Initiative 1100 is being promoted as an initiative to modernize Washington’s liquor laws by privatizing spirit sales and getting rid of the state-run liquor stores that everyone loves to hate. But, there is more to it than that. The full press release on how it affects the Washington craft brewing industry is below, but here are a few summary points:
1) Many voters see this as a chance to privatize the liquor industry in WA. But, they don’t realize the threat is in the part of the initiative that completely deregulates the WA beer/wine/liquor industry.
2) Currently, if Brewery A’s product is sold in WA it is the same price for all retailers to buy it. If this initiative is passed, larger stores (such as Costco, large grocers, etc…) and restaurants/bars will be able to obtain significant volume discounts, putting smaller local businesses at a competitive pricing discount. This also opens up the market to stores like BevMo and Binny’s, liquor warehouses in other states that dominate the market because of their volume. While this may be a good thing for bottom-line prices to consumers willing to buy from large retailers, it could be bad if you like having that local bottle shop around the corner from you and having a large selection of local brews.
3) For local breweries, they may be expected to cut their sale price and give more freebies to bars/retailers in order to compete for shelf/tap space. As a result, these small breweries may make less money and may not be able to compete.
4) Distributors are left in limbo. The initiative removes the three tier system and all breweries will be able to directly distribute to retailers, if they so choose. Many bars already choose to buy beers from a single distributor for one reason or another, now they may be given deep discounts to buy from a single brewery, such as MillerCoors or AB, further limiting your selections. The three tier system has always been a gray area to me, as there are many local breweries that already self-distribute legally….many people cite that the repeal of the three tier system is a great thing for small breweries who want to distribute their own product, but some already do this, yes? Someone feel free to jump in and explain here.
If anyone has an alternate view on this, I’m all ears. I don’t pretend to be an expert on these matters. Please feel free to leave comments below. But, if no one can convince me otherwise, I’ll be voting NO on Initiative 1100.
Here is the full release from the Washington Brewers Guild:
Vote NO on INITATIVE 1100
I-1100 is the greatest threat the Washington craft brewing industry has experienced in a decade.
- Actively being promoted as modernizing liquor laws, by privatizing spirit sales.
- Actually a sweeping proposal that repeals 39 RCWs, enabling the biggest retailers, distributors, and producers to own and give favorable pricing to each other, which would eliminate the level playing field small businesses need to grow and prosper in our state.
I-1100 negatively impacts the craft brewing industry.
Washington State is home to one of the most innovative and fastest growing craft brewing industries in the country. During the last 24 months, throughout the worst economic downturn in our lifetimes, the craft brewing industry in the State of Washington has grown more than in any 24 month period in history. Dozens of new craft breweries have opened, creating new employment opportunities for hundreds of state residents, and capitalizing on the creativity and innovation our state is known for.
What this means for YOU as a beer enthusiast:
The majority of the Washington craft brewing industry is small businesses. I-1100 would stunt the growth of our industry as breweries encounter more competition and pressure to give discounts, free product and services to obtain shelf space or handles at big box stores, chain restaurants, and other retailers. A reduction of microbrew presence in the marketplace would have a disastrous effect on our burgeoning craft beer culture.
I-1100 deregulates a prospering, innovative industry.
The problems resulting from Federal deregulation of telecommunication, airline, and banking industries are well known. The affected industries now have reduced competition, less innovation, and benefit only the largest and wealthiest companies. I-1100 eliminates the level playing field that requires consistent pricing for all breweries.
What this means for YOU as a beer enthusiast:
I-1100 would legalize Tied-Houses (alehouse owned by a brewery, selling only their products) moving Washington State towards the now failing English Pub system. Those breweries not willing or able to compete with large producers’ deep pockets will be forced out of the marketplace, eliminate jobs and close their doors.
I-1100 takes away consumer choice.
