The devil is in the details.
That's for sure. Virginia may now have the highest tax in the country (definitely in top 4) since we had a recent increase, and one proposition is for Virginia to go out of retail but still control wholesale and importation into the state. One plan is to sell franchises so retailers would have a huge initial startup cost added to the already high cost of starting a biz and putting in inventory. Because of current price structuring, it may be that the price of bottom shelf stuff would increase and selection would go down. The only hope is if some of the big retailers move into Virginia with big bucks. But, that means some of the plan for increased revenues may be lost because (though Virginia would still get sales, liquor, and income tax) profit $$ would get spent in other states and go out of state's economy. And, there may be a net job loss. It all depends on what plan actually gets instituted. If done properly, it could be a benefit for the consumer and could increase revenues for the state.

ratcheer
02-09-2010, 09:56
... and one proposition is for Virginia to go out of retail but still control wholesale and importation into the state. One plan is to sell franchises so retailers would have a huge initial startup cost added to the already high cost of starting a biz and putting in inventory. Because of current price structuring, it may be that the price of bottom shelf stuff would increase and selection would go down.

While Alabama's main retail outlets remain the state run ABC stores, some years back they also started allowing private retail operations. As best as I can understand it, these private retailers must purchase from the ABC at the full ABC retail price, then add any markup they can get to that.

A year or so ago, I went into one of those stores just to see what it was like. I saw a bottle of Blanton's, which I rarely see on the ABC stores' shelves, anymore. It was priced at slightly over $100! :bigeyes: I have no idea how they can make a living at those kinds of prices or who their customers are. Certainly not I.

Tim

cowdery
02-09-2010, 14:11
The devil is in the details. :skep:

Tim

So true. Ohio is still a control state even though it switched to an "agency" system and no longer operates the retail stores itself. It does, however, set minimum prices and controls what its agents can buy. License states such as Illinois and Kentucky exert a lot of control too, relative to other types of consumer products. Many license states fix minimum prices and hours of operation. Through licensing it is the state, and not the market, that determines the number of retail outlets for beverage alcohol. In every state, the government is all up in the booze business.

sailor22
02-09-2010, 14:25
A year or so ago, I went into one of those stores just to see what it was like. I saw a bottle of Blanton's, which I rarely see on the ABC stores' shelves, anymore. It was priced at slightly over $100! I have no idea how they can make a living at those kinds of prices or who their customers are. Certainly not I.

Two years ago I stopped in a small liquor store in Alabama - on 231 between I-10 and Dothan - they had two Blanton's on the shelf for $32 each, about $15 less expensive than here in Tallahassee. Last summer at the ABC store in Dothan the prices were just a little less across the board than Florida prices. The non ABC store was higher by a little bit on most things but less expensive on others. Go figure.

arrScott
02-09-2010, 14:56
That's for sure. Virginia may now have the highest tax in the country (definitely in top 4) since we had a recent increase, and one proposition is for Virginia to go out of retail but still control wholesale and importation into the state. One plan is to sell franchises so retailers would have a huge initial startup cost added to the already high cost of starting a biz and putting in inventory. Because of current price structuring, it may be that the price of bottom shelf stuff would increase and selection would go down. The only hope is if some of the big retailers move into Virginia with big bucks. But, that means some of the plan for increased revenues may be lost because (though Virginia would still get sales, liquor, and income tax) profit $$ would get spent in other states and go out of state's economy. And, there may be a net job loss. It all depends on what plan actually gets instituted. If done properly, it could be a benefit for the consumer and could increase revenues for the state.

Virginia is not among the highest-taxing states in the country. The commonwealth has the 18th highest tax burden. The legislature just defeated a proposed $1 billion income tax increase. (Which leaves the state budget with a $950 million hole that, if not filled quickly, will force the state to zero out the state's car tax rebate.)

But you're right to be worried about the various plans the governor and legislators are floating for the ABC. The problem is that the plans are not intended to benefit consumers or open the free market. They're designed purely to raise money for the state in the short term. And so most of these plans do little more than "privatize" liquor sales by selling the public monopoly to a single private entity. (Which is exactly what Gov. McDonnell proposed during last year's campaign. To his credit, he's honest about it; his goal was to raise cash quickly, not to open the liquor market.) Any other form of privatization will be likely to cost the state money in the short term. If there's anything worse for consumers and taxpayers than a public monopoly, it's a private monopoly. At least the people to whom the ABC answer have to come to me and beg for my vote every couple of years.

