Tag Archives: liquor

Business, News

Why Washington State’s Privatized Liquor Costs More Than Before

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So I-1183 (the initiative that privatized liquor sales in Washington last year) did not bring about the free-market paradise that the state’s tipplers were promised by supporters of the initiative. (See our earlier story comparing liquor prices at various retailers.) Spirits have been marked up, in some cases significantly. What exactly has contributed to this price hike? It looks like the one-two punch of high state taxes and a distributor duopoly that’s insulated, so far, against competition.

For comparison, sample liquor prices, based on a liter of $20 (pre-tax) liquor.
For comparison, sample liquor prices, based on a liter of $20 (pre-tax) liquor.

The accompanying graphic demonstrates the changes in liquor taxes before and after I-1183. At  The Tax Foundation, Richard Borean explains that, before I-1183, “Washington had a markup of 51.9 percent, an alcohol sales tax of 20.5 percent, and an excise tax of $3.77 per liter, making their total excise tax rate the highest in the country at $26.70 per gallon: more than 3 times the national average of $7.02 per gallon.”

I-1183 did not raise existing liquor taxes, but instead created retailer and distributor license fees (17 percent and 10 percent respectively). The distributor license fee will go down to five percent after the first two years.

It’s true, without any retailer mark-up to replace the state’s mark-up, the combination of taxes and fees post-I-1183 would amount to lower prices. But even if retailers weren’t out to make a profit — as they certainly are — there was a proviso on that 10-percent distributor’s tax: If it did not bring in $150 million in the first year (by March 2013), the distributors would have been responsible for making up the difference. Certain distributors, says Stone, actually raised their prices during the first year to meet that benchmark.

Sound Spirits, the Woodinville Whiskey Company, and SoDo Spirits (home of “only aunthentic Honkaku shochu) all report lowering their prices in order to keep shelf prices reasonable. Steven Stone, owner of Sound Spirits and president of the Washington Distillers Guild, says that even “a small change on the wholesale level can have a big effect on the retail price.”

Yet Stone is optimistic that prices will begin to calm down in the next year or two. The $150-million minimum will no longer be a factor going forward, and in 2014, the distributors’ tax will reset at five percent for all distributors and distilleries in business now. Stone thinks the liquor market is still bearing an unfair share of the tax burden, but he is not hopeful that the law will be changed anytime soon: “I kind of feel like we might be stuck—kind of like hotel California where you check in and you can’t check out.”

Another factor driving pricing is competition—or the lack of it—between distributors. In Washington, Southern Wine & Spirits and Young’s Market are by far the two biggest players, and as such they have the ability to affect prices via the labels they decide to carry. Part of what gives distributors in general their power is that distilleries need their access; in the best case, that’s a two-way street as distributors compete to sign popular or unusual spirits.

Woodinville Whiskey’s owner Sorensen says that their distributor (Click Wholesale) “is awesome. They let us focus on doing what we do best and they do what they do best.” But for a recently started company like SoDo Spirits, not carried by a distributor, the ease of one-stop distributing through the state is a dream of the past.

Though Young’s and Southern have built, effectively, a duopoly in the state’s liquor sales market, I-1183 sponsor Costco is still trying to work its way into the distribution market. Currently, the initiative states that no more than 24 liters (about three cases) may be sold from one retailer to another in a single sale. Large retailers like Costco and Total Wine & More could elbow, in practice, into quasi-distribution but for this.

If Costco can get I-1183 amended, the penny-conscious cocktail customer could see the results in drink menu prices, as Young’s and Southern respond to a large competitor carving out a piece of the distributing market. If in the short term, the lower distributors’ tax and the removal of that $150-million minimum cut for the state — even the prospect of Costco becoming a bigger player — will all contribute to price-pressure in the liquor aisle, no serious discounts are visible on the horizon. As frustrating as it is to admit, nobody can really know where the Washington liquor market is going in the next couple of years. Not even Nate Silver could call this game.

Drinks, Food

Tracking Liquor Prices in Liquor Stores Large and Small

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A shelf at Metropolitan Market (Photo: MvB)

Since the beginning of privatized liquor sales in Washington last June—for the first time since Prohibition—the question on everyone’s lips has been: Where are the cheaper prices we were promised?

Remember stories like this? “The owners of Shanahan’s Pub in Vancouver say they fully support 1183, because it will mean they can buy liquor at cheaper prices, and pass those savings on to their customers,” reported KOIN TV in 2011.

