VANCOUVER — An Oregon man is getting out of the Washington state liquor business after fees drove up his prices and consumers found cheaper booze in chain stores and across the state line.
Don Sidhu had $2.1 million in investor money that he spent on four former state-run liquor stores privatized when the state switched away from a state-operated liquor system this year.
Customers told Sidhu that they would buy their booze at Oregon’s lower-priced, state-operated stores, The Vancouver Columbian reported.
Sidhu apologized to customers for the fees, which in some cases led to prices 22 percent higher than those in Oregon.
“They said, ‘Don’t be sorry, you’re the one who’s going to lose your business,”’ said Sidhu, a Woodburn, Ore., resident who closed his stores in Kennewick and Kirkland and plans to shutter his remaining two stores in Vancouver some time next month.
Liquor sales in Oregon increased 9.4 percent in October 2012, compared to October 2011. At Oregon’s 12 border stores, sales increased by 34 percent.
Compounding the problem is distributors, who in many cases charge smaller stores between 25 percent and 35 percent more than they charge volume discounters like Costco.
“In the old system, everybody in the state paid the same price, and now, if you’re not close to a Costco or big box, you’re paying a whole lot more for the same product,” said John Guadnola of the Washington Beer &Wine Distributors Association. “It’s so much cheaper to deliver a truckload to one place and have the customer break it up and deliver it out to the individual stores.”
Sidhu isn’t alone in facing a quick, devastating business failure in Washington’s new free-market liquor sales environment.
Of the 167 former state-run liquor stores that Washington auctioned off, Sidhu estimates only 60 or 70 remain open.
He said he had a disadvantage in being a small store. The lack of volume discounts from distributors, competition from Oregon, and the loss of commercial sales that were a key profit center for the former state-run liquor stores have all contributed to the demise of the former state-run stores.
“I will keep my head high,” he said, “and move forward.”