It would be good if the commonwealth would get out of the liquor business entirely and turn the ABC into a regulatory enforcement and tax collection agency overseeing a competitive private market. But that will cost money up front and save the state little to nothing in the long term, so I'm willing to keep the state-monopoly ABC in place for a few years until the budget situation improves and the politicians feel like they can afford real reform, rather than simply making a bad situation worse to scrounge up a few dollars from a private monopolist.

(And in the ABC's defense, even though I hate the state monopoly system, I've never seen anyone who resembles a minor purchase liquor at one, and I've been able to find just about every bottle I've ever wanted at the ABC. Obscure stuff that I go in expecting the ABC doesn't even have in its ordering system, I routinely find featured on shelf displays. At the large stores with knowledgeable managers, anyway. Except for not being able to find any Buffalo Trace anywhere in Northern Virginia these last couple of weeks! Anyway, point is, Virginia's ABC stores are good enough that I'm willing to push for something better instead of settling for fake "privatization" on the cheap.)

smokinjoe
02-09-2010, 15:26
Virginia is not among the highest-taxing states in the country. The commonwealth has the 18th highest tax burden. The legislature just defeated a proposed $1 billion income tax increase. (Which leaves the state budget with a $950 million hole that, if not filled quickly, will force the state to zero out the state's car tax rebate.)

But you're right to be worried about the various plans the governor and legislators are floating for the ABC. The problem is that the plans are not intended to benefit consumers or open the free market. They're designed purely to raise money for the state in the short term. And so most of these plans do little more than "privatize" liquor sales by selling the public monopoly to a single private entity. (Which is exactly what Gov. McDonnell proposed during last year's campaign. To his credit, he's honest about it; his goal was to raise cash quickly, not to open the liquor market.) Any other form of privatization will be likely to cost the state money in the short term. If there's anything worse for consumers and taxpayers than a public monopoly, it's a private monopoly. At least the people to whom the ABC answer have to come to me and beg for my vote every couple of years.

It would be good if the commonwealth would get out of the liquor business entirely and turn the ABC into a regulatory enforcement and tax collection agency overseeing a competitive private market. But that will cost money up front and save the state little to nothing in the long term, so I'm willing to keep the state-monopoly ABC in place for a few years until the budget situation improves and the politicians feel like they can afford real reform, rather than simply making a bad situation worse to scrounge up a few dollars from a private monopolist.

(And in the ABC's defense, even though I hate the state monopoly system, I've never seen anyone who resembles a minor purchase liquor at one, and I've been able to find just about every bottle I've ever wanted at the ABC. Obscure stuff that I go in expecting the ABC doesn't even have in its ordering system, I routinely find featured on shelf displays. At the large stores with knowledgeable managers, anyway. Except for not being able to find any Buffalo Trace anywhere in Northern Virginia these last couple of weeks! Anyway, point is, Virginia's ABC stores are good enough that I'm willing to push for something better instead of settling for fake "privatization" on the cheap.)

Although, I'm not 100% sure, I think LooseProton was referring to Virginia's Alcohol Taxes being 4th highest in the country. Don't know about 4th highest, but they are at the least, high compared to the rest of the Union. In Spirits, only Oregon and Washington have have a higher Spirits Tax than VA's $20.13/Gallon. Wine isn't much better, with only NM, IA, GA, FL, and AL being higher than Va's $1.51/Gallon. "Only" 18 states have higher taxes on beer, though.

callmeox
02-09-2010, 17:08
So true. Ohio is still a control state even though it switched to an "agency" system and no longer operates the retail stores itself. It does, however, set minimum prices and controls what its agents can buy. License states such as Illinois and Kentucky exert a lot of control too, relative to other types of consumer products. Many license states fix minimum prices and hours of operation. Through licensing it is the state, and not the market, that determines the number of retail outlets for beverage alcohol. In every state, the government is all up in the booze business.

Not to play "let's correct Chuck", but things are a little different than that.

The booze on the shelves in Ohio is owned by the state and sold by the agencies on consignment. Selling price is set by the state and the only pricing variances are due to the county tax rate and any additional 'sin' taxes (like in Cuyahoga county). The stores are stocked by the state and store owners have very little influence on what product is on their shelves.

ebo
02-09-2010, 19:08
Not to play "let's correct Chuck", but things are a little different than that.