The success of the craft brewing industry has been a huge success for the consumers of Washington State. Consumers have literally hundreds of choices of locally made, hand-crafted beers from across our state. I-1100 hurts consumer choice by giving volume pricing discounts to the largest companies, thereby reducing competition. Without the means to compete in the marketplace, small, neighborhood craft breweries will close and consumers will have less choice at their favorite establishments.
What this means for YOU as a beer enthusiast:
Washington state’s reputation as a destination for great craftbeer will cease to exist as more and more craft handles are replaced by big beer and breweries close their doors.
Vote AGAINST the deregulation of the entire alcohol industry!
Vote No to preserve the vitality of the Washington Craft Brewing Industry!
Vote NO on INITATIVE 1100
I’m voting for 1100, but I also have no problem at all paying a buck (or even $1.50) more for the local brews that I enjoy. And the places I frequent will, I’m fairly confident, still carry carry those beers. Not sure about bottle shops, though; I don’t use them.
I don’t get some of their arguments, and nothing they claim has sold me.
As for airlines and telecommunications, the quality of the product is pretty similar no matter who you go through, I wouldn’t want to use a mom&pop cellular company with only 3 towers.
While I am sure Bud etc will use their money to lock up some places, those are most likely places that weren’t carrying the tiny breweries anyway, so I fail to see the loss there.
My local beer bar (Wedgewood Ale House) certainly isn’t going to switch to just serving Bud, that’s ludicrous.
The smallest breweries can’t make enough product to be in Costco regardless.
I just don’t buy any of these arguments, and wonder what is really behind them.
I *do* suspect that the huge single malt scotch collection that my local state liquor store carries will no longer be there, so I’ll have to go to a liquor megamart somewhere further afield, but I bet the prices will be better.
RE: Three-Tier-System
The 3 tier system is controlled by a large lobby that is predominently run by the industrial beer companies. It prevents many local breweries and other beer makers from getting their product out period. Removing that system is good. To be sure, we also need to change how beer is retailed…as most of the industrial beer companies control how beer is displayed in store cases.
I heartily recommmend “Beer Wars”…explains it all very nicely.
Geoff -
I am a little leery of supporting their position, though I love and respect them dearly.
I’m afraid that their position is pushed by fear alone.
Furthermore, i am unfortunately a bottom line type of guy. In the failing economy, its very hard to support paying more to support your local business (im sorry all).
Small business shops are important and i love what they lend to a community, but they need to become more efficient to compete with the big guys. If the new regulation opens up sales and allows volume purchasing, it should open avenues for small shops to obtain cheaper products as well (co-ops can exist, new distributors will spawn, etc.)
My fear is that they are resting on the old adage that deregulation only helps the big guys swallow marketplace. That only applies to the little guys who fail to adjust and innovate. Deregulation in the banking industry killed small community banks that hadn’t changed their model in years, but opened avenues for newer types of banks, like online formats.
I have never been a supporter of closing the open market and I certainly don’t think i can support it with brewing.
Brewers rules this state and have been self-distributing legally (RCW 66.24) for quite some time.
Have faith that fans will continue to drink good beer! They will continue to support their breweries and local shops! If anything, consumers can hope that it forces brewers and shops to become better.
Thanks for the article!
I don’t feel like I have a full understanding of this issue, and it makes me wonder how this is working in other states. In California you can buy booze in the Safeway, but their craft beer scene is still thriving.
It seems really odd that we have state-run liquor stores and that beer and liquor sales run through licensed distributors. Seems like too many layers of government to me (and I’m a frickin liberal).
Looking at this bigger-picture, even if craft beer fans are convinced to vote “no” what are the chances Joe Public can be convinced?
BTW – just to make sure my above comment is not taken out of context. By saying, Im a bottom line guy, i don’t mean that im going to run to Binnys right away and buy everything.
I really mean that deregulation drives the bottom line. Local businesses will drop prices and compete, pushing volume to make up the margin.
The bottom line is simply where someone wants to make it. For example, Beermongers in Portland drives the bottom line down there – not groceries, etc. They know how to compete.
I will vote YES on 1100 for many of the reasons stated by the others who left comments.
