Colorado Politics

Hudson: Competing views of capitalism clash in liquor store and grocery aisles

Whenever an economic turf war breaks out at the Capitol — complete with appeals for change to state law purportedly intended to provide greater consumer convenience — the public interest is rarely at stake. Rather, the purpose is almost always to make it more convenient for one set of merchandisers to capture your discretionary dollars at the expense of others. It’s not quite picking winners and losers, but it involves a heavy finger on the competitive scales.

Nearly a century has elapsed since Prohibition was approved, and more than 80 years since it was repealed. The reauthorization of legal alcoholic beverage sales pursued a unique path in each state. A handful of counties remain “dry” to this day, while several states operate a government monopoly administered through state package stores that capture both sin taxes and profits from the industry.

Colorado’s regulation of liquor sales has several features whose original rationale has been lost over the decades. It is presumed that the restriction requiring that an individual or business, however many stores they might operate, can only hold a single liquor license was designed to prevent the emergence of powerful retail empires. Whatever the intention, it has prevented chain grocers from selling full-strength beer, wine and liquor in more than a single location. For the most part, Colorado liquor stores are genuine “mom and pop” enterprises. For as long as I can remember, our grocers, usually partnered with convenience stores, have wanted to overturn this constraint. The time they went before voters, however, with a 1982 measure to allow sales of wine in grocery stores, they lost at the ballot box.Nonetheless, as transplants pour in from states where liquor sales are permitted in grocery stores, the hope returns that voters can be persuaded to overturn our current system. It appears we will have an opportunity to vote again on the question in 2016.

Convenience is a slippery concept, susceptible to multiple interpretations. When I was a kid, milk, eggs and butter were delivered to an insulated box on our front porch. Purchasing doesn’t get any more convenient than that. Dairies were actually competing against the same grocery stores that carried their products and earning a tidy profit in the process. In large metropolitan areas such as Denver, home delivery remains available, but only at a premium price. I have to acknowledge that when vacationing it is indisputably convenient to pick up beer and booze at the grocery store, eliminating the need to search for a liquor store. But the selection is often limited, and premium brands are rarely available — satisfactory for a long weekend, perhaps, but inconvenient as a general rule. Advocates argue that the larger purchasing power of chain stores will deliver savings to consumers. In the short term, this is likely to be true. But once the chains squeeze many small neighborhood liquor stores out of business, surveys indicate prices return to market rates.

I ran the Denver Department of Excise and Licenses for several years. Among other duties, we supervised all liquor license establishments, both retail stores and saloons. During my tenure, the grocery and convenience store lobbies placed the venue question on the ballot. This is a question that does not divide along partisan lines. It pits opposing views of capitalism against one another. The free marketeers usually line up behind the grocers. Using their volume purchasing power, it is argued that savings will be passed on to consumers. When a national retailer pulls a unit train into a brewery and hauls away millions of dollars of beer at a time, they can subsequently retail a six-pack for less than local stores can purchase it wholesale. For many “mom and pop” outlets, beer represents 60 percent of monthly revenues.

As proof of the fact that an economist can be found to justify virtually any outcome, it’s often argued that closing main street stores in response to competitive pressure from Wal-Mart actually raises the American standard of living by providing a greater range of products at reduced prices to small town consumers. Even if this is true at the margins, it ignores the social cost to families and communities, whose businesses are lost and whose middle-class incomes are snatched away. Colorado’s neighborhood liquor stores play both a social and economic role that is generally overlooked. Because they are privately owned, their ownership is readily transferred. Liquor stores also offer the first rung towards the American dream for many immigrant families. They pool resources for a purchase, work long hours, train relatives with shaky English skills and merge into their new community. They also serve as informal banking institutions, cashing checks for regular customers and stocking specialty items for those with discerning preferences.

I’m happy to pay an extra 50 cents per six-pack for these relationships. And I plan to vote “no” next year when the grocers try to persuade me one more time that I will be more conveniently served once half the neighborhood stores in Colorado are forced to close their doors. This isn’t competition, in my view, but predation. Where does it end? Why not a cannabis counter, as well? That should keep the proxy purchasers in the parking lot busy!

Miller Hudson is a public affairs consultant and a former state legislator. He can be reached at mnhwriter@msn.com

CORRECTION: A measure to allow grocers to see wine was rejected by voters in 1982. A previous version of this article incorrectly stated that similar measures have failed at least once a decade.


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