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How's That Liquor Privatization Workin' Out Ferya?

Well, my perception now is that, with the exceptions of the (few) new megabooze stores, the critics were correct: prices 'way up and selection 'way down. And I'm really starting to resent the wild (and wildly random) "sale" price rotations/fluctuations--unless you see an advertised special or catch a break, there's really no way to come even remotely close to the old WSLCB price + the new tax overlay. Walk into the wrong store on the wrong day, and the same bottle is a *lot* more than the day before or next door.

I also see the small operators starting to dry up and blow away.

Ain't the free market grand?

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  1. "the exceptions of the (few) new megabooze stores"

    Why do we have to "except" them? I love the Total Beer & Wine store (and to a much lesser extent BevMo). Much better selection than the old WSLCB stores and it feels cheaper (I haven't actually done a check...)

    Costco's been good too. Their bourbon and scotch are a steal.

    I guess you have to plan a little bit, or pay more for purchases on a whim, but that doesn't rankle me that much. I mean, pay a lot more for beer at the convenience store when I'm on the way to a friend's house than when it's on sale at Safeway a day earlier.

    2 Replies
    1. re: GreenYoshi

      "Why do we have to "except" them?"

      For me, it is because they are all a long drive from where I live and work, and visiting them means I will burn up half a day for the excursion. And those stores may "feel" cheaper than WSLCB, but they are not. I know what I paid for specific items that I stocked regularly, and even the "super stores" have significantly higher bottom line pricing than WSCLB stores.

      The reality is that within the same radius of home, for most Washington residents, the selection is indeed now far more narrow, and the prices are much higher.

      1. re: GreenYoshi

        Hi, GY: "Why do we have to except them?"

        Well, they're the exception to the rule. And few and far between. I have 6 "grocery"-type licensees within a mile. The nearest megabooze is 3 miles away, and it's not near anyplace else where I shop. So it's another special trip, and the prices are STILL high. It just tastes bad driving out of my way just to get fleeced a little less than at the truly rapacious grocers--I still get fleeced.

        I've only scrutinized Costco's selections/pricing at the SODO store (also a LONG way from me), and only about 3 times, but I wasn't wowed by their selection OR their prices. About the only things I thought were decently-priced were their house brands, which I won't serve to guests.

        I want my vote back.


      2. My experience is pretty much the same as yours. I loaded up pretty well on all the staples before the new law went into effect, because the new tax structure made it obvious that these items would jump in price. We've also taken to ordering scotch from the UK periodically, and just dealing with customs to clear it. It takes a pretty large order to make shipping affordable, so we only do this once in a while.

        I also had a friend who owned a local wine distributorship. I used to buy wine from them direct -- I got a great price and I loved the stuff he brought in. He went out of business shortly after the law came into effect. And, yeah, he's not the only small operator who has.

        1. Total Wine and More is ok...you can get some good deals..but overall I think its been terrible (the new taxes bumped the price up a great deal) and most of the selection is so crappy its barely worth it. Some of the scotches almost doubled in price...

          1. I've gone to mail order. Or duty free at the Canadian border.
            I just won't support WA State's greedy tax hungry maw.
            Mail Order - The plus is that you get a lot more variety.
            The minus is that to control shipping costs a six bottle order makes sense. (cents)
            I've been enjoying a variety of old rums from an outfit in St. Louis.

            4 Replies
            1. re: JayDK

              The law was written (by the retailers) to be revenue neutral.

              What's new is not the revenue taken by the state, what's new is the private profits, being taken at every level of the supply chain, and the higher overhead by having different entities handling logistics, distribution, and retail.

              When the state held the monopoly, there was much greater efficiency and economy of scale. The new system has more players, so is less efficient, and everyone in the chain is adding their profit margin to the shelf price.

              And of course much of that profit is now heading out of state, as with your mail order merchant, and to out-of-state companies with a presence in our market, like Safeway and Bev-Mo.