If 1100 means breaking the State stranglehold on alcohol and putting downward pressure on pricing I am all for it.
The main concern that sold me on posting this is opening up the market to large retailers like BevMo and Binny’s.
I love the local bottle shops like Bottleworks, Full Throttle, Malt & Vine, etc…and while I can’t say for sure, I don’t think they’re all exactly rolling in cash. Yes, voting no limits their competition. Maybe that’s wrong from a business free market sense, but I’m going to blindly look past that as they’re an important part of our beer scene, I believe.
Saying that these small shops will have to lower their prices as well and make up for that with volume is going to be tough to do if there’s a BevMo down the street now too, and they are getting pallets of Rogue, Ninkasi, Deschutes, Full Sail, etc…to drive down their bottom line.
Oregon bottle shops would face this same problem if a similar initiative was passed there getting rid of the state run liquor stores and opening up the market to BevMo, etc…regardless of what is currently driving the bottom line there, yes?
“The 3 tier system is controlled by a large lobby that is predominently run by the industrial beer companies. It prevents many local breweries and other beer makers from getting their product out period.”
Hey Brian – if local breweries are already allowed to self-distribute, how does the 3 tier system prevent them from getting their product out? I just don’t get this. Is there a volume limit on what breweries can distribute?
?1105 seems to be the “bad” initiative, adding more middlemen to the market. 1100 seems to be straightforward and least cost. The counter arguments don’t seem to hold water at all, as I doubt any of the good beer shops or pubs will stop carrying the delicious craft beers we crave. The customers of small stores and pubs that aren’t drinking bud light now because it’s a buck cheaper won’t switch to it because it’s two dollars cheaper down the road. Ultimately this is a specialty market with educated customers that is successful because of their product, not because of unnecessary regulations.
Reading everything here, and the chatter on twitter, I’m thinking…
I don’t believe that the voters of Washington should be in charge of this one. While I think changes are needed and/or warranted, I cannot come to terms with the fact that these kinds of lofty decisions will be made by voters who have proven time and time and time again that they will vote against their own self interests if you promise them $30 car tabs.
I’m voting for the initiative. I live in California half the time and it has both a thriving craft brewing scene and bottle shops too. Bevmo is big in CA but it has neither good prices nor good selections compared to smaller beer and wine shops. So I don’t see the argument for a No vote.
I got linked here from Hoptopia, and I live in California, so I’m not exactly the target market. However, allow me to look at this from a different POV. I’ll try to reply point by point
1) I think the notion that the craft beer industry needs protections to stay around is silly. People are buying craft beer for the love of beer, not because it’s a dollar cheaper or whatever else.
2) Here in CA, you can buy beer damned near everywhere. Drug store, grocery store, gas station, there are liquor stores all over the place as well as the big box beer/wine/liquor specialists like BevMo and Total Wine. Your big stores basically don’t even bother with most craft beer…they carry BMC and their included selection of imports and that’s it. Sure, Costco might be able to sell me a 36 pack for domestic for $17.99 and it’s $19.99 at other places, but really, this doesn’t effect craft beer whatsoever.
Furthermore, there are plenty of shops of all sizes. Within 20 minutes of my house, I have 3 BevMos, a Total Wine, 2-3 different independent stores that are big enough that I wouldn’t consider them in the “liquor store” category, and they all have their pros and cons. Total Wine, actually, has the best selection AND the best prices. If they weren’t in town, half of the beer I get I just wouldn’t be able to find, and the stuff I could find would cost me 50% more. This is a bad thing! When Total Wine moved in, BevMo’s keg prices went down $10-20. This is a good thing!
3) Local breweries are already competing for space. The macros are always going to be cheaper, they have economy of scale on their side. Despite CA not having any fixed pricing, there are still many bars that keep craft on tap, and even more that keep nothing but. The point was made above, craft drinkers are used to spending for quality, they won’t just become BMC drinkers because the prices are a buck or two apart.
