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Groups may seek privatization of liquor sales in Oregon

September 16, 2013

Grocery stores and convenience stores may get behind a ballot initiative to privatize state-run liquor stores now that the Oregon Liquor Control Commission has decided to let liquor stores sell wine and beer.

“This isn’t 1933 anymore and people want the convenience of liquor being in the grocery store,” Northwest Grocery Association President Joe Gilliam said. “OLLC should be focused on licensing and enforcement, not promotion and selling of distilled spirits.”

The state agency oversees 248 privately owned liquor stores throughout Oregon. The stores own their shelves, but the OLCC owns the liquor and gives owners a percentage of each sale. Most of these stores, especially those in metro areas, only sell distilled spirits but in March 2012, the commissioners let four metro locations sell wine and beer as part of a pilot program.

On Thursday, the commissioners declared the program a success and opened the application process for beer and wine sales to any OLCC store. The earliest date that an OLCC store can present its new business plan for approval is Oct. 24.

One major caveat is that OLCC stores can’t displace their distilled spirits for beer, so they would have to reconfigure, remodel or expand their stores. Another sticking point is that Oregon won’t buy the wine and beer, meaning owners will have to pay for the products up front.

Steve Brown, who owns the pilot store Lincoln City Liquor Outlet, chose to remodel. He now offers more than 300 kinds of microbrews and 200 kinds of wine from small vineyards at his Oregon Coast location.

“We wanted product that isn’t in the big-box stores,” Brown said. “The responses from the customers were excellent. It gave them choices.”

Brown also owns South Salem Liquor Outlet at 5107 Commercial St. SE. He submitted a proposal to the OLCC Friday morning to sell more than 800 microbrews and set up 30 growler taps at that location. If all goes well, he hopes to present the plan at the board’s Oct. 24 meeting and start selling before Thanksgiving.

Beer is a bulky product, and it’s one that customers prefer to buy cold, Gilliam said. Not all OLCC store owners can afford to expand or remodel their stores to compete with the breadth and depth of selection offered at grocery stores.

“They (the OLCC) are screwing around trying to look modern without making any real changes,” Gilliam said. “Putting beer and wine in OLCC stores doesn’t help the average shopper, it only hurts the convenience store.”

That’s one of the reasons why he says his association has been researching whether it wants to back a 2014 ballot initiative to privatize Oregon’s liquor system.

“We will know probably next month whether we’ll go,” Gilliam said.

The Northwest Grocery Association failed to convince lawmakers to pass privatization legislation in 2013 despite what Gilliam characterized as broad public support for the idea. He now thinks a ballot initiative is the best approach and pointed to the successful 2012 voter campaign in Washington state to privatize its liquor stores.

Brown said he’s heard talk of an initiative for years.

“We like the system the way it is,” Brown said, adding that liquor prices in Washington jumped after privatization.

He also pointed out that grocery stores have been allowed to apply for licenses to run independent liquor stores within their walls since 2011.

“None have chosen to do it,” Brown said.

Plaid Pantry Executive Vice President Jonathan Polonsky said he thinks the OLCC decision appears to be a negative for the chain, but the impact on stores will depend on how many OLCC agents take advantage of the relaxed restrictions.

“It’s too soon to tell whether it’s going to be really good or bad,” Polonsky said. “It’s going to be more competition. They have a monopoly on spirits, so it’s something they have that we don’t.”

When it comes to the topic of privatization, Polonsky said Plaid Pantry is neutral for now. The company’s Washington locations took a small hit to their sales after grocery stores and big-box chains started selling distilled spirits, but he said sales have snapped back.

“If all of a sudden every single liquor store licensee (in Oregon) decided to opt in and sell beer and wine, well, then we would move from a neutral position to it should be privatized because then we want a level playing field,” Polonsky said. “That strikes us as a bit unfair.”

Source: Statesman Journal