              Washington State actually forbids mail order for hard liquor, but some of the online retailers seem unaware (perhaps purposefully so) that their shipments here are illegal.

              1. re: Gizmo56

                It is not revenue neutral to the state; it was done to make money. And it does, at the expense and convenience of consumers, along with a large re-distribution of ownership of profitable locations. I reviewed the auction process carefully.

                1. re: Veggo

                  Many people labor under the mis-impression that the stiff taxes they see at check-out are new, and were the product of 1183, or were imposed by the state after passage of 1183.. In fact thosee taxes were there when WSLCB held the monopoly and were just part of the shelf price.

                  "Does This Change Affect the Rates of Spirits Taxes I Will Pay?
                  No. Initiative 1183 (I-1183) does not change the rates of spirits taxes that the general
                  public will pay. The general public still pays:
                  ▪▪Spirits sales tax at the rate of 20.5 percent of the selling price
                  ▪▪Spirits liter tax at the rate of $3.7708 per liter

                  If the Spirits Taxes Did Not Change, Then Why Did the Prices for
                  Spirits Change?
                  Effective June 1, 2012, the only price control on spirits is that spirits sellers cannot sell
                  below their cost.
                  For spirits sales to the general public, the selling price can include, but is not limited to:
                  ▪▪Cost of goods sold.
                  ▪▪Markup, which may include:
                  ▪▪ Federal, state and local taxes imposed on the seller
                  Note: Taxes imposed on the buyer are not included in the markup and
                  are required to be separately stated on a receipt, price list, or price tag.
                  ▪▪ License fees paid to Liquor Control Board (10% paid by distributors and
                  17% paid by spirits retailers)
                  ▪▪ Business expenses
                  ▪▪ Additional markup for desired profit"


                  Yes, "it was done to make money" ... for giant retailers like Costco, Fred Meyer, Safeway, etc.

                  1. re: Veggo

                    "Just 18 months after getting voter approval on the [I-1183] initiative, Costco is now brazenly pressing state legislators to remove the 17 percent fee.

                    If passed, second substitute House Bill 1161 would deprive the state of tens of millions in revenue, and give Costco, and other big retailers, an inequitable and unwarranted advantage over other private liquor distributors. Those other distributors paid more than $150 million in licensing fees. But as a retailer, Costco would be exempt.

                    These distributors have invested millions since the 2011 general election to re-create and improve on the state’s distribution for spirits and wine, which the initiative also closed. The Costco bill puts this system and the more than 1,000 family-wage jobs it created at risk.

                    It makes no sense to allow Costco to sell directly to restaurants without shouldering any of that burden and then reward them with a tax break. That would be a slap in the face to Washington taxpayers. And given the court-ordered mandate to fully fund K-12 education and the dire need to preserve and maintain our roads and bridges, it would be ridiculous to give back a voter-approved revenue source.

                    Let’s not forget that Costco itself included the 17 percent fee in its initiative in order to persuade voters to pass the measure."

                    Read more here: http://www.theolympian.com/2013/06/06...

              2. keep the bureauocrats/government out of my booze!

                1 Reply
                1. Yeah, what a surprise it's not good for consumers--didn't Costco write the initiative?

                  I ski Whistler 4x a year and so at least can buy some booze at the duty free on the way home. The downside is, for those of us with NEXUS the limit of what you can bring back is quite small.

                  1. I think the selection issue really depends on where you live. If you had a pretty good local WSLCB store, you are probably a little worse off now. The replacement for my local store was pretty good for a while but is no longer all that exciting. On the other hand, the liquor selection at my local QFC (located in a one-time state store location, no less) is pretty impressive and the only thing the state offered that even remotely resembled Total Wine or Wine World was the store in West Seattle.

                    Price is another issue. More than any other state, Washington used its state-run liquor stores for revenue-generation and we already had one of the highest effective tax rates in the entire country. 1183 was written such that the new taxes are roughly equal to the profit margin of the state stores but now you also get to pay the profit margin of the retailer as well. There's no way around that other than by buying booze from out of state.