Despite public approval for Initiative 1183 in the early days, there were those who disliked it from the beginning. “Like a lot of craft distillers, Kent Fleischmann, co-owner of Dry Fly Distilling in Spokane, will vote against I-1183. He worries that prices for Dry Fly’s vodka and gin could be driven much higher by retailer and distributor markups, plus new fees imposed by the initiative. He figures a 750-milliliter bottle of gin and vodka could rise from $29.95 to $40, a daunting prospect,” reported the Seattle Times.

Unfortunately for Fleischmann (and the liquor buyers of Washington) his prediction turned out to be correct. A 750-milliliter bottle of Dry Fly gin is now regularly priced $34.99 at the Metropolitan Market, or $44.99 with tax. In fairness, as Metropolitan shoppers know, the prices there tend to be a few dollars more than most places, but it’s clear that we have not entered the free-market promised land.

Still, another question remains: Do certain stores, large or small, chain or independent, sell liquor at better prices than others?

To find out, we compared the cheapest fifth of vodka, rum, tequila, gin, and whiskey at grocery and big box stores (for simplicity’s sake, we did not distinguish between Scotch, bourbon, etc., and instead just included the cheapest whiskey we could find—usually Canadian) at various outlets. Secondly, we conducted a price comparison of a fifth of Absolut, Bacardi, Jose Cuervo, Seagram’s, and Jack Daniel’s.

A chart of bargain-basement pricing (Sophie Pattison/The SunBreak)

For the lowest liquor prices, the brands range from well-known, bargain-basement vodkas such as Platinum ($10.99 at Metropolitan Market) and Burnett’s ($9.99 at Trader Joe’s and 8.99 at BevMo), to Trader Joe’s brands that we had never heard of before, such as Rebel Yell Whiskey ($11.99).

Total Wine & More boasts a brand called American Pride that beats the prices everywhere else in tequila ($6.99), gin ($4.99), and vodka ($4.99). The cheapest whiskey we found was Monarch Canadian ($7.49) at BevMo; the cheapest rum, Montego Bay ($5.49) at Trader Joe’s.

At Metropolitan Market, as savvy shoppers might expect, prices don’t go very low at all. The cheapest rum brand was Bacardi ($11.99) and the cheapest gin, Beefeater ($19.99).

A chart of famous names in liquor (Sophie Pattison/The SunBreak)

The reason we include the lowest price for every variety of liquor is to help readers gauge which stores have, overall, the least expensive brands. We are absolutely not recommending these as quality liquors. While the brand name American Pride might suggest a certain downhome dignity, its price of $4.99 for a fifth of vodka does not instill great confidence in brand quality.

We selected a hard-drinking neighborhood, collecting prices from several Capitol Hill grocery stores as well as one independent Capitol Hill liquor store and two of the new superstores. So far as the grocery stores go, the prices only differ by a few dollars. The QFC “regular” prices would make this store one of the more expensive places, but with a QFC Advantage card their prices closely match the other grocery stores. The prices listed in the chart for Safeway are those available with a Safeway Club Card.

The one independent liquor store we checked out, Northwest Liquor & Wine on 12th Avenue, did have slightly more expensive prices than the grocery stores for the brand name liquors we compared. However, their cheapest liquors were quite competitive with the other stores, and they even had the cheapest gin (McCormick’s $6.99) out of all the Capitol Hill stores, tying with Safeway (Essex $6.99), and beaten only by rock-bottom American Pride.

News, Politics

Prohibition Ends in Washington! Where’s My Booze At?

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As you may by now have heard, Washington voters overwhelmingly approved Initiative 1183! This historic vote ends our state government’s unAmerican monopoly on liquor sales and/or turns our state’s highways into a giant game of drunken bumper cars, depending on if you work for Costco or not.

Of course, the question you and I want to know is: When is Safeway going to start selling me some damn George Dickel?

Here are the facts as I have cribbed them from various news sources.

  • Stores can start selling liquor on June 1, 2012 (just 205 days away!)
  • Prices won’t go down that much, since we retained our state’s high liquor taxes.
  • Only stores that are 10,000 square feet or more will be able to sell liquor (that’s about the size of the average Trader Joe’s, according to the Tacoma News-Tribune)
  • Don’t get too excited, owner of a 10,000-sq. ft.-retail space! You still have to apply for a license to sell liquor from those pesky state bureaucrats.
  • Also, pesky city and county bureaucrats will be passing regulations about where liquor stores can be. So if your 10,000-sq.-ft. retail location is next door to an elementary school, church/mosque/wiccan magic circle, hospital, or other place where sobriety is highly recommended, you may be S.O.L!
  • All the state-owned liquor stores will quit business by June 1, no matter what Bartleby says. Some state liquor stores are run by third-parties–those folks will be able to stay in business (even if they are smaller than 10,000 sq. ft.) but will have to buy their inventory from the state.