The booze on the shelves in Ohio is owned by the state and sold by the agencies on consignment. Selling price is set by the state and the only pricing variances are due to the county tax rate and any additional 'sin' taxes (like in Cuyahoga county). The stores are stocked by the state and store owners have very little influence on what product is on their shelves.

The selection of whisk(e)y in Ohio, be it bourbon, scotch or Irish, sucks.

cowdery
02-09-2010, 20:01
Not to play "let's correct Chuck", but things are a little different than that.

The booze on the shelves in Ohio is owned by the state and sold by the agencies on consignment. Selling price is set by the state and the only pricing variances are due to the county tax rate and any additional 'sin' taxes (like in Cuyahoga county). The stores are stocked by the state and store owners have very little influence on what product is on their shelves.

I appreciate the clarification.

How is distribution handled? I have the impression that although the state is technically the distributor, they are using companies such as SW&S as distribution agents. True?

A little tidbit. At a liquor agency in Ohio recently, I noticed that certain products, such as Jack Daniel's black label 750 ml, were not on the shelf. Instead there was a note to "ask at the counter," or something. I asked the owner, who said that he had limited shelf space and therefore could not allocate the amount of shelf space the most popular products need, so he did this instead. It seems nuts--hide your best sellers in the store room?--except in the context of what the Ohio ABC lets them do. For instance, the solution in a license state would be floor stacks, but apparently Ohio prohibits those.

DeanSheen
02-09-2010, 20:07
The selection of whisk(e)y in Ohio, be it bourbon, scotch or Irish, sucks.

Depends on what you want. There are some good things on the list. Being in Cuyahoga county I have more to choose from store wise and trust me, I have to go to several stores to get things on the list.

callmeox
02-09-2010, 20:21
I appreciate the clarification.

How is distribution handled? I have the impression that although the state is technically the distributor, they are using companies such as SW&S as distribution agents. True?

A little tidbit. At a liquor agency in Ohio recently, I noticed that certain products, such as Jack Daniel's black label 750 ml, were not on the shelf. Instead there was a note to "ask at the counter," or something. I asked the owner, who said that he had limited shelf space and therefore could not allocate the amount of shelf space the most popular products need, so he did this instead. It seems nuts--hide your best sellers in the store room?--except in the context of what the Ohio ABC lets them do. For instance, the solution in a license state would be floor stacks, but apparently Ohio prohibits those.

Warehousing and distribution is handled through three (formerly 4) regional warehouses that (I believe) the state has contracted out.

Another reason that Ohio doesn't have a wide selection of more of the boutique brands is that it is a bailment state. The liquor on the state warehouse floor belongs to the wholesale distributor and the state does not take ownership of it until it is moved to an agency.

LarryG
02-10-2010, 11:52
While Alabama's main retail outlets remain the state run ABC stores, some years back they also started allowing private retail operations. As best as I can understand it, these private retailers must purchase from the ABC at the full ABC retail price, then add any markup they can get to that.Yes -- that is exactly what the owner of the package store where I've been buying my beer for the last 20-odd years told me. I noticed that Wild Turkey Rye is on the ABC's wholesale list, which means (as I understand it) that it can be purchased in case lots by private stores, private clubs, bars, etc. but is not available in the ABC state stores. When I asked if he could order me some, he said, "I can, but you can go to the state store and buy it for the same price I can." When I explained that it was not on the retail list, he nodded and said I'd have to buy the whole case since he wasn't sure he could justify the shelf space for the balance. (I declined.)

On a subsequent trip I spot-checked a couple of his prices, out of curiosity. IIRC his mark-ups were on the order of 40 percent.

Larry

ebo
02-10-2010, 14:47
Depends on what you want. There are some good things on the list. Being in Cuyahoga county I have more to choose from store wise and trust me, I have to go to several stores to get things on the list.

It isn't that I don't have access to a variety of whiskey, it's that I have found only one place in Stark County that carries a wide variety of whiskey.

ThomasH
02-10-2010, 15:16
Ohio used to have a much better selection until the agency retailer system was developed around 1995. In the 1980's and early 90's, everything whiskey wise was available here. Many other states paled in comparison then but the situation is just the opposite now!

Thomas

T47
02-10-2010, 20:29
I would love to see it happen. I figure WA State is going to get there money no matter what. My big hope would be that selection might improve. Trying to order from the State stores is next to impossible, and maybe the mail order places would be able to start doing business here again. I know there is good and bad with both systems, maybe variety is not the golden goose I hope it will be but I just can't believe the State can run anything better than the private sector.