                    11 Replies
                    1. re: lavaca

                      "...the only thing the state offered that even remotely resembled Total Wine or Wine World was the store in West Seattle."

                      WSLCB's selection is sadly under-appreciated. The state used to carry over 3,000 products. While not every label was routinely sold in every store, consumers could arrange to have anything in the state's inventory delivered to any of the local outlets. Your local Safeway or Bartell Drugs naturally will devote shelf space to big sellers like Smirnoff, and naturally will not make room for Lucid Absinthe, which was widely available at WSCLB. The state store system did a far better job at assuring that a lesser-in-demand ingredient for a cocktail recipe could be found by a consumer (in cities, suburbs, and rural areas) than the big chains that have now assumed the liquor monopoly.

                      Total Wine and BevMo are a disappointment to me. I had hoped to see deep discounts. Regular comparison pricing reveals that their prices are roughly equivalent to what I might find as a good weekly discount at a supermarket. There are some labels at the "super" stores that WSLCB didn't carry, but many new ones I had expected to see, and that are readily available in most of the country, are not here.

                      Nothing is cheaper than before privatization, anywhere. The vast majority of the state that lives away from "super stores" and flagship grocery retailers now suffers a much more narrow range of product.

                      Privatization has neither lowered price (for anyone) or improved selection (for the vast majority). We are all paying a lot more, and 99% of us have much less selection within a convenient distance that coincides with the rest of our routine household shopping.

                      1. re: Gizmo56

                        Hi, Gizmo: "Total Wine and BevMo are a disappointment to me."

                        I've been so underwhelmed with Bevmo I no longer even make special trips there. The last 3 times I did, they didn't even have some very basic things I needed, like the orange Angostura bitters. The associate encourages me to "check back in another week". The last time (yesterday), I was told I could drive to the Northgate store, where they had ONE bottle.

                        As near as I can tell, privatization has not benefitted the citizens one farthing, and has inconvenienced and fleeced the vast majority in the name of corporate profit.

                        What *should* have happened was to allow a pilot program of privatization to test some of the corporate lobbyists' and election-buyers' outlandish claims. Hmmm, I wonder why *that* didn't happen?


                        1. re: kaleokahu

                          I don't know why BevMo even bothered opening in that space at Northgate - it seems to be about half the size of their average California store.

                          That said, bitters have always been a standard grocery product. Does your local QFC not have a cocktail section?

                        2. re: Gizmo56

                          Agreed -- if you knew how to get the most from the WSLCB, it wasn't so bad.

                          1. re: seattle_lee

                            I have commented about this issue on the Seattle Times. I continue to be amazed at how the free-marketeers reflexively express satisfaction at the ejection of the dreaded "State" from the liquor market despite the customer having no net benefits to show for it.

                            For the prior WSLCB regime to have resulted in net revenue for the state, the contrived 52% markup/"profit" must have included all overhead including the labor costs of state workers.

                            Let us assume--as does your average free-market-minded 1183 supporter--that the private sector could sell liquor more efficiently than the state, especially with regard to labor costs. With this assumption, it seems inescable that the higher prices are the result not just of taxes and fees but increased markup from profits.

                            One could conclude that the pro-1183 lobby most certainly DID account for the state's markup. In this sense, they knowingly sought to capure this markup for themselves--even though it reflected inefficiencies of state labor that the privatization supporters publicly maligned-- and then blame any net retail price increases over the prior regime on the fees and taxes alone.

                            The fact that the pass-through amount representing the share of the fees-unlike the taxes--are not segregated from the underlying price in any information shown the customer in private liquor stores does not exactly inspire confidence that the private sector is not gouging. This supports the view that 1183 represented a net-inefficient privatization scheme/cartel. Together with the lowest common denominator/duty-free style selection at most grocery stores as mentioned by others, the current situation can be fairly viewed a worst-case scenario for the consumer.

