Up until late yesterday, I was working on a story for this week’s paper about the state’s independent, locally owned and operated grocers—roughly 540 of them—publicly opposing Costco’s current liquor privatization measure, Initiative 1183. To refresh your memory: If approved by voters in November, the measure would require the state to close its 300-plus stores and sell off its liquor distribution center, while making Washington grocery stores with over 10,000 square feet (or approximately 1,500 stores) eligible to sell hard liquor.
The group’s opposition was surprising for two reasons: one, the grocers had generally supported (but not endorsed) a similar initiative pushed by Costco last year. “We support privatization in general,” said Jan Gee, president and CEO of the Washington Food Industry Association, which represents independent small- and medium-sized grocers in the state. “We don’t support the current Costco initiative because it creates major barriers for our stores.”
And two, the “major barriers” Gee referred to didn’t include I-1183’s controversial 10,000 square-foot-minimum rule. “That’s not a huge issue for us,” Gee said.
So what, then, is the big problem independent grocers have with Costco’s initiative?
Gee explained to me that the initiative, in conjunction with current liquor laws, would basically require all grocery stores to build their own, individual liquor distribution centers—separate warehouses, basically—if they wanted to sell hard alcohol.
“There are barriers to how our stores would be able to create distribution centers for themselves,” Gee explained. “Our men say, ‘This is horrendous.’”
Meanwhile, Gee said the law ensures that smaller grocers couldn’t compete with Costco and other grocery giants that already have their own warehouses.
But her explanation didn’t quite make sense. Forcing all stores to have a separate warehouse for storing liquor sounds impractical from a business standpoint and more puritanical than our currently restrictive system. If the initiative really operated that way, wouldn’t all grocers who weren’t Costco be screaming about it? So I called the Washington Liquor Control Board (WSLCB) to confirm Gee’s interpretation state distribution laws.
Their response? “We’re not sure how Jan inferred that, but it’s not accurate,” says Rick Garza, deputy director of the WSLCB. As Garza explained it, wine and beer distributors who currently operate in the state would most likely apply to also become liquor distributors—and they already have warehouses because they’re in the business of distribution. If a grocery store’s current beer and wine distributor decided not to apply for a liquor distribution license, that store could simply contract with someone else.
“I don’t think it’s complicated,” Garza added.
After speaking with Garza, Gee called back to announce that her organization is “temporarily suspending” its opposition to I-1183. “We may have had a misinterpretation of what the impact of the law will be on my stores,” Gee said. “It appears I need to go back to my board.”
There you have it, folks: A small, dubiously earned win for Costco’s I-1183.
UPDATE: I just received a voice mail from Gee saying that “we got the confusion all cleared up” and now the Washington Food Industry Association is reinstating its opposition to I-1183. Having not yet spoken with Gee, I remain confused. I’ll update when I know more…
Lobbying is hard.
Capable staff is expensive.
Sucks to be an independent grocer.
So it’s the square feet requirement after all…
If I-1183 passes, then grocers will have the option of selling hard liquor. If it does not, then their status quo is maintained.
I totally don’t get what their problem is.
@3: The context and requirements of the “option”. Is it that too hard to understand?
Small retailers are going to get shut out here.
They don’t understand what will happen.
Costco, Safeway and Kroger will buy into their existing warehouses at a very large discount because they will be buying mixed truckload quantities.
Small grocers can still buy from distributors on a direct store delivery basis, but they will be charged a much higher price for the usual 6 bottle per item purchase than will someone who buys 120 cases of that same item.
*sigh*
I fully support the idea of jettisoning this relic of the prohibition era. But I really hate the 10,000 sq ft minimum. That is quite a bit larger than most of the current liquor stores I frequent. I’m a bit baffled by Gee’s statement that this is no big deal to him. Wouldn’t that drive out a lot of the smaller independents, and put it all in the hands of Costco and the larger chain grocery stores?
The current system of state owned stores is stupid, but this initiative seems tailor made to hand it all off to Costco and screw smaller companies, for no valid reason.
Not a fan.
I-1183 doesn’t make the state liquor monopoly look so bad and inconvenient after all.
@6 First step. We tried a broader measure and it failed. Let’s do this, show people the sky does not fall, then push to expand it. Sometimes you have to take half a victory.
I offer a simple solution to all of this bullshit:
Let me special order by the bottle.
If I could do that at any liquor store – BY THE SINGLE BOTTLE, I would retire my personal jihad against the WSLCB. Hell I would even accept a concession that I needed to order a minimum of say, five bottles, as long as I could buy different bottles of difficult to find/imported liquors. There’s no becherovka anywhere because it wasn’t a ‘top seller.’
Personally, I’d put that order in at least twice a month.
COSTCO’S NEW MONOPOLY – The HIJACKING of the liquor business only benefits one entity – Costco. There’s so many aspects of this that make it a bad deal for WA residents. The suspension of reality to perceive this as a step up is unbelievable. It assumes that when the legislature revamps the liquor taxes per the initiatives mandate that the taxes will be going DOWN. Are you kidding?! What rational person could believe that after a major disruption in the revenue stream their response will be to LOWER the taxes? 7 new taxes in 1183 will add cost to every bottle. Moving from one entity handling distribution AND retailing to two separate private entities will more than double the markups on each bottle. This is the way it works in every state where privately held liquor is sold. And Costco’s use of comparing WA to CA for the purposes of showing how low liquor prices will be is blatantly deceptive. Does anyone think that the state is going to decrease its liquor tax from $26 per gallon to $3 per gallon like in CA?
The 10,000 SQ Foot rule works just fine to make sure that Costco will be the new monopoly in the liquor category for several years to come. In the mean time selection will be going down by 60%. Why? Picture your grocery store – where will the spirits go? Is there a spare aisle sitting idle? There simply is not room in grocery stores to carry the variety that our current liquor stores do, not even close. And grocery stores don’t have the desire to carry high-end, high-cost items that may take a while to sell.
The pay off for the state of $150mil for a couple years is a pittance compared to the revenue we would all be benefiting from should liquor dollars continue to go into the state fund for the next several decades (note that the OFM numbers only project for a few years to draw their conclusions which creates an incomplete picture at best). Does anyone believe that the money that currently supports our state’s residents would be better directed to Costco’s bank accounts, and if so, why? Is Costco such a wonderful corporate citizen that they give back more to our people than the state does? Does Costco really think that they will be as reliable in preventing sale of alcohol to minors as the state – since liquor and the need for public safety go hand in hand why is it such a stretch to have the state controlling liquor?
The Costco Takeover should be branded for what it is – a land grab dressed up in deception and misinformation whose only goal is to divert desperately needed revenue from state services to Costco’s wallet.
#6 note: 10,000 sq ft minimum is a requirement with a majority of the area for Grocery sales and then they allow liquor – you can’t be 100% liquor.
this column is awful, a bunch of he said she said bs.
“Small grocers can still buy from distributors on a direct store delivery basis, but they will be charged a much higher price for the usual 6 bottle per item purchase than will someone who buys 120 cases of that same item.”
That’s a common practice of suppliers whether or not they’re selling alcohol.