Just Days Into Privatized Local Liquor Sales It Seems Privatization in Snoqualmie Means Dramatic Price Increases

There it sat last Friday. Liquor on a Washington State grocery store shelf; a historical moment and a sticker shock moment.  A bottle of vodka that last week sat on a state liquor store shelf now sat for sale at the Snoqualmie Ridge IGA – with a 33% price increase.  That seems high enough, but then take it to the checkout line and another 24% gets hiked on for sales tax; the total price increase topping at nearly 60%.  That’s the price now paid for convenience in Snoqualmie.

Some local residents might be left feeling duped by Costco and their $22 million invested to pass Initiative 1183, which it turns out guarantees 27% in fees for the state paid by retailers and distributors for the right to sell liquor.  This new fee is on top of normal profit markups and the already high sales tax on liquor.

The 27% license fee breaks down as 10% to distributors and 17% to retailers.  So the distributor adds its 10% fee to the liquor it sells the IGA. They then mark it up another 17% before selling it to consumers.  Last fall voters were told a competitive marketplace could lead to better pricing.  But it seems it will take a lot of competition to offset the big price increases created by initiative 1183.

Local restaurants and bars are also feeling the price increases.  Ana’s Family Mexican Restaurant owner, Anna Sotelo, says she’s still waiting to see how all the price increases play out.  She knows she will likely feel the 10% distributor fee most directly, and that the new increase pressures her restaurant, which already has tight margins.  She also confirmed she’s now dealing with multiple distributors, whereas before she had just one.  She says there’s a chance if her cost to make those infamous house margaritas increases by 20%, that increase could be passed onto customers.

Phil Stafford, owner of Finaghty’s Irish Pub says they are also dealing with a new distributor structure now that the state out of the liquor business.  Phil said, “We have already seen some of the prices go up as much as 25% in some cases and others are around 10%.”  Finaghty’s said they will know more about the future of their prices in about two weeks, when everything is stable.  Phil says they will probably keep most prices the same, but that top shelf liquor may have to be adjusted to accommodate the increases.  He added,  “Probably the biggest winner was the Snoqualmie Tribe liquor store since they are exempt on the taxes.”

It seems the privatization of liquor sales, at least in the first week, isn’t all the last year’s campaign chalked it up to be.  Even Costco is selling liquor for more than the state did just last month.  By the time consumers get through the Costco checkout, they’re at least paying a 10% increase, and possibly more depending on the brand purchased.

There is, though, the convenience factor which many friends remind me.  Too bad driving from Snoqualmie to the Issaquah Costco to shop isn’t convenient for me.  If it were, the price increase wouldn’t be as dramatic as the premium convenience fee residents will pay if they are buying liquor on Snoqualmie Ridge.

If voters knew last November that 1183 would dramatically increase prices, would it have passed?  Did I-1183 really get the state out of the liquor selling business, something it had been in since prohibition?  The new 27%  fee designed to offset lost state liquor sale revenues seems to keep Washington forever linked to liquor sales – with consumers picking up the tab.  And more of that tab if you are shopping in Snoqualmie.

 

Comments

  1. While not enjoying the higher prices, I do enjoy the increased availability (if somewhat sporadic stocking currently). I think the new sticker shock could be a blessing in disguise as the transparency in pricing lets the consumer better understand exactly how much tax the state is actually collecting on liquor sales. I think any increase in transparency in taxation is a good thing as the average Joe tends to overlook how many different taxes and fees, etc. we pay every day. This helps increase awareness and allows for people to ask if they feel they’re getting what they want/deserve for the money they spend.

  2. Hi Dana,

    I think it was predictable.

    It’s not rocket science. Closing the state liquor stores means higher costs for the entire supply chain. That much was revealed during the campaigns. The voters chose to ignore these arguments

    The Costco branding will help many drinkers in cost, but perhaps not quality. Its how it works. From what I read, some items are priced less others are priced higher. Voters chose to get the state out of the distribution business, and now voters get to deal with a different supply chain system but are still expected to cover lost markup fees. It’s still 3% less than it used to be.

    Getting the state out of the distribution business does not take away your tax obligation.

    A toast to change!

    Nancy

    • It’s all about the layers of taxation and deciding who gets to pay them:

      Take a look at the following article. The Liquor Control Board and the liquor distributors are interpreting laws in favor of the distributor, not the consumer. This interpretation reduces the competition that was intended to drive costs down.

      http://www.spokesman.com/stories/2012/jun/05/editorial-board-ought-to-rethink-its-rule-on/

      There’s no reason closing the state liquor stores/supply chain should raise costs. The state had a monopoly and shared that monopoly with a few distributors. There was no incentive for the state to seek lower prices and little incentive for the distributors to offer them. Taxes remain the main reason liquor is so expensive in Washington state, privatization is not to blame.

  3. Costco offers their private label which is not only high quality but a better price. And with stores like BevMo opening, I’m very happy to see the change and glad I voted the way I did!

  4. Jessica Bailey says

    When we buy liquor which isn’t often we go to the casino. It’s way cheaper there.

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