                            1. re: equinoise

                              Think of it this way:

                              Cost + Overhead + State's profit (the implicit liquor tax) = Your price

                              Cost + Overhead + Store's profit + State's profit (now an explicit tax) = Your price

                              Washington may be the only state where a privatization initiative actually managed to increase the state's revenue from liquor sales. That's quite a feat given that we already had one of the highest effective liquor tax rates in the country prior to 1183. Heck, even Anchorage had cheaper booze than Seattle.

                              1. re: lavaca

                                The problem I have with this equation is that the private industry's collection of liquor taxes is not entirely "explicit". Private retailers often state in a general way that the 10/17% fee imposed by 1183 is factored into the price of each bottle, but unlike the explicit taxes, the consumer is not informed of the amount of this factor. Thus, the distributor's and retailer's "pass-through" of a portion of the 1183-imposed fee is commingled with their overhead and profit in a way that is misleading and opaque, and robs the consumer of the ability to fairly appraise price competition and understand the extent of price-gouging which is occurring under the guise of "higher" taxes.

                                In this way, the private system also deviates from the state system in that the consumer knew that she was paying a 52% markup from cost of every bottle.

                                And the ability to purchase mass-market liquors during expanded hours at grocery and drug stores at prices several dollars higher than under the WSLCB scheme is not a net benefit in my view, when also considering the net reduction in selection.

                              2. re: equinoise

                                "despite the customer having no net benefits to show for it."

                                There are a lot more places to buy booze. That's a pretty huge benefit, especially for those of us who don't own cars.

                                Those places also tend to have much better hours than the old state-run stores. That's a pretty huge benefit, too.

                                In fact, those two benefits alone more than make up for the increased cost at checkout---especially since before I effectively had to add at least $2.25 in bus fare to the cost of my liquor if I made a special trip.

                                Glad it passed.

                                1. re: eight_inch_pestle

                                  "a lot more places to buy booze" ... that depends on where you live. Before 1183 I had three WSLCB outlets within 10 minutes of my home. Now I have three private retailers within that same radius, a Safeway, a QFC, and a Fred Meyer. All of them have a terrible selection compared to WSLCB, so if I want an ingredient for a cocktail that is not a huge mass market item, I must travel MUCH farther than I did before privatization.

                                  "much better hours than the old state-run stores" ... yes, the hours at most private stores are longer. Maybe our initiative could just have asked for longer hours and Sunday sales, rather than paying higher prices for reduced selection to profit-driven corporations.

                                  "before I effectively had to add at least $2.25 in bus fare" ... in my experience, the cost differential for even a single bottle of an inexpensive label would offset considerably more than your $2.25.

                                  I am not arguing that your personal experience with bus commuting and the previous location of the closest WSLCB makes the higher prices and reduced selection still a net benefit for you. But I don't think your cost/benefit experience is shared by very many consumers in the state.

                                  Congrats on your pestle size. ;)

                                  1. re: Gizmo56

                                    "...that depends on where you live. "

                                    Well, yes and no. Of course everyone will have different anecdotal experiences, because obviously places to buy liquor will never be distributed in a uniform grid. But there are objectively more places to buy liquor in Washington State than there were before privatization.

                                    "But I don't think your cost/benefit experience is shared by very many consumers in the state."

                                    And on what do you base that conclusion? 'Cause I bet it is. I bet there are a whole lot of people who have most if not all of their liquor needs met by their local grocery store or supermarket and are perfectly happy to pay a little more for the convenience of more locations and far, far better hours. Not to mention if they don't want the state in the liquor business in the first place.

                                    "in my experience, the cost differential for even a single bottle of an inexpensive label would offset considerably more than your $2.25."

                                    Where did I say transit fares completely offset the cost difference? Didn't even so much as imply that. Doesn't change the point.

                                    "Maybe our initiative could just have asked for longer hours and Sunday sales, rather than paying higher prices for reduced selection to profit-driven corporations."