So, to recap, June 1, 10,000 feet, bureaucrats. Happy drinking, Washington!

(Photo of George Will and wife via Facebook)

Business, News, Politics

Seattle Doesn’t Trust Costco to Hold Its Liquor

All this could be Costco's...then yours. (Actually, it's the bar at Still.) (Photo: MvB)

Publicola (natch) tips you off to the latest Elway poll on Initiative 1183 (aka “Costco’s liquor-privatization initiative”), which shows a full 50 percent in support of I-1183 statewide. But not so fast.

First, as Publicola cautions: “It’s worth noting, though, that most pundits say a measure needs to initially poll at around 60 percent so it has a cushion to withstand the inevitable negative campaigning of an election.”

And secondly, as the Seattlepi.com’s Chris Grygiel adds, 54 percent of Seattle respondents were opposed.

Predictably, law enforcement and religious groups have looked askance at a proposal whose success is based on increasing total liquor sales in Washington. They’ve been joined in this by the United Food and Commercial Workers union, which represents some 1,000 workers currently employed by the state in its liquor stores. (The UFCW argues, persuasively, that union employees running state liquor stores are more stringent about not selling alcohol to minors than private enterprises.)

I-1183 calls for the closure of state liquor stores and the liquor distribution center; private sellers would then be licensed, with the state still collecting a 17 percent vig from total liquor sales. To forestall corner booze emporia popping up, the initiative requires stores to have 10,000 square feet of retail space. But there’s no denying that the hope (or fear) is that greater convenience and “non-uniform wholesale pricing” would tend to increase liquor sales.

The state’s Office of Financial Management agrees, and offers this rosy prediction for a state beleaguered by deficit, should Washington adopt I-1183:

…total State General Fund revenues increase an estimated $216 million to $253 million and total local revenues increase an estimated $186 million to $227 million, after Liquor Control Board one-time and ongoing expenses, over six fiscal years. A one-time net state revenue gain of $28.4 million is estimated from sale of the state liquor distribution center.

So what’s Seattle’s problem? Democrats. We’re loaded with them, and 62 percent don’t seem to care for anything with “privatization” in the name. Seattle Republicans and independents, by contrast, are in favor 57 and 54 percent, respectively. It’s a little strange, in that initiative sponsor Costco is beloved by Democrats, at least those running for office. Maybe the emphasis should be on “de-socializing” liquor, instead?

Drinks, Food

New to Seattle: Camarena is Premium Tequila for the Masses

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There’s a new tequila on the block, but it’s made by one of the oldest families in the business. Camarena Tequila made its American debut in California, Nevada, and Texas last year, and hit Washington State shelves in February, but the Camarena family has been making tequila in the highlands of Jalisco for nearly eighty years (and six generations) already. The first tequila to bear the family name, Camarena is made with 100 percent pure blue agave, sustainably farmed in the Los Altos Highlands, where the family has about three million agave plants growing. Right now, the tequila comes in silver and repasado varieties, with an anejo in the works. These are sweet, peppery, and earthy liquors, and though the quality is high, the price is nice: each bottle retails for $20. With that in mind, I bravely volunteered to sample these new premium spirits.

Tequila! Let's get ready to make some drinks.

The good people from Camarena actually wanted us to make our own drinks. Oh, twist my arm.

You too can make cocktails with only a few simple ingredients.

They provided the tequila, the recipes, and the requisite additional ingredients: vermouths, lemons and limes, ginger ale and beer, cassis, almond liqueur, orange liqueur, amaro, maple syrup and agave syrup, and even an egg. Don’t worry, all those liquids did not go into the same drink. If you’re playing along at home, a low-res version of the recipes can be found here.

Before...

The task at hand involved making four cocktails: a paloma (a refreshing alternative to the margarita), a cope de arandas (file under “aromatic cocktails”), an el diablo (file under “girly drinks”), and a dona elena (in the traditional sours–with egg white!–family).

...and after! Look at those delicious drinks.

I have to say that there was not a dud in the bunch. I will definitely drink a paloma again–it’s not nearly as heavy or as sweet as your traditional margarita, but just as simple to make. The dark copa de arandas proves that you can have a tequila-based cocktail in the winter, especially with just a hint of fresh mint. Meanwhile, with its cassis, the el diablo is a little too sweet for me to have more than one, but any cosmo lover should give it a try. And the dona elena is your classic sour, with a tequila twist.

Camarena tequilas in their native environment: on the shelf, at your friendly neighborhood liquor store (in this case 12th and Pine).