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April 07. 2012 10:13PM

Grocers still hope to sell hard liquor

CONCORD — After being rejected by the House of Representatives in its first attempt to allow the sale of hard liquor in private grocery and convenience stores, the 850-member New Hampshire Grocers Association is now looking to the state Senate.

But the Senate majority leader is giving the plan a cold reception.

Association President John Dumais said, “We're regrouping” after the plan was watered down to a study bill by the House.

The Senate Republican leadership has not yet taken a collective position, but Sen. Jeb Bradley, R-Wolfeboro, the leader of a 19-5 Republican majority, enters the debate skeptical at best.

“We have $140 million of general fund revenue from the sale of spirits in liquor stores,” Bradley said. “The Liquor Commission has good job of rebranding themselves. They're getting better at expanding stores. I'm just very concerned about making major changes that could undermine our ability to consistently produce the revenue that has been produced. I just don't see it as something that makes sense at this point.”

Dumais pointed to a study his group conducted in 2008 that projected $11 million in annual additional profits for the state if Scotch, vodka and other spirits were allowed to be sold in grocery and convenience stores and pharmacies. But a group that opposes the plan commissioned a study earlier this year that had the opposite forecast — an annual loss of state revenue of $13 million to $17 million.

The State Liquor Commission says though liquor would be available at far more locations under the plan, it would actually be a money-loser for the state because, said Chairman Joseph Mollica, the state's “brand” as the seller of inexpensive liquor would be “diluted.”

The commission believes that grocery stores would have to charge higher prices than state outlets, and as a result, the state would lose its reputation as a place where out-of-staters can come for inexpensive liquor.

The study by Brian Gott-lob of PolEcon Research for New Futures, a nonprofit group battling alcohol and drug abuse in the state, found that at least 80 percent of the sales of liquor at private stores would come at the expense of the state-operated liquor stores.

But Dumais said expanding sales from 77 state stores to 1,000 to 1,400 private stores is “really optimizing the opportunity, which is what the Liquor Commission is supposed to be doing.”

He said the private store sales would be in addition to, not instead of, sales at state stores.

The bill originally allowed private stores to purchase hard liquor from the Liquor Commission at a wholesale discount of between 10 percent and 20 percent, depending on how much was purchased. That was later changed by a House committee's leadership to require the stores to purchase the liquor from the state at full retail price and then mark it up at their own risk. That version was then changed to the creation of a study committee.

In 2009, the Liquor Commission cut the discount to large grocers for the wholesale purchase of wine to 15 percent while allowing small stores to continue to get a 20 percent discount, Dumais said. He said that at that point, the large grocers had to mark up the cost of wines slightly above what the state sells it for at liquor stores. That caused the sales of wines to drop in private stores and pick up in state stores, Dumais said.

Dumais said the commission has the power to “put a ceiling” on the retail price of liquor in private stores.

He suggested it cap retail prices at the same price as liquor stores, provided the private stores receive an “appropriate” wholesale discount, in the 10 to 15 percent range.

“We're willing to try it out in some pilot stores, see where it goes,” said Dumais. “If it doesn't work out, we'd back away from it, and if it works, go ahead with it.”

Dumais said grocers are also willing to step up their current training of grocery store workers to be sure they can handle the sale of spirits.

He also said the grocers association does not believe that the sale of hard liquor in private stores would cut into the state store sales.

“It didn't happen in 1976 when we got wine,” he said.

But Mollica said, “To put this product in grocery stores and have it labeled as a New Hampshire Liquor Commission substation is ludicrous from a business standpoint.

“All of our profit goes into the general fund, and we do not feel that it is in the people's best interest, the taxpayers' best interest, to erode their brand.”

Mollica also opposed capping the retail prices at grocery stores at the same prices as those offered in state stores because the state would have to give the private stores a wholesale discount, which, he said, would cost the state millions of dollars.

Dumais said private stores would lose money on the liquor sales unless they could get a wholesale discount of 18 to 20 percent. But he said they are willing to take a loss on the liquor because they believe they will make it up by drawing more people into their stores.

“When you go to a grocery store, it's a combination of everything, and the state should be looking at that,” Dumais said. “They are going to come over here because we have low tobacco prices, low beer prices, because we have no sales tax. If we can get them across the border, we're going to all do better by it. And we're going to do better by them buying more volume of everything.”

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