                                    That still wouldn't have added locations, and liberal as I am the fact that a grocery store is profit driven doesn't bother me in the least.

                                    And for the record the selection at many of the state stores in Seattle was never that great. I always ended up taking a ZipCar or two buses to Ballard or (more likely) SoDo for much out of the ordinary.

                                    1. re: eight_inch_pestle

                                      "I bet there are a whole lot of people who have most if not all of their liquor needs met by their local grocery store or supermarket and are perfectly happy to pay a little more for the convenience of more locations and far, far better hours. Not to mention if they don't want the state in the liquor business in the first place."

                                      If "you don't want the state in the liquor business," and the trade-off of reduced selection and higher prices is considered fair, I am sure like-minded consumers will be happy to pay more and have less from which to choose. Too bad the corporations that wrote the initiative and poured millions into passing it didn't frame it that way for the voters at the time.

                                      If "more locations and far, far better hours" are more important than reduced selection and higher prices, again I am sure like-minded consumers will be happy to pay more and have less from which to choose.

                                      "Where did I say transit fares completely offset the cost difference? Didn't even so much as imply that. Doesn't change the point."

                                      OK, then I don't get your point in mentioning it, if you weren't implying some kind of benefit in saving the $2.25.

                                      My point was that I and many others, find that the reduced selection at grocery retailers, when compared to WSLCB stores, forces us to travel much further distances (or mail order) for anything but the most mundane liquor products. Our experience is the opposite of yours.

                                      You say that "there are a whole lot of people who have most if not all of their liquor needs met by their local grocery store or supermarket" ... yes! ... most consumers are happy with Popov Vodka and Fleischman's Gin, but I was much happier about the way that WSCLB stores sought to provide a decent representation of the broad range of spirits and labels in all locations, with everything at a lower cost.

                                      "And for the record the selection at many of the state stores in Seattle was never that great. I always ended up taking a ZipCar or two buses to Ballard or (more likely) SoDo for much out of the ordinary."

                                      The WSLCB website maintained listings of the thousands of products in their inventory, and I always found that the staff in my nearest stores would gladly special order any spirit that was in the system but that was not on that store's regular shelf inventory.

                                      I get it. You are happy with the 1183 changes, given your bus-oriented circumstances, the old local WSLCB store "grid," and your inherent ideological preference that the liquor business be privately held.

                                      As you say "everyone will have different anecdotal experiences." That's right. But it does not alter the fact that overall prices are higher and overall selection is reduced. I suspect that for most we would gladly go back to the pricing and selection that we enjoyed a year ago.

                                      "liberal as I am the fact that a grocery store is profit driven doesn't bother me in the least." Me neither. I own a business myself and I surely do love me some profit. The question here is whether consumers are better off today. You argue an anecdotal yes, Kaleo, myself, and most of the other respondents here have a very different perception.

                                      Cheers (if you can afford it), enviable pestle.

                                      A final note...now the WSLCB now has a bigger burden of monitoring compliance with all the private retailers. They have recently reported that approximately half of the sellers in the Tri-Cities that they tested were selling to minors. We don't really have data yet on how the expanded hours effect drunk driving, but I suspect that the new ability to grab a pint of cheap liquor of a shelf up until 2 am won't be beneficial to safety on Washington roads.

                        3. I had such high hopes that the privatization would result in the kind of prices you see in California. While I'm happy with the added convenience, especially since I'm forgetful and often need to get liquor on weekends and holidays, it's rather annoying that the liquor prices haven't dropped. I'm hoping as the retailers get more accustomed to selling liquor and recognize that lower liquor prices = more sales for things other than liquor, things will start looking better on that score.

                          12 Replies
                          1. re: soypower

                            Worth noting that prices are in fact falling, and that next year the fees assessed on most distributors will fall from 10 percent to 5 percent. No way of knowing, of course, how much---if any---of that they pass along.

                            1. re: eight_inch_pestle

                              Hi, 8IP:

                              Let me preface this by saying I admire you and your perspectives greatly...

