Washington state started its new system of liquor sales last week. It very much remains to be seen whether this is a good idea.
Heavily funded by Costco and other private retailers, liquor-sales privatization failed when two similar initiatives were both placed on the ballot in 2010. But a sequel proposal won by nearly 59 percent in 2011.
As a result, the most visible result in our area is the closure of several state-franchised liquor stores in Pacific County, including those in Naselle and Long Beach. At the same time, Washington grocery stores including Sids in Seaview are now stocking liquor on the main floor. Some of the former state stores, including those in Ilwaco and Ocean Park, are converting into purely private businesses.
In large part, Costcos not completely justified reputation for low prices may have swayed voters into thinking that private liquor sales would result in bargains. It is early days, but this belief appears to have been seriously misplaced as state analysts warned before the vote. Adding profits for wholesalers and distributors now joining the supply chain appears likely to tack on a 25 percent or greater price increase for consumers. Bars and restaurants that serve hard liquor are likely to find they have to hike drink prices and/or accept smaller margins.
Profit margins for smaller front-line retailers are likely to be razor thin, even though they will bear the brunt of consumer irritation over price hikes. Due to shelf-space constraints, some small-town retailers will also have a hard time offering the variety achieved by former state-franchisees.
The impact on state revenues and thus on taxpayers and consumers of state services is still rather fuzzy. The Washington initiative included a 10 percent fee to the state from wholesalers and a guaranteed $150 million in state revenue in the first year. These fees are part of the reason prices will not go down. But the switch is still expected to cost Washington many millions over the course of time.
Consumers will have more convenient access to liquor a dubious benefit. There may also be intangible costs in terms of under-age drinking, shoplifting and other factors.
Still, it certainly can be argued that it is time for all states to get out of a business they intervened in at the end of Prohibition. We wouldnt permit states to participate in the cheeseburger or home-building businesses. Belief in capitalism generally means that private sellers have a right to make what they can by selling lawful products. Over the course of time, competition ought to take care of price, selection and other market issues. The presence of liquor may help build customer traffic within some grocery stores. Perhaps there will ultimately be a net gain in jobs and economic activity.
It is, in general, rather easy to manipulate the publics vote on ballot initiatives. We should look very long and hard at each of them to make sure we are going to get what we want and not merely what some corporation or special interest wants.
In this case, we purchased a pretty bottle, but what was inside it may turn out to rotgut.