Privatizing liquor hasn’t brought price down

MOUNTLAKE TERRACE — More than six months after privatization of the state’s liquor industry, the goal of lower prices has yet to materialize.

In fact, prices overall took a jump immediately after the changeover and have stayed near that level since.

The average price per liter of hard liquor after taxes statewide in October was $24.06, according to figures from the state Department of Revenue.

This is down slightly from the first month of privatization in June, but still more than 10 percent higher than the $21.59 at state liquor stores in October 2011.

“It’s gone up quite a bit,” said Trudy Brodie, of Edmonds, who manages the bar at the North City Eagles Club in Shoreline.

She was at Mountlake Terrace Liquor &Wine on Friday buying stock for the bar.

“We had to raise prices,” she said.

Stores larger than 10,000 square feet, along with some locations previously occupied by state liquor stores, were allowed to sell hard liquor starting in June following the passage of I-1183 in November 2011.

The ballot measure was designed to keep state and local governments from losing money in the transition.

The state’s previous spirits sales tax and liter taxes stayed in place. The state’s 51.9 percent mark-up went away, but has been replaced by fees of 10 percent on distributors and 17 percent on retailers.

“The private sector is adding its own markup as well,” said Brian Smith, a spokesman for the state Liquor Control Board.

Backers of I-1183, which passed with 59 percent of the vote, steered clear of claiming it would bring down prices, though it was mentioned as a possible by-product. Instead they touted other potential benefits.

“Yes on 1183 will create true competition in liquor and wine distribution and sales, strengthen liquor law enforcement, benefit Washington taxpayers and consumers and generate vitally needed new revenues for state and local services,” according to the argument for the initiative in the 2011 voters’ pamphlet.

The fee charged to distributors is scheduled to be cut in half in 2014, to 5 percent, which could help bring prices down, Smith said.

In June, the average liter price was $25.35, more than a dollar higher than October, according to state figures.

Some prices have gone up since then, some have dropped.

Some of the prices at smaller stores are higher than at large chain stores because the small retailers can’t get bulk discounts from distributors, said Leonard Daniel, who owns and operates Mountlake Terrace Liquor &Wine with his wife, Lori.

Also, each brand is often available from only one distributor, Leonard Daniel said. The right to distribute a brand is bought by the highest bidder.

“There’s no competition until you get down to this level and we’re just fighting for the crumbs,” he said.

The Daniels say they make up for their disadvantages with customer service and product knowledge, and by carrying a wider variety of brands and sizes than many of the bigger stores.

Lori Daniel managed the store on 44th Avenue W. when it was part of the state’s system. Sales have slowed since the changeover, she said.

“We’re very fortunate to be in the community we are,” she said. “They’ve really supported us.”

Brodie of the Eagles Club said she buys directly from distributors as well but goes to the Mountlake Terrace store to get items that aren’t available from distributors.

“They’re pretty good to me and they’re local,” she said of the Daniels.

Bill Sheets: 425-339-3439; sheets@heraldnet.com.