One may state that upon the passing of the new beer law, some sales in the existing liquor stores may decline. Despite this possibility, this can present a major expanding opportunity for all the craft beer creators in the area. As a convenience store advocate, I support the passage of House Bill 1192, which would allow grocery and convenience stores to sell full strength beer. While there are arguments on both sides for and against this Bill, one must recognize that convenience stores sales were already affected by the recent changes to the law allowing Sunday sales of liquor, malt beverages and wine.
We have seen a decrease of 16 % in sales of 3. 2 beers during the 1st quarter following the change. This has had a significant impact on the ability of the convenience store to compete with alcohol sales on Sunday, creating an inequity in the market. The state of Colorado has one of the highest percent of microbreweries in the United States per capita and is famous for craft beers. Colorado has a higher percentage of alcohol consumption than 60 percent of other states.
The higher level of Colorado liquor consumption per capita could correlate to widespread retailing of liquor in the state, along with a slightly younger population and higher rate of tourism. Colorado consumers not only consume more per capita than the US average, but also are more inclined than the average to buy premium liquor products that support the local industry. (Summit Economics, 2009) This means that the local convenience stores are not going to take the loyal consumers from the local liquor stores.
In limiting liquor sales, the state government has effectively allowed licensed liquor stores to charge whatever that they want for their products and in response to these changes, these entities have raised the prices considerably. Chain convenience stores are able to buy more products from distributors either by storing it or by buying for multiple stores. Buying from distributors in bulk allows us as storeowners to charge lower prices for the same product as the liquor stores. Buying in bulk also saves on transportation cost as well cuts down on environmental pollution.
Statistics have shown through the decrease of 3. 2 beer sold that consumers, if given the option, prefer “full” strength beers to 3. 2 beers. Consumer preferences determine to which products a store will sell or dedicate shelf space. If 3. 2 beer is not selling, convenience stores will remove it from their shelves to free up shelf space for products that will sell. The result will not only affect convenience stores, but the consumer. Consumers will be adversely affected by limitations being placed on where they can purchase beer.
If consumers care more about convenience, then they may not take the time to make an extra stop at a liquor store for beer. This will affect overall beer sales, which trickles down to the beer industry as a whole, lowering total overall profits. Many people have said that allowing ‘big business’ to liquor will adversely affect the vibrant craft beer culture that has routed itself in Colorado. I believe that the exact opposite will happen. Allowing convenience and grocery stores to sell beer will give these craft brewers a larger market to which they may sell their product.
If their product proves to be a popular one then the larger chain stores will be able to assist the craft brewer in receiving a larger destruction pool rather than limiting it to small mom and pop stores that in many cases do not have the excess funds to risk on a new product. Allowing larger business to sell beer and liquor will also bring greater diversity into the market. Current liquor stores have a fixed amount of space and time they can devote to bringing in different products such as imported beers.
Larger business will be able to afford to bring a variety of flavors and types into a stagnant market and increase sales. This will allow consumers to experiment with different types of beer and may open up new sub-markets in the liquor sale industry. In addition, one could argue that if an individual is able to have the ability to purchase ones spirits at the local convenience stores, then allowing an individual the option of a quick and simple as well as a convenient place to stop and pick up multiple items in one place. However, the other option of segregating ones choices to a liquor sales consumers are orced to make multiple stops if they wish to purchase both groceries and liquor for example. Many consumers may decide the trip to the liquor store is not worth it at all because they want to save time or they feel that going to a liquor store by be socially undignified. Furthermore, Liquor stores should have the responsibility of giving customers a reason to shop there – not the government. If liquor stores are worried about going out of business because a convenience store can compete with them, then one may need to take the added step to review ones current strategic business model.
It may show where flaws or weaknesses may exist therefore an additional marketing plan may be developed in order to remain competitive within the marketplace. This could be through customer service, other benefits (beer tasting) or inventory (stocking the best specialty brews) just to name a few. We should hold liquor stores responsible for beating their competitors, not having the government hobble competitors for them (Wheelen, p. 91). In other words, by not passing House Bill 1192, liquor stores are seeking government regulation as a way of advancing their own interest, not the consumers.
If one is not willing to open up the playing field, consumer’s options are being limited. In essence, the consumer should maintain the flexibility to choose what they prefer – convenience or selection, customer service or convenience. There exist many differences for the consumers of the 21st century who are satisfied by different things, which means there are beer markets out there for liquor stores and convenience stores. If convenience stores can sell full strength beer, the number of sellers can more than double, giving consumers more options.
The ability to offer additional options will result in more sales, which is good for the beer industry as a whole. Beer represents 60% of alcohol sales nationally, which means that liquor stores still have the opportunity to capture the other 40% of alcohol sales, which convenience stores are not able to do so. Any declines in beer prices will be short lived in an oligopolistic industry and will be offset by increases in wine and spirit prices as liquor stores seek to compensate for losses and stay in business (Appendix C).
Liquor storeowners argue that if they lose revenue and subsequently must close, the economic and small business impact will be devastating. Convenience stores are also small businesses that contribute to the economy! Even though the corner convenience store may have a sign that says, “7-11” – this does not translate into automatic corporate profits. In many cases, local, small business entrepreneurs that purchase the right to use the 7-11 name on these stores.
They do this as a way to enhance business and give customers a sense of comfort by shopping at a place they recognize. There should not be an assumption that job and proprietor losses of income will be the result of corporate convenience store takeovers! If liquor stores want to stay in business, they should fight for that right like the rest of America and not make the government do it for them. Although the Statistical analysis of Census data predicts 17% to 52% of liquor stores will close if distribution were to include supermarkets and convenience stores (Appendix C).
Millions of independent consumer transactions should determine winners or losers in the business of liquor retail, not by antiquated laws designed to aid one small special interest of independent retailers (Appendix B). Once the new law passes, the microbreweries will have more opportunity to increase their production and expand their beer sales by selling a higher percent of their product locally without having to pay the huge shipping costs normally associated with beer distribution in Colorado’s remote areas.
Beer decreased 16%, which represents a . 064 gallon loss for every gallon of full strength beer gain. (Summit Economics, 2009) In closing, it is important that the Colorado State Government repeal the liquor segregation laws that have discriminated against business for decades. Allowing beer, wine, and spirits to be sold in convenience and grocery stores will increase sales (and state revenues by extension), decrease prices, and give consumers more variety to choose from in their shopping experience.