                              Went to Costco today to review the vaunted savings, and found ... none (and it took 90 minutes to return to Magnolia empty-handed). Where, exactly, have you found prices falling? Please omit mention of the megastore "grand opening" ads.


                                1. re: kaleokahu

                                  So I was Costco last night and thought I'd take a quick comparison on prices, because I did think they were pretty good previously and was surprised that others disagreed.

                                  This was the WSLCB price list I found for comparison (from 2012 but good enough).

                                  For the stuff I drink (again mostly scotch and bourbon), prices were consistently 5-10% cheaper, so $3-9 cheaper than 2012 prices.

                                  So, maybe I was a little deceived by the pricing structure in calling them "a steal" in my earlier comment, but it's definitely a good bit cheaper than before.

                                  1. re: GreenYoshi

                                    Hi, GY:

                                    Thanks for checking. This is the kind of data people need to keep reporting.

                                    Looking down that 2012 WSLCB pricelist sections for scotch and bourbon, how many of those 100+ bottles does Costco carry?


                                    1. re: kaleokahu

                                      I am also interested in hearing specifics on which labels (and how many) come out out any cheaper at Costco today, after taxes, versus WSLCB's all-inclusive bottom line pricing,

                                      1. re: kaleokahu

                                        Enough to keep me happy ;-)

                                        Next time I'm at Total (which has a selection broader than what most WSLCB stores had), I'll compare prices there and report back.

                                        1. re: equinoise

                                          You know, I was thinking about that.

                                          I forget... back at the WSLCB stores, there was no sales tax (or at least it was included in the shelf price), right?

                                          I threw away my most recent Costco receipt so I'm not sure if sales tax was added at the register.

                                          1. re: GreenYoshi

                                            GY, yes, the considerable liquor taxes are added at the register at Costco.

                                            At WSLCB, the shelf price was all you paid at the register - all taxes were included.

                                            You are paying much more at Costco and Total than you did at WSLCB.

                                            1. re: Gizmo56

                                              No, the prices I was comparing at Costco were inclusive of the "considerable liquor taxes". They've actually been very good about noting the "price", but highlighting the price plus liquor and per liter tax and what you'll pay at the register on their price cards in the stores (unlike some other retailers).

                                              The only difference I'm not sure of in my price comparison is WA State sales tax at 9.5%.

                                              I won't disagree that prices are higher at the Safeways/QFCs/BevMos but I think you're wrong when it comes to the bigger guys (which I'll grant have their limitations for some)

                                              1. re: GreenYoshi

                                                "I won't disagree that prices are higher at the Safeways/QFCs/BevMos but I think you're wrong when it comes to the bigger guys (which I'll grant have their limitations for some)"

                                                Bigger guys? limitations for some?

                                                Still would like to see specific examples of bottom line (after tax, at the register) pricing of named products where you save money at Costco over WSLCB. It costs money to join Costco. Costco stores are few and far between on a state-wide basis. There have been several threads on this subject and I have yet to see anyone document that he or she bought any specifically named spirit at a price under WSLCB's prices.

                                                Please tell us how the Costco written and financed privatization law has benefited state-wide consumers, overall, on selection, price, and/or convenience.

                                2. It's working out just dandy for me, as expected.

                                  For others, it's a travesty, a disaster, an abomination--also as expected.

                                  As we learned in previous threads here on the subject, each camp will present their criteria for evaluating the situation, and tick off their new joys or their new woes. The other side will dismiss them as irrelevant or not enough to negate their own list. A few people will get testy and some feelings may be hurt. Nothing much new will be learned and it is highly unlikely anyone will change their minds on the issue.

                                  But yes, the free market looks pretty grand from where I'm standing.

