What does the consumer think?

There has been lots of press on the subject of privatization of state run stores with the focus on the state of Washington. For those of you who are unaware, there will be two conflicting initiatives on the ballot, one of which seeks to end the state stores. Here’s the way a local news blog described it.

There’s big money behind two efforts to privatize state liquor sales in Washington. Defenders of the status quo say the measures could end up costing the state hundreds of millions of dollars in lost tax revenue. Nonsense, say privateers.

Most of the comments to the blog seemed to support privatization.

The general and trade press has been all over this. Not surprising since many control states (not to mention suppliers and distributors) are looking at this closely.

But, what about the consumer? What does the alcohol shopper think of all this? Do they favor or oppose state run liquor stores?

The only pulse taking I’ve seen on the subject is a poll run by a research center at the University of Washington. Here’s the question they asked in the May, 2010 poll:

Another initiative that could be on the ballot in November would privatize alcohol sales. Currently hard alcohol can only be sold by the Washington State Liquor Control Board, but this initiative would allow alcohol to be sold at grocery stores and other places where beer and wine are already sold. Will you vote yes or no on the alcohol privatization initiative?

More than half (52%) of those polled said yes; 37% said no with the remainder presumably undecided. Interestingly, this spread of 15% among all voters turned out to be 21% among Republicans – 57% indicated yes and 36% said no.

I haven’t seen or conducted in-depth research on the subject but I would hypothesize that the consumer is indeed more in favor of privatization than the status quo. Obviously, attitudes will vary from state to state but in general, there are some consumer-based reasons that might be in favor of privatization:

  • Convenience and the need for one stop shopping
  • The perception that the overhead to run state stores can give way to more tax dollars
  • Desire for less government involvement (see the Republican support mentioned above)
  • Competition and better prices
  • Belief that 70 years since the end of prohibition means less need for government to exert day to day control of sales

No value judgments here but I would guess that privatization, slowly but surely, will take over. Control States need to do a better job of telling their story and justifying their role in the booze business if they are to survive.

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A Booze Business Fairy Tale

Once upon a time in the land of Makaplan, the ruling Prince was having some problems. Business was not good and the people were not happy.

“How will we manage to increase our wealth if our sales are not growing? If you can’t do it, then we will find someone who will move our goods and at a more profitable rate,” they exclaimed.

The Prince was worried and turned to the King for help. Alas, the King, who was from another land, had no idea how to increase the wealth of Makaplan. “What do you think?” asked the King.

“Well, I could do what we always did in my previous kingdom when I was just a Duke,” said the Prince. “What is that?” the King asked.

“First, we will tell everyone that the cost of our products will go up soon,” said the prince.

“How will that help?”

“Don’t you see, they will buy more at lower prices than they will soon pay,” said the prince. “Our sales will go up.”

“What about the year after” asked the King?

“Well… in my previous Kingdom, we also put new things up for sale. That brought us more business; people are always looking for new shiny things” said the Prince.

“Are you sure that both these things will increase the wealth and keep people happy?”

“Absolutely” said the Prince.

He also thought to himself… “If that doesn’t work, next year, I will be the King.”

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Organic Booze

I just got back from a trip to LA and my head is spinning with matters having to do with green in general and organic in particular.

I saw the following on a brochure for the Santa Monica aquarium:

“Printed on 100% recycled content, 100% post-consumer waste, processed chlorine free paper using soy-based inks.”

Once I got past the ‘post-consumer waste’ part, I thought, did they expect people to read or eat the brochure? But, these are important matters and we need to pay attention to what is becoming the “green” lifestyle. Including the alcohol industry.

The June issue of Cheers has a cover story on organic drinking. The following tidbit of information caught my eye.

According to the Greenfield, Ma.-based Organic Trade Association, sales of organic beer, wine and spirits were up last year. Organic beer sales totaled $41 million in 2009, up 11.7 percent from 2008; organic wine sales equaled $161 million, up 7.5 percent; and spirits were up 16 percent with $7 million in sales.

A drop in the bucket, sure, but there is a market for organic alcohol products especially in wine. In spirits, it’s the vodka category that leads the way with dozens of entries although Chatham Imports (Crop Organic Vodka) recently introduced Farmer’s Botanical Gin. In tequila, more and more organic products are entering the market.

The gist of the article seems to indicate that the organic trend in alcohol is here to stay.

A consumer friend who is not in the industry can best sum up my view:

“If organic means smoother, purer, better tasting, I’m all for it. But to tell you the truth, when I’m having a drink, I’m not thinking about hugging trees.”

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