Full-strength beer forces market in a corner
2013 will be the fifth consecutive year lawmakers attempt to tackle the state’s aging alcohol regulation. Rep. Kevin Priola, R-Henderson, wants to propose a statute that permits the retailing of full-strength beer in Colorado grocery stores.
What’s more than interesting is that brewers and liquor stores oppose any changes to current codes while major grocers, convenience stores and the Colorado Retail Council want to make the switch to full-strength beer in supermarkets.
But what do consumers want?
Let the laws of economics show you the results before you cast your vote (really, this issue may end up on a future ballot).
Myth #1: Supermarkets will offer more varieties of craft beer for consumers.
Being able to pick up a sixer of full-strength beer while grocery shopping is supposed to make it more convenient for consumers. And initially it will. But once beer becomes just another item on the shopping list, liquor stores will see a significant decrease in their craft beer sales, which is a major chunk of their profits. This trickle-down effect affords the national grocery chains more influence on the market, and subsequently the supply, empowering them to sell their shelf space to the highest bidder. Could you imagine if you’re craft beer choices were limited to those small batch brews from big beer conglomerates?
Myth #2: The craft beer industry is growing so rapidly it needs more outlets for competition.
Did you know a new brewery opens in Colorado every two hours? OK, kidding. But there’s a reason why local and craft beer is a big industry along the Front Range: Because of the current legislation! Right now, liquor stores and microbrewers have a mutually beneficial relationship. Since you can find a liquor store on every other street corner, brewers are able to strategically retail where the demand for their beer exists. This wealth of options helps to keep costs low for brewers, helping to fuel much of the new business growth in the Napa Valley of Beer.
Myth #3: More distribution channels make it easier for new businesses to enter the craft beer industry.
Once consumers spend their beer bucks at the supermarkets, mom-and-pop liquor stores will begin to vanish. According to the Denver Business Journal, a study conducted by Summit Economics, LLC declares that nearly half of Colorado liquor stores will close their doors within three years. So there will be fewer distribution channels for brewers, affecting new or less-established craft brewers the most.
Myth #4: Major commercial brewers support full-strength beer in all retail outlets.
Consumer choices will eventually comprise of the trifecta of international brewers and a few other craft brewers that are big enough to survive. By this point grocery stores will have abused the lucrative beer market, forcing even mass brewers to pay higher fees in order to compete with low-margin items over limited shelf space. Not to mention, watered-down 3.2 beer keeps the costs of ingredients down for big brewers.
Myth #5: Selling full-strength beer in supermarkets boosts the local economy.
Liquor stores have wreaked havoc on Sunday beer sales in supermarkets ever since Colorado politicians made the seventh day equal to the rest of the days that end in ‘y’ over four years ago. Safeway has publicly stated it plans to add one position to each store if the new legislation passes. Compare that to the 10,000 jobs that will be eliminated in the first five years of passage. (And don’t forget about all that missed tax revenue.) Independent liquor stores, microbrewers and their suppliers will also be affected, especially Colorado’s burgeoning hop industry.
Supposedly booze is a recession-proof industry and for good reason, but Darwinian economics are still at play.
How do you think having full-strength beer in grocery stores will affect the 75+ new breweries opening in Colorado in 2013?