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February 14. 2012 8:32PM

I'll drink to expanding liquor sales


 

Today we can buy three out of four categories of alcoholic beverages at the grocery store. Adding a fourth category constitutes a convenience, not a catastrophe. It will be good for the state, good for revenues, and good for consumers.

When federal Prohibition was repealed, then-Gov. John Winant still wanted state prohibition. But he acquiesced to the legislative repeal so long as alcohol sales were a state monopoly sold at the three state liquor stores that opened in August of 1934.

Sales gradually expanded beyond the state-run retail outlets, which have grown to 77. There are four categories of alcohol in New Hampshire: beer, table wines, higher-alcohol fortified wines and liquor.

Today, the first three categories can be sold at grocery stores (licensed off-premise consumption outlets). But each step was a struggle against the same arguments made today for the retail monopoly.

Initially, non-monopoly beer sales were limited to a small number of outlets. Attempts to open sales to most grocery stores were opposed by the Liquor Commission. In the 1970s, retailers asked to be allowed to sell wine in addition to beer. For most of a decade the Liquor Commission fought this expansion with the same arguments made today against liquor sales.

Control advocates argued that selling wine in 1,000 stores was too much and should be limited to the 77 state liquor stores. They argued that wine sales would merely cannibalize state sales and cost the state millions of dollars in revenues.

Based on experience, we know that they were wrong. About half of all wine sales are in state-run stores, the other half in private outlets. The wholesale side of the business is still a strict state monopoly. Revenues didn't decline, but in fact experienced a significant increase. Just as important, consumers were able to purchase a legal product in 1,400 locations instead of 77.

When fortified wines (wines with a higher alcohol content, usually for dessert) were added, the same objections were there, but muted by past experience.

Today, you can buy beer, wine and fortified wines all at your local grocery store. The one exception is liquor. A bill in the Legislature would change that. Stores that currently sell beer, wine and fortified wine could add liquor to the shelf. After all, if a store is currently selling all the other alcoholic products, why would it not be able to also sell whiskey responsibly?

The proposal is very simple and does nothing else. The state would still control the import and wholesale operation of liquor. New Hampshire would still be a control state. New Hampshire would still operate liquor stores, and private retailers would be required to purchase from the state as the monopoly wholesaler.

Just as their predecessors did when wine sales were opened up, opponents have claimed that the state will lose money. It wasn't true with wine. It wasn't true with beer. It wasn't true with fortified wine. But this time they really mean it.

A study by the New Hampshire Grocers Association — advocates now and advocates when wine was opened up as well — suggests that the state will realize one-time revenue from initial shelf stocking (purchased from the state as the monopoly wholesaler) and licenses. In addition, the grocers believe the state will see an annual revenue increase of $11 million. (Current Liquor Commission profits are about $130 million per year).

Opponents dispute those numbers, as they did when we expanded wine sales, but a 9 percent profit increase from a tenfold increase in retail locations is hardly unrealistic.

Another attempt to stop retail sales is by claiming that liquor enforcement needs a dozen new agents. Yet no store that doesn't already sell alcohol will be added. We already monitor and enforce sales at each of those outlets. How would the addition of a few products that are sold under the exact same rules as products they already sell change anything? Agency administrators like any excuse to add staff, but this one is fairly easy to see through.

Finally, more stores means more choices. The state-run stores necessarily limit products. Currently, locally produced John Stark vodka is about to be removed from state stores. It may be a reasonable business decision, but surely with local grocers making their own decisions, the “Live Free or Die” vodka would find a few niches. Specialty drinks that have no room in the limited liquor stores would find a home somewhere.

It is natural for a control agency to want to maintain control. But there is no reason that stores that sell three categories of alcoholic beverages can't sell a fourth. Arguments that were wrong about wine, wrong about beer and wrong about fortified wine should be discarded. The change will be good for consumers and good for state revenues.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord. He can be reached at Arlinghaus@jbartlett.org.


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