By Terri Allan
The battle for expanded sales of alcohol in convenience stores continues in 2012, and operators and their representatives €" heartened by recent inroads in several states €" maintain that they won€™t give up the fight, no matter how strong the opposition. In fact, convenience retailers and their allies may employ some new strategies this year, as they work to win over lawmakers and voters.
"In 2012, we€™ve decided to move our actions to the [state] House," said Tom Palace, executive director of the Petroleum Marketers and Convenience Store Association of Kansas, of the group€™s attempt to revise the state€™s law that prohibits the sale of full-strength beer, wine and distilled spirits in convenience and grocery stores. Last year, a bill that would have mandated the change failed to receive the support it needed in the state Senate. Palace said that this year, "we€™re tweaking the bill a little, conducting surveys and working members of the legislature."
Palace is hopeful that a bill will be introduced in the state House this month, and that it might include language allowing for the gradual phasing in of alcohol beverages in convenience and grocery stores, starting with strong beer, then wine and then spirits. While he conceded that this is an election year, and "people will be hesitant to vote on anything," the association executive said he€™s "cautiously optimistic" the measure will advance.
Frustrated by failure in recent years to advance legislation that would allow Colorado convenience stores to sell full-strength beer, the state€™s trade association is considering retooling its proposal to make it more attractive to craft brewers and Governor John Hickenlooper. According to Grier Bailey, government affairs manager for the Colorado & Wyoming Petroleum Marketers and Convenience Store Association, the group may pursue "an effort to incentivize Colorado brewers" €" the outspoken opponents of last year€™s effort by convenience and grocery stores to stock strong beer.
Bailey reported that his group is considering legislation that would allow convenience stores to sell only full-strength beer classified as "Colorado natural products," or craft beer produced in the Rocky Mountain State. Such a move, he said, would help alleviate fears expressed by the state€™s craft brewers that chain sales of beer would hurt small brewers, at the hands of major beer marketers.
A "Colorado natural products license" would be difficult for craft brewers to oppose, Bailey explained, as it would grow their business. Hickenlooper, also a former craft brewer, could be sympathetic, Bailey noted.
Convenience store operators in some states say that recent regulatory revisions have already brought benefits to their businesses. Sunday blue laws have been overturned in some areas and sales of alcohol beverages have increased, noted Mike Thornbrugh, manager of government affairs at QuikTrip Corp. Thanks to the repeal of a Sunday sales ban on off-premise alcohol beverages in Georgia last year, and the successful passage of local ballot initiatives on the matter, about 40% of QuikTrip€™s stores in the Atlanta area can now sell beer and wine on Sundays.
"For QuikTrip, it€™s a good thing," Thornbrugh said of the new law, "and for our consumers, it€™s a good thing." Indeed, one Georgia convenience store reported a 60% increase in total revenue on the first Sunday that it was permitted to sell beer late last year. More Georgia towns are likely to put the matter on ballots this year.
Other areas in the South are considering Sunday sales of alcohol beverages, including parts of South Carolina and Mississippi. And late last year in Provo, Utah, the Municipal Council voted to legalize Sunday beer sales. "It€™s a big deal," said NACS Vice Chairman of Government Relations Brad Call, general counsel and executive vice president at Maverik Inc., which operates three stores in the resort city. "We€™re very grateful." At press time, a coalition of convenience and grocery stores in Indiana was hopeful that bills allowing for the sale of cold beer on Sundays would soon be introduced in the state Legislature.
In Massachusetts, chain food retailers, including convenience stores, were given the green light this past November to increase the number of liquor licenses they can hold. Governor Deval Patrick signed legislation allowing individual companies up to five licenses, from the previous three, beginning January 1. The maximum number of licenses jumps to seven in 2016 and to nine in 2020.
And in the Dallas area, more convenience stores have been adding beer and wine licenses thanks to a local-option referendum that allows formerly dry areas of the city to go wet. Thornbrugh commented that the ability to sell beer and wine in a market where convenience stores had previously been prohibited from doing so "opens up possibilities" when it comes to adding new stores.
