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Liquor Sales Initiatives – Privatization

July 31, 2010

Here in the great state of Washington, we have an oddity of sorts when it comes to liquor stores: they are all either state-owned or state-contracted.  This election cycle, we citizens have an opportunity to change that through the initiative process.  I-1100 and I-1105 seem to be wildly popular with voters, with I-1100 having the most energy and funding behind it, for instance: Costco.  On the surface, I-1100 is about liquor, and not beer and wine.  From the Secretary of State:

This measure would direct the liquor control board to close all state liquor stores; terminate contracts with private stores selling liquor; and authorize the state to issue licenses that allow spirits (hard liquor) to be sold, distributed, and imported by private parties. It would repeal uniform pricing and certain other requirements governing business operations for distributors and producers of beer and wine. Stores that held contracts to sell spirits could convert to liquor retailer licenses.

However, the ballot will read slightly differently:

This measure would close state liquor stores; authorize sale, distribution, and importation of spirits by private parties; and repeal certain requirements that govern the business operations of beer and wine distributors and producers.  (Emphasis mine)

So, it does affect the beer and wine industry.  But what of it?  The Washington Brewers’ Guild (published by the Washington Beer Blog) has come out against this measure:

Vote NO on INITIATIVE 1100

I-1100 is the greatest threat the Washington craft brewing industry has experienced in a decade.

  • Actively being promoted as modernizing liquor laws, by privatizing spirit sales.
  • Actually a sweeping proposal that repeals 39 State Laws, enabling the biggest retailers, distributors, and producers to own and give favorable pricing to each other, which would eliminate the level playing field small businesses need to grow and prosper in our state.

I-1100 negatively impacts the craft brewing industry.

Washington State is home to one of the most innovative and fastest growing craft brewing industries in the country. During the last 24 months, throughout the worst economic downturn in our lifetimes, the craft brewing industry in the State of Washington has grown more than in any 24 month period in history. Dozens of new craft breweries have opened, creating new employment opportunities for hundreds of state residents, and capitalizing on the creativity and innovation our state is known for.

What this means for YOU as a brewer:

The majority of the Washington craft brewing industry is small businesses. I-1100 would stunt the growth of our industry as breweries encounter more competition and pressure to give discounts, free product and services to obtain shelf space or handles at big box stores, chain restaurants, and other retailers. Long-term affect: A reduction of microbrew presence in the marketplace would have a disastrous effect on our burgeoning craft beer culture. Small breweries not capable of participating in the race to the bottom would close, eliminating jobs. Washington State ’s reputation as a destination for great craft beer would come to an end.

I-1100 deregulates a prospering, innovative industry.

The problems resulting from Federal deregulation of telecommunication, airline, and banking industries are well known. The affected industries now have reduced competition, less innovation, and benefit only the largest and wealthiest companies. I-1100 eliminates the level playing field that requires consistent pricing for all breweries.

What this means for YOU as a brewer:

I-1100 would legalize Tied-Houses moving Washington State towards the English Pub system, making it harder for small breweries to obtain handles. I-1100 allows beer and wine to be purchased on credit, creating a greater accounting burden as you track down customers with overdue balances. I-1100 legalizes Pay to Play, creating a sales system where money speaks louder than quality. I-1100 allows producers and distributors to give away free draught systems, product, mirrors, neons, store remodels, etc. Long-term affect: Those breweries not willing or able to compete with large producers’ deep pockets will be forced out of the marketplace and close their doors.

I-1100 takes away consumer choice.

The success of the craft brewing industry has been a huge success for the consumers of Washington State. Consumers have literally hundreds of choices of locally made, hand-crafted beers from across our state. I-1100 hurts consumer choice by giving volume pricing discounts to the largest companies, thereby reducing competition. Without the means to compete in the marketplace, small, neighborhood craft breweries will close and consumers will have less choice at their favorite establishments.

What this means for YOU as a brewer:

With a pay to play system, a brewery will be chosen based upon their ability to pay in goods or services instead of upon the merits of their beer. Washington state’s reputation as a destination for great craftbeer will cease to exist as more and more craft handles are replaced by big beer and breweries close their doors.

Vote NO on INITIATIVE 1100

I have to say that I will be supporting I-1100.  I don’t buy the opinion of the brewers’ guild.  Their position comes across as somewhat polemic, and overstating the potential effects of this proposed law.  Frankly, I find some of their fears, like Tied Houses, unconvincing and without merit.  They are looking at but one aspect of this relationship between the brewers and drinkers.  They focus on brewers to the neglect of you and I, the drinkers.

Let’s take on tied houses… some bars may end up being tied to brewery in this way.  But others will not.  Bar and restaurant owners know what their patrons like.  They must, or they will be out of business.  The average Washington beer drinker, in my experience, is more attuned to the craft beer scene in general, even if he or she prefers the likes of PBR or Rainier.  But with the beer scene as Evan describes it, the craft beer drinker will still seek out craft beer.  He will still demand it, and the craft brewer will supply it.  I find the idea of a successful Budweiser, Miller, Coors, or even Redhook Tied House to be something that will largely go unnoticed to a craft beer drinker.

In the end, I think it the brewers’ guild is experiencing some trepidation about the potential future, the unknown.  They, as craft brewers, have it pretty good here in Washington.  In their quest to maintain the status quo regarding regulations affecting their industry, I contend they don’t have enough trust in the good people who continually drink their fine ales and lagers, and have put them in a position to be successful.

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2 Comments leave one →
  1. Beer Lover permalink
    July 31, 2010 6:07 pm

    Big Tex, I think you’re absolutely right. The Guild is afraid of the unfamiliar. In fact, 1100 should only help craft brewers and their customers. Protectionist regulation, like the Three Tier laws, inevitably only “helps ” the largest and most entrenched businesses, who can afford lobbyists and large campaign contributions to maintain the regulations to their perceived benefit. To the extent that it “helps” them, it only helps them become complacent and inefficient, with higher prices and worse customer service, all the while locking out competitors.

    A free and fair marketplace, as we’ll have under 1100, invariably works to the advantage of entrepreneurs who have innovative products and are better at understanding and reaching their customers.

  2. Big Tex permalink
    July 31, 2010 9:07 pm

    Thanks for dropping by, Beer Lover. I don’t think craft beer in Washington is going to take a hit. If they keep making the sweet nectar we love, we’ll keep coming back for more. It’s fairly simple.

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