4) What you’re describing is basically how the distributor system works. The vast majority of distributors who sell AB products sell nothing else. MillerCoors and the rest are basically left to the rest of the distributors. If a bar goes with distributor A, they’re likely getting products that are all from the same company.
There are some craft brewers who have also gone into business as distributors and are distributing their own beer as well as other companies. Stone here in CA has done exactly that. The thing is, not every craft brewer has the capital/capacity/knowhow to also become a beer distributor. The fact that there’s a goverment mandated middleman is not helpful to anyone. My understanding is that the laws are more lenient in CA…I know brewers that sell directly to bars, and most brewers also sell beer directly from their brewery to the public via growlers and bottles. This hasn’t seemed to stifle the huge craft beer movement here.
What I read here makes it sound like this law pretty much puts WA’s laws regarding alcohol more in line with CA’s laws. CA has a thriving craft beer community…there are tons of small shops, big stores, brewpubs, small craft breweries, large craft breweries and everything inbetween. I’ve got tons of choices nearby, and I’m in LA which is one of the worst major cities in the state for craft beer. If you look at somewhere like San Diego where the culture is a lot more popular, you can’t throw a rock without hitting a bar serving great craft beer, and it’s found it’s way into even the most mainstream stores.
It sounds like WA has developed a solid craft beer community despite the stifling alcohol laws, but trust me, it is absolutely not needed to keep craft brewers in place. All it’s doing is removing roadblocks.
PS: I’ll be in Seattle around labor day, any recommendations where to go around downtown?
I will be voting yes on this bill, look at California. In my opinion they have the best beer scene in the country. When the WA Brewers Guild says, “…small, neighborhood craft breweries will close and consumers will have less choice at their favorite establishments.” This is not true and is simply fear mongering in my opinion. They should be saying the places “may have to close” not “will close” and “will have less choice”. I have been critical of the guild in the past and the arguments they made for a no vote on 1100 have not convinced me.
The only thing that scares me about 1100 passing is the state will try and raise taxes elsewhere to make up for the revenue they lost from the liquor sales. The state made $230 million from liquor sales in 2009. Can anyone say new taxes…or better yet can anyone say legalize cannabis and let the state tax it!!!!!!!!
When you say this:
“Many bars already choose to buy beers from a single distributor for one reason or another, now they may be given deep discounts to buy from a single brewery, such as MillerCoors or AB, further limiting your selections.”
You are saying that businesses don’t have to cater to their customers. That’s not true. If customers demand a bigger selection, they will get it.
Your argument #3 is another way of saying the same as above. Customers will continue to demand good beer and will continue to pay for it and bars will provide it. You seem to assume that there is a “correct” price for beer and regulation is maintaining it. Prices should be set by supply and demand not by regulation. If people pay more, good for the craft beer industry. If people don’t want to pay more, craft breweries will have to become more efficient to profit at lower prices. That’s capitalism and it works extremely well for both consumers and businesses.
Troy – Maybe I’m way off, but my point with that statement is this:
- Currently, it seems like every single bar in WA state has at least one or two decent craft beers (at the very least), no matter where you are. While a lot of that has to do with customer demands, some of it might have to do with distributors those bars use to get their macro beers also carrying other craft brands they can provide the bar, sometimes in package deals I’d imagine (even if illegal).
Now, say MillerCoors or AB decides to distribute their brands exclusively in WA (not saying they would, or if it is even possible – but it would now be legal for them to do this). With their wide portfolio, they could possibly put together an offer to a bar for all of their taps and kill a few craft taps, because those bars care more about the price than the beer. Maybe they’re perfectly happy pouring one of MillerCoors imports or “craft” brands over a local brew, if the price is right, and maybe most of their customers won’t care.
I’m not talking about places I frequent, like Collins Pub or Naked City, etc…. I’m talking places where the people are there just to drink, and don’t really care what they’re drinking. While I don’t frequent these places, there are enough times I end up in places like that and am happy at least for that tap of Ninkasi or Mac & Jack’s, etc…
Now, maybe I’m just dead wrong. Maybe the beer culture is such here that all those little bars will continue to keep one or two crafts on tap.
