Ringing in the beer year

Grocery and convenience stores are on their marks for New Year’s Day when an 85-year-old remnant of Colorado’s prohibition laws is put to rest, sanctioning them to carry full-strength beer. As a result, mom and pop liquor stores, whose beer sales are estimated at more than 30 percent of their present sales, will be feeling the punch. 

While there will still be “lite” versions of beer to appease those watching their waistlines, anything with the moniker of a 3.2 beer now on shelves is headed the way of extinction, never to be produced again.

“I’m in the middle of this and it’s not simple to explain,” Director of the Colorado Liquor Enforcement Division of the Colorado Department of Revenue Patrick Maroney said of all the changes in regulations and terminology.

“The legislature passed the law that fermentable malt beverages, previously called 3.2 beers, will no longer have a maximum amount. It will be anything over a half of a percent and that will be the minimum that needs to be regulated. So there’s no additional license needed for a grocery store or a convenience store to sell stronger strength beer than 3.2 and their current liquor license will suffice,” Maroney said. 

It may be a distant memory now, but it was big news in 2008 when liquor stores were first allowed to be open on Sundays. That breakthrough kicked into motion more organized pressure from retailers to challenge Colorado’s antiquated liquor laws so they could jump into the action. Those efforts gained momentum over the past decade.

“In 2016, the liquor store business was threatened with about six different ballot initiatives,” Jeanne McEvoy, president of the Colorado Licensed Beverage Association, which advocates for family-owned liquor stores, said. That year existing liquor laws were seriously under fire by lobbyists for big retailers, outnumbering liquor store lobbyists by more than ten to one.

“There was a desire by grocery stores and big box stores such as Costco, Walmart, and Target to enter into the sale of beer, wine, and spirits that historically was in the purview of liquor stores. Because the threat of those initiatives would have devastated all of the liquor stores in Colorado, we were able to negotiate some changes which will slowly phase in the transfer of liquor sales to grocery stores over a 20-year period. Unfortunately, we just couldn’t wrestle the beer issue to the ground.” 

King Soopers’ Corporate Affairs representative Adam Williamson said, “This is about adding the convenience of one-stop shopping for our customers. It is all about choice. Our customers have told us repeatedly, this is what they want in our stores.” 

“For the majority of liquor stores, 50 percent of their sales are in beer sales,” McEvoy said. “So to lose those sales is pretty daunting. But, I can tell you that the vast majority of beer drinkers are men and how many men like to go to the grocery stores, and do you really want to stand in line to check out with beer?“ 

Small liquor stores will be at a sobering disadvantage, though, when it comes to purchasing enough beer to qualify for volume-based price breaks. But more vital to the scheme of things is that shot-glass size independent stores won’t be able offer customers the low prices their mug size competitors can afford. Grocery stores can easily buy hundreds of cases of beer on the cheap only to send them out the door for a pittance over their cost, just to draw customers into the store.

Niwot Liquor Store owner Tom Valdez said, “It changes everything for me, because grocery stores will suck all of the profit out of it until the smaller places go away. Now that they can sell beer in every store, they will do that at just pennies on the dollar until all the liquor stores close up and then they’ll boost the price up. Beer is an important part of our business as far as making a profit.“

Bert Steele, owner of Niwot Market, said the store will not be carrying liquor. 

Loren Touch, owner of Gunbarrel Liquor, just around the corner from King Soopers, said, “We definitely think we’ll lose half of our beer business, but it’s not something we lose sleep over because there’s nothing we can do about it.”

Acknowledging the production and marketing power of mainstream beer manufacturers like Coors and Miller, those brands are likely to have the upper hand in sales numbers through big box retailers. But there’s less of a definitive prediction regarding how craft beers will perform in the fray. 

McEvoy said, “About 15 percent of the beer sold in Colorado is craft beer. Because a lot of smaller liquor stores have been their partners from the beginning, you could say we took them to the dance. We walked hand-in-hand until this change in the beer law. Then it feels like they saw the beautiful girl across the dance floor and said, ‘let’s go there.’ It’s very frustrating, and it’s already turning sour. But in the end, grocery stores will only carry what sells well.”

Managing partner of Longmont’s Wyatt’s Wet Goods, Joe Henry said, “Although chain grocers will adopt craft brewers into their sets, the selection will not compare to what you'll find in a larger independent liquor retailer such as Wyatt's.” 

Henry explained this is because being an independent store gives the business the ability to make streamlined and spur of the moment decisions about inventory so Wyatt’s can “put product in cooler doors within minutes of the first sales call.” 

Valdez said about a third of his sales comes from beer. He’s anticipating that continuing to sell specialty beers will still draw in customers. 

“Here in Niwot, I’m basically a convenience store and I try to do my best with pricing,” Valdez said. “But it will definitely affect me, I’m just not sure how yet. I will try to keep my pricing as comparable as possible, but it will be hard because of their buying power.” 

McEvoy is very upbeat about the future of liquor stores in general, citing consumers who loyally support local businesses and the ineffable resourcefulness of small business owners.

Touch echoed that sentiment, saying, “Any business person faced with adversity has to really go to their strengths and make them better. No matter what any big chain does, they will never compete with the personal, on-the-ground customer interaction a liquor store provides. When people come in, we’re only interested in helping them figure out how things taste, what’s on sale, what pairs best with their meals, and what to buy for their party. You’ll never find that in King Soopers or Safeway.”

Valdez said, “I think I’ll be okay because I have a loyal following and great customers who come back because of the personal attention they get and all of the familiar faces. We’ll keep being a small-town business and hopefully the big boys don’t eat us up. “

Two other modifications consumers may notice as of 2019: While the drinking age is still 21 years old, employees selling liquor may now be as young as 18 and, if you have beer in your grocery store cart, you will not be allowed to use a self-checkout stand.

This is just phase one of various changes down the road. Over the next 20 years, a complicated unfolding of regulations will gradually allow every grocery store and big box retail location to carry a full-line of beer, wine, and spirits.