Supermarkets could upend current liquor landscape

Change in law makes future look dicey for small retailers

Posted 7/30/18

Linda Abreu, of Castle Rock, walked to the parking lot on a recent weekday with a full grocery cart — the typical milk, eggs, cereal boxes and frozen dinners — and a couple bottles of wine, …

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Supermarkets could upend current liquor landscape

Change in law makes future look dicey for small retailers

Posted

Linda Abreu, of Castle Rock, walked to the parking lot on a recent weekday with a full grocery cart — the typical milk, eggs, cereal boxes and frozen dinners — and a couple bottles of wine, because, she said, it was on sale.  

“It’s definitely a nice change,” Abreu said, “that now I can buy wine with my cheese.”

At the King Soopers on Promenade Parkway in Castle Rock, one of a handful across the state offering a full liquor section for the first time ever, shoppers have already embraced the ability to buy full-strength beer, wine and liquor whlie shopping for groceries.

In just a few aisles, the store displays countless types of craft beer. Shoppers casually perused the expansive collection of wine with carts full of bread and cheese. This new convenience, stemming from the largest change in the state’s liquor laws since the end of Prohibition in 1933, has already become routine for some.

Bill launched changes

In 2017, stores like King Soopers, Safeway and Costco were able to open liquor sections under certain restrictions. Senate Bill 197, passed in 2016, allowed for retailers to sell liquor once they obtained two liquor licenses and bought out every liquor store within 1,500 feet.

In a municipality with a population of 10,000 or fewer, liquor-licensed stores must buy out all retail liquor stores within 3,000 feet.

Starting in January 2019, the landscape will change even more. SB-243, passed in spring of this year, referred to as the “beer bill,” will allow malt liquors, like Mike’s Hard Lemonade, and full-strength beers to be sold in grocery stores under a standard beer license.

The bill also clarifies that local jurisdictions have authority over what is allowed in their public places and outlaws new liquor stores to be built within 500 feet of a school.

State Sen. Chris Holbert, a Republican from the Parker area, a sponsor of SB-243, said these policies came from a history of phased-in approaches. It began in 2008, when Gov. Bill Ritter signed a bill allowing liquor to be sold on Sundays.

“The grocery stores were left with 3.2 (percent alcohol content) beer, where people only 21 and older could buy it. They could buy it seven days a week, but nobody wanted it,” Holbert said. “So the grocery stores have been fighting for the opportunity to sell full-strength beer, and that change occurred with Senate Bill 197 in 2016.”

The King Soopers in Castle Rock is just one of a few retailers selling liquor already, a list that includes select Target, Costco and Safeway stores. As of 2017, grocery store chains were limited to five fully licensed locations. In 2022 they will be allowed eight, 13 in 2027 and 20 in 2032. By 2037 there will be no limit to the number of licenses a chain can obtain.

It will be something for longtime Coloradans to get used to. Colorado is just one of five states — Utah, Kansas, Minnesota and Oklahoma are the others — still selling just 3.2 beer in its stores. Chris Howes, president of the Colorado Retail Council, said the demand for new laws can be somewhat attributed to the influx of people moving to Colorado, people who are used to being able to have craft beer on their grocery lists already.

“I think customer demand will finally bring what we consider a very normal environment to Colorado,” Howes said, “but we’ll take this first step with craft beer because it’s delicious and customers want to buy it.”

Competition heightens

Once more grocers begin selling full-strength beer, wine and spirits, small liquor store owners will need to adapt to new, much larger competitors.

Jeanne McEvoy, CEO of the Colorado Licensed Beverage Association, a statewide representative of family-owned liquor stores, said there will be an estimated 2,000 full-strength beer competitors in the market come 2019.

“That’s an immediate, significant change to the competitive landscape,” McEvoy said. “Now we have to figure out what might be most beneficial to assist liquor stores in adapting to this change.”

With the beer bill kicking in next year, liquor store owners have already begun anticipating their next moves. Some will expand, others will downsize, according to McEvoy. Several others still don’t know much about the new laws in the first place.

And as the craft beer market will expand to grocery stores, smaller liquor stores will need to learn how to adapt.

McEvoy said the CBLA predicts a 30 percent decrease in “bread-and-butter” beer sales from local liquor retailers, sale of popular beers like Coors, Budweiser and Corona.

“That’s what keeps the lights on and the bills paid,” McEvoy said. “I think their purchasing may change and the number of craft beers they might be able to offer. You’ve got to have the money to buy it. Bottles and cans on the shelves don’t make you any money. It’s the (beer) walking out the door.”

Discouraging journey

On a recent trip to California, Carolyn Joy, owner of Joy Wine and Spirits in Denver, visited local liquor stores to see what she should expect in the coming years. She does this whenever she goes to different markets. This time, her daughter was visiting a few colleges in the Bay Area.

What she found was something she worried Colorado would turn into — or has already begun turning into. The smaller liquor stores were less impressive and more run-down while the chains prospered. Some smaller stores did well, but typically in neighborhoods with a high population density and not much competition surrounding it.

“What has happened in Colorado, in my opinion, is people getting used to shopping at chains,” Joy said. “And chains getting deeper pockets than mom-and-pop stores and it’s hard to ward them off.”

Joy’s fears of what may occur in Colorado echo much of the same sentiment from smaller liquor store owners. Some stores will be forced to close as a result of the new competition, and other stores will survive, be it because of the store’s location, ties to the community, customer service or selection.

Joy acknowledged the consumer still stands to benefit from the change, but said it might not be as convenient as some may believe.  

“In the long run,” she said, “sometimes, is it really convenient if you go to a place where you don’t have to wait in line and you get what you really want and you have a parking spot and they’re friendly and you’re supporting the community?”

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