Your comment about #3 rolls in with what I just mentioned above. Bar A has a sweet offer from MillerCoors and is tempted to do away with their two craft taps. But, they give those craft brewers a chance by saying “hey, if you can come down to $X, we’ll stick with you.” Sometimes it won’t come down to if the people are willing to pay more, but what the bar owners want to do.
I’m not as worried about the breweries as I am the bottle shops, though. Breweries will find a way if their product is good enough. I just don’t want to see local bottle shops replaced by BevMos. Now, as the CA folk said, they have multiple bottle shops and large retailers like BevMo that coexist. That is good to hear, but I just can’t imagine that if a BevMo plops down in one of our neighborhoods that a bottle shop in that immediate neighborhood would have much hope of surviving. Hope I’m wrong.
bevmo does not sell craft beer at a discount, its actually more than safeway, they do most of their business in wine which they sell really cheap, but 2 years ago sixers at bevmo were 7.99 standard)
and i dont think you need to worry about the craft beers losing tapspace to the big boys (at least not in this part of the state, maybe in eastern wa), yesterday my wife and i walked out of a bar/restaurant because the taps sucked,
I very much look forward to voting YES on I-1100.
There’s a lot of fear-mongering around this issue and I put the above statement from the Brewer’s Guild is in that category.
This idea that craft brewing will suffer with the elimination of state-controlled distribution has little or no logic to back it. Customer demand for quality beer is higher than ever; we’re not going to switch to crap beer just because it’s cheaper. We would be drinking crap beer now if that were the case.
Stating that the craft beer scene in our state will suffer because there will be *more* opportunities for distribution doesn’t pass the logic test. How can that possibly be?
This initiative will increase opportunities for bottle shops and specialty spirits sales, not reduce them.
Other fears to put to rest:
Lack of tax revenue: In a number of scenarios put forth by the state auditor’s office, the elimination of state stores and distribution system will actually increase revenue once the costs of running the current systems are eliminated. Source: http://www.sao.wa.gov/auditreports/auditreportfiles/ar1002726.pdf (page 26) – and this doesn’t account for increased sales due to decreased “bootlegging” where residents bring in alcohol purchased more cheaply in other states.
The fear of increased spirit consumption: data from the NIH indicates that per capita consumption in private sales states is the same or below that in states with government-run stores.
Source: http://www.niaaa.nih.gov/resources/databaseresources/quickfacts/alcoholsales/consum03.htm
Revenue for the state will increase. Prices for consumers will go down.
The statement from the Guild doesn’t make sense.
This is a win-win.
BTW: Not all brewers agree with the guild position…
I’m also FOR Initiative 1100. Current law causes higher prices for brews. Also, the State will get more in tax revenue if they don’t have to run the state stores and the warehouse. This should help lower our taxes. Competition will cause the industry to settle out just like other commodities resulting in everyone getting the best price. I expect that overall it will greatly help the craft brewer in the long run rather than hurt them.
GTWF Ep 10: "One For The Ages" | Getting Tanked With Frank // Aug 6, 2010 at 7:16 pm
[...] Why You Should Vote NO on Initiative 1100 [...]
I agree with kendall. There is no plan in either of the initiatives to deal with the loss of revenue resulting from the closure of the state run liquor stores. I can’t imagine anyone in any business choosing to eliminate a revenue-generating program without first having a plan to compensate for the lost income.
I-1100 and I-1105 are too short-sighted.
How can any be so stupid as to the arguments from the craft brewers. lets do everything to protect them and forget about this looser state sysem and enjoy the inconviences they have given the rest of us. If they believe the state system is so good, they should only market their product through the state Liquor Control Board.
Let us first remember that we are in need of a better job market and anything that increases the unemployment rate right now should provide something more to offer than just being able to get cheaper alcohol at more places. Plus can we find a better initiative that puts some regulations on the pricing before taking this huge step? This is not very well played.
