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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Control States

Have you been following the press about privatization of some Control States?

In case you haven’t, Wine and Spirits Daily (June 7th edition) has a great score card on what’s been happening.

NABCA has issued a resolution in support of Control States. No surprise but people I’ve talked with have wondered why they didn’t do this some time ago. WSD reports that 4 states (NC, PA, WA and VA) are looking closely at privatization. So the debate must be getting serious.

I’m not sure I know how I feel about privatization.

Those who want to keep government involvement argue about jobs and the need for industry regulation or control in their jurisdiction. But the NABCA resolution states, “there is irrefutable proof that alcohol control systems have a positive public health and safety impact on their communities.” Does this mean that the 32 open states are not doing a good job in protecting health and safety? Or, that the industry, unless governed by state officials, will behave badly?

Follow the money. As WSD points out, in tough economic times, states will look to a range of resources to increase revenue including taxes, fees and privatization.

Hey, look at California – on the ballot this November is a voter initiative to legalize marijuana. The tax revenue from sales is seen as a way to help the state’s budget difficulties.

Interesting that the economic climate has created change in government’s involvement in the social climate. But I guess it’s always been that way.

Here’s a thought if you’re working in a state store that gets privatized – think about moving to California.

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