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Washington: Liquor board, retailers gear up to implement I-1183

Posted on  | November 10, 2011   Bookmark and Share
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Source: Seattle Times

By Melissa Allison

People who make a living selling liquor scrambled Wednesday to grasp how voters’ resounding approval of Initiative 1183 will affect them, while a Northwest grocery-industry representative speculated about alcohol deregulation spreading to other states.

The passage of I-1183 means the state will stop selling liquor by June 1, when grocery stores will begin legally selling spirits for the first time since Prohibition began. The initiative received 60 percent of the statewide vote.

Everyone from wine-shop owners to distillers to grocery chains is gearing up for big change.

The Washington State Liquor Control Board, which will lay off more than 900 people in the coming months, said in a statement that it’s disappointed the measure passed.

“Weighing most heavily on our hearts and minds are the more than 900 Liquor Control Board employees who will lose their jobs,” the liquor board said. “Despite operating under a microscope, they have carried out their responsibilities with dignity and professionalism.”

Most of those people work in the state’s liquor stores and Seattle distribution center. Their pay ranges from $11.35 an hour for entry-level clerks to $21.50 an hour for the highest-paid store managers.

The liquor board said it plans to concentrate on sales through the holidays and will shift in January to divesting its distribution center and retail stores.

It also plans to work on enforcement of liquor laws, including those that prohibit sales to minors. State stores have a 94 percent compliance rate for not selling alcohol to minors, compared with 77 percent for the private sector, which includes retailers selling wine and beer and restaurants selling all forms of alcohol.

Safeway plans to sell liquor in all of its 155 groceries in Washington, a spokeswoman said. Trader Joe’s intends to sell it in most of its 18 stores statewide, a spokeswoman said.

Issaquah-based Costco Wholesale, which gave a record $22.5 million to the campaign, did not respond to requests for comment on expectations for its 27 stores in Washington, or when it might start selling its private-label Kirkland Signature liquor here.

Flush with the campaign victory, the grocery industry is gearing up for deregulation talks in other states.

Joe Gilliam, president of the Northwest Grocery Association, said Wednesday he expects industry leaders to begin talks in the coming months with liquor regulators and lawmakers in Oregon and Idaho. He thinks industry organizers might be successful in legislatures, meaning ballot efforts in those states might not be necessary.

Meanwhile, Washington’s current liquor industry is bubbling with fear and possibility.

Aside from the state workers who know they will lose their jobs by June, there are more than 100 entrepreneurs who contract with the state to sell liquor.

I-1183 allows them to continue operating, but many are not sure they can afford to buy their liquor inventory from the state – or whether the investment would be worth it, given the new competition they will face from groceries.

The average contract liquor store has $125,000 in inventory, the liquor board said.

“We don’t know, we truly don’t know,” said Karen Lindskog, who opened a contract liquor store in 2009 on Vashon Island with her business partner, Cherry Morgan.

She said she plans to talk to Vashon’s grocery-store owners and others about whether they are going to apply for liquor licenses. Their answers will help determine whether she mortgages her house or the building the liquor store is in for money to buy the liquor inventory, she said.

“Even if we can get our hands on the thousands of dollars it would take to stay in business here, would it be a viable business?”

Tara Thomas opened a contract liquor store in Renton over the summer. She said she is working at least 80 hours a week between the store and her customer-service job at United Airlines – her fallback plan in case she closes the store.

“I figured even if the initiative wins, I’ll still have the experience of opening a liquor store and learning to manage a business, and that can go on my résumé,” she said.

Thomas’ store is in the same shopping center as a QFC, although she said her regular customers say they would continue to buy liquor from her.

“My rent is high, so I can’t afford any competition,” she said.

David LeClaire, who founded Wine World off Interstate 5 on Northeast 45th Street in Seattle last year, said he plans to be one of the region’s new competitors for liquor sales.

Wine World is one of the few wine stores large enough to sell liquor in Washington under I-1183, which requires stores to measure at least 10,000 square feet.

“We’re first in line, and we’ve had distilleries calling us,” LeClaire said.

“It’ll hurt prices on the mass-produced brands,” he said, including wine and liquor, but Wine World specializes in something Costco does not – variety.

Still, LeClaire said he had not wanted I-1183 to pass. He thinks its deregulation of pricing and distribution will hurt small players.

One distillery that called Wine World on Wednesday was Oola Distillery on Capitol Hill.

I-1183′s passage comes at a tricky time for Oola, which sells gin and vodka in a handful of state liquor stores but had planned to pitch the liquor board this week on a statewide rollout.

The liquor board canceled the meeting, because it has decided not to list any new products as it begins to divest, a liquor-board spokesman said.

“We’re stuck, and that aspect of our business is shut down,” said Brandon Gillespie, Oola’s managing director. “We can sell to consumers here [at the distillery], but how are we going to get product to cocktail bars, restaurants and retail establishments if the liquor control board is not going to be available to purchase that product?”


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