The successful expansion of alcohol beverage sales in some states seems to be lighting fires underneath convenience store operators in other states. Indeed, despite 2012 being an election year, retailers and their state association representatives are not ruling out tangible progress.
"It€™s just a matter of time" before strong beer, wine and spirits are available in Kansas convenience and grocery stores, remarked Thornbrugh, acknowledging that the two retail channels are working together to change current state law.
In QuikTrip€™s home state of Oklahoma, meanwhile, some retailers continue to seek change to the current system, which would allow liquor stores to offer liquor, wine and full-strength beer, while supermarkets and c-stores could sell full-proof malt beverages and wine. The call for change continues despite the disbanding of a task force charged with studying the matter late last year.
"The discussion was all about protecting turf," reported Thornbrugh of the task force€™s meetings, which were ordered by Governor Mary Fallin. "Oklahoma had a chance to take things into the 21st century." Still, he said the debate is unlikely to die down, and a statewide ballot initiative could pave the way for change. "I believe it would pass in Oklahoma," the QuikTrip executive remarked. "In fact, I would not be surprised if it passed as early as 2012."
Bailey said that while the Colorado & Wyoming Petroleum Marketers & Convenience Store Association prefers that change to Colorado€™s alcohol beverage laws be enacted by the state legislature, when it comes to a ballot initiative, "never say never."
Colorado convenience store industry interests "have been doing the same thing for the last three to four years, and we€™re still not where we want to be," Bailey continued. "Given that beer is the number three segment in c-stores, the state of Colorado can€™t expect us to thrive without it." He conceded that while the "Colorado natural products license" is not a "long-term solution," at least it€™s a step in the right direction.
Ballot initiatives on alcohol beverage sales have already dramatically changed the rules in one state. In November, Washington voters approved an initiative that ends the state€™s monopoly on distilled spirits sales and allows large grocers to begin stocking liquor. The measure, which becomes effective June 1, permits stores measuring at least 10,000 square feet to sell liquor, thereby shutting down state-controlled liquor stores.
Also under the change €" and spearheaded by Costco €" Washington retailers can now obtain volume discounts on liquor and wine, and warehouse those products themselves rather than using distributors.
While the changes largely don€™t apply to Washington convenience stores, Thornbrugh noted the significance that ballot initiatives are beginning to have. The QuikTrip executive said it€™s ironic that in a number of states, "politicians are scared to vote" on matters such as expanding the sale of alcohol beverages, "yet when it comes to an initiative, their constituents often vote overwhelmingly in favor of change."
Passage of the initiative in Washington is likely to have ramifications around the country. "Costco has changed the rules," he remarked. "The three-tier distribution system will change. There will be a whole slew of action. This has really changed and rocked the alcohol beverage industry world."
Change could also be in the making in other areas where states play a role in the sale of alcohol. Utah lawmakers are expected to consider changes this year to the management of the Department of Alcoholic Beverage Control, a move that could include the sale of strong beer, wine and spirits in grocery stores. And in Pennsylvania, where the state controls the sale of wine and spirits, lawmakers are once again discussing privatizing the system.
Randy St. John, senior vice president of the Pennsylvania Convenience Store Council, commented that while his group supports privatization, the measures currently being considered don€™t go far enough because they don€™t address the state€™s prohibition of beer sales in convenience and grocery stores. "Privatization should be rolled out to provide Pennsylvania residents with convenience, selection and good prices," he said, adding, "and the availability of beer in groceries and convenience stores."
St. John continued that the vast majority of Pennsylvanians applaud a change to the system: "Eighty-one percent of the people in the state want a change to the current system€¦But they believe privatization would allow them to buy beer, wine and spirits in grocery stores." Bills currently under consideration by the Pennsylvania General Assembly would not allow that.
Whether through the legislative process or voter referendum, state alcohol beverage laws are likely to continue to evolve. And convenience store operators in a number of states won€™t be satisfied until they have their fair share of opportunity when it comes to selling beer, wine and liquor.
Terri Allan is a New Jersey-based freelance writer, specializing in the beverage industry. She can be reached at email@example.com.