I just wanted to chime in, because I have always thought that the state should not be in the liquor business. A comment left by fleagle, which stated:
“I agree with kendall. There is no plan in either of the initiatives to deal with the loss of revenue resulting from the closure of the state run liquor stores. I can’t imagine anyone in any business choosing to eliminate a revenue-generating program without first having a plan to compensate for the lost income.
I-1100 and I-1105 are too short-sighted.”
I am somewhat confused here….The state spends millions of dollars on salaries, leases, property, and inventory. They net around 332 million dollars from the sales of liqor, beer, and wine, but there is nothing in the initiative that caps the tax on alcohol. Currently the state of Washington has the highest “sin” tax in the country. They would make money because they are making money on taxes without all of the overhead. Out of 1500 employees half are salaried with a total payout of $32,710,595.04
a year. Now if you take into consideration the hourly employees without and overtime their salaries would amount to roughly $21,592,584.00. In their annual report for 2009 they stated that they spent 120.75 MILLION dollars on expenses just to operate and the cost of products came out to 463.39 Million. The state is really proud of their distribution center which is brand new and had a cost of 22 Million dollars. Now lets think for a second. Liquor distributors that sell to the state deliver all of the products to distribution center in Seattle. Then the state has to pay to distribute to one of 161 state run stores or 155 contracted stores. This means that there is a truck involved (either owned/leased, or they pay a contract to a delivery company) If the three tier system was not in place, the liquor distributor would deliver it to the business. Currently we are being charged twice for delivery. The bottom line is this, the state cannot efficiently sell liquor. There is too much waste and that is being passed on to the consumer. In my humble opionion.
By you voting for it, so many will be out of a job. Not to mention deregulating to sale.
the*
I have a big problem with I-1100 and it’s not just because if it passes I’ll lose my job but there are some serious issues that the passing of 1100 would create.
The people who are from California that are for 1100 because they thing that the beer scene is great in CA and why can’t WA have that same thing are missing one critical fact. California has some regulation on the sale of alcohol and has a 3 tiered system. If 1100 passes in WA, there would be zero regulation! That would mean that liquor would be available in as many as 5,000 stores instead of the current 315. Washington would have 3 times the number of liquor outlets per capita compared to California.
Also hard liquor would be available from 6am to 2am, instead of 10am – 7pm. That would increase the chance of underage drinking as well as more chronic drinkers which could result in more people on the road under the influence.
The cost of shelf space would go up significantly which would push out small local beers that we all love and only high-volume national producers would be able to afford for the slotting fees.
If 1100 passes, it will be legal for a retailer, such as Costco to demand payment to carry a product or demand preferential pricing and special deals that aren’t available to small retailers. Neighborhood stores and restaurants would not be able to compete.
Costco says that they would lower their prices if 1100 passes, but what they are saying is that they would make more profit. Their current mark up is 10% where most stores are 30% so they might lower their prices 10% to the consumer but they’d increase their profit from 10% to at least 20%. This initiative isn’t good for the consumer, it’s profitable for Costco. Why else would this be Costco’s third attempt to be able to sell liquor (they’ve already tried the courts and the legislature).
If you won’t vote no on 1100 and 1105 because of the benefits that you as a consumer would get from cheaper and more accessible alcohol, vote no on 1100 and 1105 for police, fire fighters, and schools. The current system puts more than $350 million into state and local government – for schools, law enforcement and other crucial services. This revenue would be lost if these initiatives pass – even while consumption increases and enforcement rates drop. No regulation, means less money for schools (which are already cutting back everywhere) and more crime (due to more drinking and less enforcement).
I’m not even going to get into the question of where is the state going to make up for the lost revenue.
You’ll vote for 1100 if you want WA to have a STATE INCOME TAX. Sales tax will probably go up again too, not to mention everything else.
Vote NO to protect small breweries, teachers, schools and law enforcement!