With Washington state closing out its state-run liquor stores and going to privately owned stores, can you tell me what it will mean for our region's wine industry?
The potential payoff for private investors apparently was highly attractive, with the liquor business in state hands having grown to an $889 million business annually. Of that, about 14 percent -- or $124 million -- was the state's profit, and $425 million went to local communities.
For the short term at least, it's clear that after June 1, when private stores were allowed to start sales, there would be many more places to buy liquor, with many of them also stocking wine and beer. Brian Smith, the Washington Liquor Control Board's spokesman, said there were 1,500 applications statewide either filed or approved as the end of May approached. The state previously had only 328 retail outlets, so you can expect to see at least five times as many liquor outlets in your local area, if it's typical.
Bidders paid out $25.9 million for the rights to 149 state liquor stores, and a follow-up auction May 24 of 18 unsold state stores pulled in an overflow crowd that had to be moved from a conference room into a warehouse, Smith said. The preliminary total for the sale, which did not include all fees due from buyers, netted another $5.7 million.
Despite a requirement that liquor sellers must pay a 17 percent tax on sales to replace the state's revenue loss and the money that went to local governments, private enterprise clearly was eager to get into the liquor business.
In the Tri-City area of Eastern Washington where I live, 53 retail locations were set to open on June 1 in Benton and Franklin counties. That's a sixfold increase in liquor outlets.
Some of those 1,500 new stores statewide no doubt will add substantially to the number of wines available in Washington communities, which likely will be good news overall for the wine industry. For example, the largest store in Benton County planned to open with 1,500 wines, with one of its owners claiming some will cost up to $20,000 a bottle.
As impressive as the numbers are, not all impacts may be favorable to every sector of the wine business as it existed before June 1. Many smaller wineries were apprehensive about the change, Smith said, and I had heard similar concerns from owners of small to medium-size wineries. They feared decades-long relationships with state buyers and existing wholesalers, who enthusiastically promoted Washington wines and also understood the benefits of promoting wines from Oregon and Idaho.
For example, the yearly Washington wine sale event at state liquor stores, which produced some great consumer bargains on very good wines, is over. Even if private enterprise replaces it, can its replacement rebuild the public's interest and appetite for such an event? Maybe, but that will take time.
Big wineries like Chateau Ste. Michelle and Columbia Crest, which have a huge share of the Northwest market, have the marketing staffs and expertise to create their own pricing events if they wish. But smaller wineries will have to build new relationships with a much larger set of retailers, an effort requiring time, new arrangements and probably no small amount of money.
On the other hand, having 1,500 outlets to sell to means a lot of shelf space to fill with a lot of bottles, creating new opportunity, even though liquor and beer will grab much of that shelf space. If more outlets lead to higher sales volumes, it will be a definite plus overall.
However, not all of those outlets will be new for wineries. Costco, Safeway, Albertsons, Fred Meyer and smaller local and regional grocery stores, such as Yoke's Fresh Markets in Eastern Washington, faced a bit of a dilemma as they planned for the June 1 opening date: where to put the liquor when their stores' floor space isn't immediately expanding?
Even big stores had to make some accommodations to devote shelf space to liquor. At some Yoke's stores, for example, the video sections, which were tucked into a nook near the stores' courtesy counters, have closed.
One store official told me that was an easy sacrifice to make because video had been in decline since the advent of digital video recorders, Netflix and Redbox. But not all stores had such an obvious choice to make. In some, the shelf space previously devoted to wine had to be squeezed down.
Darrell Toombs, who manages the Yoke's in West Richland, Wash., and his staff tackled the problem by reorganizing and repositioning part of their wine shelves and found a way to add 32 extra feet of shelving. That will handle a substantial part of the new liquor inventory.
He plans to make room for more by such strategies as trimming down the big-format jug wines formerly arrayed in rows of two or three down to just one or two, allowing him to squeeze in a bit more of the new liquor inventory.
That conjures up an oddly prophetic old line from Bob Dylan. Those shelves may have "started out on Burgundy but soon hit the harder stuff." Sorry, I just couldn't resist.
Wine words: Distillation
You might think it's a bit of a stretch to discuss the evaporative process used to produce hard liquor into a wine-centered column, but it's really not. Heating the fermenting wine grape juice to evaporate the alcohol and then recondense it to concentrate the alcohol long has been used to create grape spirits of 77 to 98 percent for Port-style wines and Sherry. And it's also used to produce brandy (alias Cognac and Armagnac), another of the delightful beverages derived from wine grapes.
Ken Robertson, retired editor of the Tri-City Herald, has been sipping Northwest wines and writing about them since 1976.