OLYMPIA, Sept. 11.—Looks like the drop in booze sales that took place after Washington’s liquor stores closed was nothing more than a hiccup. Sales last month rebounded above last year’s levels – a sign that the promise of last year’s liquor privatization initiative is coming true despite somewhat higher prices, distribution problems and reports of heavy buying at out-of-state stores just over the Washington border.
The state Department of Revenue reported Monday that hard liquor sales showed a sharp uptick in July, the second month that Jack Daniels and Johnnie Walker appeared on supermarket shelves. Washington exited the booze business on June 1, shutting down its state liquor stores after 78 years and allowing private retailers and distributors to take up the slack.
Restaurant and bar purchases were still down slightly in July compared to same month last year, probably because of heavy buying during the month of May, the final month the state liquor stores were in business. But the figures suggested their stockpiles are getting low.
“There are some problems out there, but it looks to me like wow, the system is working,” said Bruce Beckett of the Washington Restaurant Association, one of the organizations that sponsored last year’s Initiative 1183. “The data shows that after two months, the marketplace is adjusting and getting prepared to handle this.”
Overall sales by volume increased 15.4 percent over July of last year, all of it due to retail sales to consumers. The increase comes despite increased prices, the apparent result of new fees and state rules that have steered the vast majority of the business to two large distribution companies. The average price paid for spirits was up 16.2 percent in July over last year, according to Revenue’s figures.
It’s a little soon to declare a trend, said Mike Gowrylow, spokesman for the Department of Revenue. Some studies indicate that if liquor is more available, purchases go up. But there also might be something of a novelty effect in the fact that booze is available in retail stores for the first time in the lifetime of any living Washingtonian. Hard liquor vanished from Washington retail outlets on Jan. 1, 1916, when this state became an early adopter of Prohibition.
But the figures demonstrate that the big reduction in sales that took place the first month was most likely a one-time event. Sales boomed at the state liquor stores during their final month as consumers, restaurants and bar owners rushed to lay in supplies. Bar and restaurant purchases increased 47 percent and retail sales increased 20 percent.
The next month, the first of the new privatization regime, sales plummeted – and critics wondered if the promise of big new tax revenue the first year would actually materialize. The state Office of Financial Management predicted the measure would raise $400 million to $480 million for state and local governments the first five years. But big sales across the border in Idaho and Oregon just after the state stores closed raised the possibility that large numbers of customers had shifted their purchases out of state, avoiding state taxes entirely. Now the second-month sales numbers show that reduction was mainly the result of stockpiling. Restaurant and bar purchases decreased 27 percent in June but just four percent in July, an indication that their cellars are being depleted. For consumers, sales were down 3 percent in June but increased 21 percent in July.
It made sense for restaurant and bar owners to lay in a supply before the old state liquor stores closed, Beckett said. The state Supreme Court rejected a challenge to the initiative a day before the liquor stores were to close, and he said the two big distribution companies serving the state’s restaurants and bars, Young’s Market Co. and Southern Wines and Spirits, were slow to ramp up. Distribution remains spotty outside metropolitan areas, he said.
The retailers and restaurant owners that backed the initiative still have big problems with regulations adopted by the state Liquor Control Board, and they have filed a lawsuit to overturn them. The board imposed a 24-liter-a-day sales limit at most retail outlets and imposed a second tier of license fees on retailers when they sell to the bar and restaurant trade. Essentially that gives the bar and restaurant business to the distributors — they face no sales limits and no second-tier license fee. Initiative sponsors argue they never intended that. “The shutdown of the retail market chain because of the license fee and the retail limits have really hurt the ability of some of these [bar and restaurant owners] to keep inventory in stock,” Beckett said.
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