In Our View: Privatization Still in Infancy
Liquor prices are up, sales are down, but don't jump to conclusions
Friday, August 17, 2012
As we move more than two and a half months into the privatization of liquor sales and distribution, Washingtonians understandably wonder: How's it going?The answer: Too soon to tell.
Granted, opponents of Initiative 1183 are chanting "we told you so" after liquor prices increased and liquor sales decreased in June after privatization was implemented. But the state Department of Revenue says data from many months will be needed before any long-term trends can be identified.
The Columbian supported I-1183 back in November. So did 58.7 percent of voters statewide and 58.4 percent of voters in Clark County. And we've seen nothing in the first couple of months of privatization to change our mind. Yes, liquor prices are up, forced higher by many influences including a 10 percent distributor fee and a 17 percent retail fee to generate revenue the state lost when its antiquated monopoly was shut down by voters.
But many wobbly variables also are at play. Liquor sales were down in June, but according to The Associated Press, not as much as many officials had expected. June 2012 sales statewide dropped just 9 percent compared with June 2011. But it's undetermined how much of that can be attributed to privatization. Part of the explanation could be found in the fact that liquor sales in May shot up 27 percent as customers stocked up in advance of privatization; many likely were motivated by fear of higher prices in June. So perhaps during June, much of their booze had already been purchased the month before. No one knows for sure.
It's also true that liquor sales in Oregon increased 35 percent in June at stores near Washington. The AP reported that State Line Liquor Store at Jantzen Beach -- the first liquor store in Oregon south of Vancouver on Interstate 5 -- saw a 46 percent increase. Store owner Paul Babin estimates 80 percent of his business comes from Washington.
That might be true, but it's an estimate. Truth is, Oregon does not keep track of where liquor customers live, so it's impossible to know for sure.
Other factors could be in effect. Distributors are coming through an uncertain period as inventories are built. Retailers are maneuvering through startup difficulties.
But two certainties -- about dire warnings that became myths -- were brought into clear focus by Seattle Times columnist Bruce Ramsey. Opponents of I-1183 issued heated warnings about a proliferation of minimarts selling liquor, but Ramsey points out that no store of less than 10,000 square feet has been given a new license yet, and the "trade area" that would allow smaller stores hasn't even been defined yet by the state Liquor Control Board.
Second, the warning about a huge increase in liquor purchases by underage customers proved to be a false alarm. As Ramsey reported, the compliance rate was 94 percent at state stores before privatization, and in July (after privatization) it was 92 percent among new retailers.
Many new fees on liquor purchases face a cloudy future. Prices could come back down in months or years to come. Interestingly, The Oregonian editorialized about possible liquor privatization in that state: "Whether (Oregon's) liquor monopoly is crushed by the initiative steamroller or picked apart piece by piece through legislative action, the end result is both inevitable and desirable. Selling liquor is not an appropriate government function … ."
We agree, and so do more than 30 states including Washington that have privatized liquor sales and distribution.