Changes in Colorado Could Hurt Independent Liquor Stores

Apr 13, 2016 in Alcohol Beverage, Startups

Within the beverage alcohol industry, there are two types of states: control states and non-control states. Inside control states, the state government operates package stores to handle off-premise liquor purchases. Non-control states, such as Colorado, do not have these types of regulations in place, so independent, licensed liquor storeowners can open shop. Colorado has restrictions on the type of alcohol available in chain stores, which are currently only permitted to sell 3.2 percent alcohol. Recently, a group called Your Choice Colorado began pushing to get full strength beer and wine into all chain and convenience stores. This group argues that changing Colorado liquor laws benefit consumers, brewers, and the state’s economy, but many liquor storeowners and other organizations disagree.

The Arguments Against Beer and Wine in Colorado Grocery Stores

Independent liquor storeowners and groups like Keep Colorado Local feel that businesses would suffer if national supermarkets and chains were allowed to stock full-strength beer and wine. Colorado has a strong craft brewery industry, with 284 breweries according to the Brewers Association, and many attribute their success to the number of locally owned liquor stores willing to sell craft beer. Similarly, the culture surrounding craft beer would be altered with an ability to buy alcohol in additional locations. Some brewers with especially strong opinions feel grocery stores would only bring in product from top performing breweries and cut out small, unique businesses that set Colorado apart.

Additionally, the 15,000 people employed by liquor stores, breweries, distilleries, on-premise alcohol businesses, and wineries in Colorado may have their jobs and businesses threatened by this change. Employment opportunities offered by locally owned businesses would shift to chain grocery stores, such as Kroger, and put less money back into the local economy.

Summit Economics explored the potential impact of bringing beer and wine into Colorado grocery stores, and found that 42 percent of independent liquor stores would most likely close down. About 8,600 jobs and $2 million in revenue would be lost within three years of the transition.

The Arguments for Beer and Wine in Colorado Grocery Stores

Grocery store chains claim changes in Colorado’s liquor laws would bring a net benefit to hiring and the economy. A study funded by several grocery stores, including Walmart and Safeway, determined that craft beer sales would increase by $125 million and jobs would increase by 22,000. One component of the argument suggests the current marketplace doesn’t provide craft brewers with the distribution and exposure they could accomplish by putting product on grocery store shelves.

The consumer impact of this change was also investigated. Grocery store chains explore many ways to improve the customer experience, from display execution to product availability. Chains argue that laws restricting full strength beer and wine sales to liquor stores prevents a competitive marketplace in Colorado. If grocery store chains put these beverages on their shelves, the consumer cost would decrease by 18 percent and customers would gain the convenience of a single stop for their alcoholic drinks. Your Choice Colorado states its primary goal is to modernize liquor laws and promote the robust craft brewing culture in the state.

Why We Care

Denver, home of GoSpotCheck, is also home to over 1600 independently owned liquor stores and over 300 licensed breweries. Additionally, Colorado has more liquor stores per capita than 45 other states.

We have customers in every facet of the beverage alcohol space, from large retailers to small breweries. One of the world’s largest suppliers, Beam Suntory, uses GoSpotCheck to increase efficiency and visibility. Another GoSpotCheck customer, Sweetwater Brewing Co., implemented our mobile app to grow brand awareness and explore new markets.

Both sides of the debate to offer full strength beer and wine in Colorado chain stores have compelling arguments. If the initiatives get enough signatures to make it on the ballot, Colorado residents will vote on the measure in November 2016. The turnout will directly affect – or not affect at all – a market that GoSpotCheck understands and enables.