Mixers and mixed feelings
Local liquor store owners have mixed feelings about a new law that allows grocery and convenience stores to sell stronger beer, while allowing liquor stores to sell more non-alcoholic products. The law took effect April 1.
Brian and Lindsey Shaughnessy, owners of O’Shaughnessy Liquor, 1211 East St., have embraced the change. They’ve remodeled the store, knocking out a wall to provide more sales space. They’re excited about bringing in new mixers for things like margaritas and blended drinks, and now sell sodas, juices and energy drinks. They set up a new display Wednesday for shot glasses, corkscrews and koozies. They’re even offering barbecue supplies and charcoal to cater to a recent influx of construction workers.
But Susan Thompson, owner of State Street Liquor, 110 S. State St., is more cautious. Thompson said she’s waiting to gauge customer demand before adding any more non-alcoholic products. She believes it will take years to sort out the ramifications of the new law, not just its effect on customers and stores but also for vendors, taxing entities and law enforcement.
The new law allows grocery and convenience stores to sell beer with an alcoholic content of 6 percent, up from 3.2 percent. The trade-off for liquor stores is that they can now carry non-alcoholic products such as ice, cigarettes, lottery tickets, mixers, shot glasses and more, with the caveat that those items can’t account for more than 20 percent of a store’s gross sales. Wine and hard liquor sales will remain limited to liquor stores.
A study on the effect of the changes is expected from Alcoholic Beverage Control in 2029.
Kansas is one of the last states to do away with the Depression-era restriction on alcoholic content. Utah will end its restriction on Nov. 1, leaving only Minnesota to sell 3.2 percent beer.
Brewers have said they plan to cut back on production of 3.2 beer as demand wanes.
THOMPSON sees advantages and disadvantages from the law change. She’s read market studies from other states that showed liquor stores lost about 30 percent of beer sales to grocery and convenience stores.
On the plus side, both Thompson and the Shaughnessys said beer sales have the lowest profit margin and hope a reduction in their sales won’t have a dramatic effect on their bottom lines.
TIME WILL tell if the new law helps or hurts liquor stores, Thompson said.
She hasn’t made drastic changes to her inventory and wants to wait perhaps several months to see how buying patterns change.
“Customers are still figuring out who’s carrying what and comparing prices,” she said.
Thompson said she’s concerned about the taxes concerning liquor sales, which are subject to an enforcement or “drink tax” in lieu of sales tax. Grocery and convenience stores are not subject to the same tax, and instead must tack on state and local sales taxes. Thompson has updated her computer programs to better adjust for tax rates between alcoholic and non-alcoholic products.
She’s also concerned about law enforcement. Alcoholic Beverage Control (ABC) regulates liquor stores but enforcement of liquor laws at grocery and convenience stores could fall to local law enforcement agencies.
She’s also seen vendors scramble to adjust. A truck that previously arrived like clockwork each morning no longer makes consistent deliveries because the driver makes more stops at grocery and convenience stores.
“There’s going to be a lot we’re going to learn about this legislation and maybe amend it,” said Thompson, whose husband is District 9 Rep. Kent Thompson, said. “It’s going to be a process and the state is going to have to learn what works and what doesn’t.”
And while much media attention has focused on beer sales, customers so far have been slow to realize they now can buy more products from liquor stores, Lindsey Shaughnessy said.
“We really need more awareness,” she said. “You can come here and get everything you need to build a drink from the ground up. I think it’s going to change the way consumers think about liquor stores.”
AS MORE customers turn to grocery and convenience stores for beer, it’s an opportunity for liquor stores to sell more craft beers and speciality products, the Shaughnessys said. They plan to increase their inventory of such products.
And there’s still a market for lower-alcoholic content beer. Some people like it for the taste or the cost, Thompson said. She worries what will happen if brewers stop making 3.2 percent beer. But Brian Shaughnessy pointed to products like Budweiser Select 55, which has fewer calories and just 2.8 percent alcoholic content. In an ironic twist, many convenience and grocery stores have stopped selling lower-alcoholic content products so liquor stores may be the best place to find them.
“Now all those customers are coming here,” Brian Shaughnessy said.
Alcohol sales are seasonal, with an increase in beer sales during warmer months and an increase in wine and spirits during cooler months and around the holidays, Thompson said. It’s too soon to know how the new law will affect sales, especially during this transition in seasons, she said.
But O’Shaughnessy Liquor already has seen beer sales drop, Brian Shaughnessy said. “But I expected worse. We’re actually finding ourselves in a better position. Beer is just not a fun game anymore.”
To compensate for reduced beer sales, the Shaughnessys dramatically increased their non-alcoholic products. Much of that came from customer request, Brian said. The store has obtained a tobacco license but is not yet selling cigarettes and tobacco products.
Previously, liquor stores could sell non-alcoholic products in a separate location. O’Shaughnessy offered such products in a separate section of the building. With the recent remodel, they’ve torn down a wall that previously was cooler and storage space. They’ve moved their warehouse into the space that previously sold non-alcoholic products.
“It’s nice to have everything in one space,” Brian Shaughnessy said.