CO Liquor Stores & Craft Brewers Against Consumers?

by Michelle Minton on March 9, 2009 · 1 comment

in Nanny State, Personal Liberty

After running into the owners of a Colorado Brewery this weekend, I stumbled on a battle going on in the state between, as the Brewers see it, liquor stores and grocery stores. Really, it is a battle between liquor stores and consumers. While it is predictable that liquor stores would try and block legislation that would allow any other store to carry beer I was extremely surprised to find that many craft brewers are adamantly taking the side of liquor stores and actively lobbying Colorado legislators to keep beer off grocery store shelves.
It is a very sad thing when businesses ask government to shield them from competition. It is even more depressing to see small businesses, which survive by their flexibility and loyal customer base, exhibit such anti-competitive and anti-consumer behavior.

The situation: In the state of Colorado, grocery stores and convenience stores are allowed to sell beer, but only if it is under 3.2% ABV which is lower than the average brew. They argue that they should be allowed to compete with liquor stores and serve their consumers better by lifting the percentage barrier on beer.

The arguments: Grocery stores, faced with increasing food prices and falling profits demand the ability to offer their consumers the products they want—including full-strength beer. Independent liquor stores as well as *some* craft brewers claim that grocery stores will carry only the top selling brands of beer and that changing the law will put independent and small liquor stores out of business resulting in reduced availability of craft beers.

The liquor store-craft brew argument is pure bunk. And it isn’t even a new argument. It’s the same old Wal-Mart myth repackaged in a beer cask. The oft heard claim is that a large store (like a Wal-Mart) moves into an area squeezing out smaller Mom-and-Pop competition. The truth is that any business moving into a new market will increase competition within the market. As in the case of Wal-Mart, if grocery stores enter the malt beverage market some independent stores probably will go out of business—but don’t blame the grocery stores. Blame the liquor stores for being uncompetitive; for not finding some way (either product variety, more convenience hours or location, better advertising) meet the demands of consumers—they should go out of business if they can’t provide what consumers want. The question then is, will craft brewers go out of business as a result of all this change? The answer is the same for the liquor stores: not if they are good craft brewers.

While the brewers that I spoke with touted the importance of the craft brew movement in Colorado (no argument here) and the variety that exists in the state (again- that’s a fact) he didn’t seem to want to listen to the argument that grocery stores selling beer might open a whole new market for distribution. In fact, he downright admitted that “maybe” and “might” isn’t comforting when the system they currently have “works right now”.

So, there you have it, small businesses preserving the status quo. These brewers, who already have distribution contracts set in place with these small liquor stores, simply don’t want to think about how they could work to convince grocers to carry their beers or incense their fans to demand stores carry their brand, and liquor stores don’t want to have to think about how to carve a niche in a market where competition can enter freely.

In fact, the respective arguments of liquor stores and craft brewers are self-defeating when put together. If grocery stores will refuse to carry craft beer (as the brewers believe) and the liquor stores will lose customers to grocery store beer…liquor stores can devote more inventory to the craft beers that consumers obviously want and keep making a profit. As Philadelphia beer reporter “Joe Sixpack” said “If supermarkets squeeze out craft beer, it’ll only create alternative specialty beer retailers. Look at gourmet cheese. You can’t buy it at the Acme, but you still find it easily, in specialty shops, farmer markets and upscale places like Whole Foods.”

When I brought up the fact that Whole Foods grocery stores carry many craft beers and are often right next to liquor stores, the craft brewer I spoke with had to admit that Whole Foods was the exception to his vision of generic grocery store selection. But if selection in CO grocery stores really would be that bad, it would simply create more opportunity for stores like Whole Foods that recognize the demand for craft beers.

Allen March 9, 2009 at 8:36 am

It's not even Whole Foods, it's already happening in a way. The Super Target I like to go to in Glendale, just a couple miles from my place, has a full liquor license. They have most of an entire row of beers to choose from, many including many of these "craft" beers.

The other question that hasn't been asked in this debate here in Colorado is if part of the issue is if there are too many small brewers around. There are some local beers that I've had once or twice but never buy again. Not because they're bad but just because there are so many others that are better or others to try.

Maybe some Lefthand that have been leading the fight against the change fear they're going to be left in the dust. Their beer not good enough to stand out on it's own nor their business operations ran well enough to compete on price.

Here's just some CO based small brewers. This doesn't include all the others we can find in stores from KS, WY, OR, UT, CA, MN, et al. And I'm sure I'm missing some CO places, especially brew pubs that don't bottle and sell their beer.

Aspen Brewing Company (Aspen)

Avery Brewing Company (Boulder)

Boulder Beer Company (Boulder)

Breckenridge Brewery (Breckenridge)

Backcountry Brewery (Frisco)

Bristol Brewing Company (Colorado Springs)

Dillon Dam Brewery (Dillon)

Flying Dog (Denver)

Grand Lake Brewing Company (Grand Lake)

Great Divide Brewing Company (Denver)

Left Hand Brewery (Longmont)

New Belguim (Ft. Collins)

Odell Brewing Co (Ft. Collins)

Oskar Blues Brewery (Lyons)

Palisade Brewery (Palisade)

Phantom Canyon Brewing (Colorado Springs)

Pug Ryans Brewery (Dillon)

Ska Brewing Company (Durango)

Steamworks Brewing Company (Durango)

Twister Pine Brewing (Boulder)

Tommyknocker Brewery (Idaho Springs)

Wolf Rock Brewing Company (Keystone)

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