                                  1. It's working out just fine for me. Thanks for asking!

                                    1. Here's how it's "Workin' Out Fer me." This just happened this afternoon.

                                      My wife and I are hosting a house guest who just arrived at SeaTac yesterday. Our friend brought along a cocktail recipe that she was anxious to share with us. The only ingredient for this concoction that we did not have in the house is Midori (a popular melon liqueur that I used to always be able to buy at all of the three nearby WSLCB stores).

                                      I went to Safeway, but they do not carry it. I went to Fred Meyer and struck out there. I then drove in the opposite direction to a former WSLCB store (the only one of the three in the area that was licensed for privatization. Since my last visit, that former WSLCB has gone out of business (most of those stores are struggling, and I understand that there is a class action suit by many of the license holders against the state).

                                      So I covered about 20 miles and wasted about an hour looking for something that is certainly not exotic, but which privatization has made unavailable to me locally. My next option is to make a 40 minute (each way) drive to get a bottle from Total Wine, which will have to wait until the weekend.

                                      That's how it's working out....

                                      45 Replies
                                      1. re: Gizmo56

                                        After the first store, why didn't you call before driving all over town?

                                        1. re: jlbwendt

                                          Because I am obviously foolish in expecting to find a common bottle of liqueur in the vaunted free market of newly privatized liquor sales.

                                          Had I called, I would have saved wasting some time and gas. But it would not have solved the problem that I remain empty-handed.

                                          1. re: Gizmo56

                                            Guess it's not that common :-)

                                            Joking aside, I do agree, Midori seems like it should be relatively easy to find. Must not be much of a demand for it.

                                            1. re: jlbwendt

                                              Hi, JB:

                                              Well, there *is* a demand for it. The private sector has just decided what we should get. And if you can't GET Midori, for example, talking about demand doesn't make a lot of sense.

                                              The idea that the "free" market is infallible is just crazy.


                                              1. re: kaleokahu

                                                Who said anything about an infallible free market? If enough customers request a product, a business may consider stocking it. I give my business to stores that carry and order(!) what I want to purchase.

                                                1. re: jlbwendt

                                                  Hi, jlb:

                                                  Well, that's the necessary implication of your statement: "Must not be much of a demand for it." So... you did.

                                                  The implication being that if there were much demand (which there is), the privatized free market would invisible-hand-it-over (which it doesn't).


                                                  1. re: kaleokahu

                                                    Sorry, Kaleokahu, I was going to be in a "agree-to-disagree" mode with this topic, but as an economist I really can't let this poor understanding of economics and the "free market" stand...

                                                    While I'll agree there is SOME demand for liquors like Midori, the point is that the demand is not sufficient for all stores to carry it all of the time (I mean seriously, I think of Midori like that old bottle of Galliano that sits in the back of my parents cabinet...). If more consumers were willing to pay more for it, or bought it more regularly, it would be more available. Alternately, a smaller store that focuses on selection (over pricing and volume) may find a market opportunity in regularly stocking Midori or Galliano (think Wine World, for example). THAT'S the free market.

                                                    To be clear, WSLCB stores were effectively subsidizing Gizmo's Midori habit, by regularly providing it in stores in place of some alternative (it was not as profitable of an item than something else they could have stocked).

                                                    You can argue that the WSLCB better served consumers (but at a cost to tax payers), and you can argue the retailers are currently swallowing up the expected consumer surplus (thus keeping prices comparable to before), but you can't call this a failing of the free market.

                                                    1. re: GreenYoshi

                                                      I think this analysis is incorrect.

                                                      I again return to my analysis of spices. Supermarkets know that their customers expect them to have a reasonably complete selection of what home cooks need. So they don't just carry salt and pepper, they also carry saffron, even though it sells in much smaller quantities. That does not mean that they are "subsidizing" anyone's saffron "habit," it means that they are in the grocery business and they know that they need to carry things that people use occasionally, as well as things that people use every day.

                                                      And that is also how WSLCB approached their inventories.
                                                      I don't think you've succeeded in making a showing that they did so "at a cost to taxpayers." Liquor sales are and have always been financed by the liquor buyers who pay the liquor taxes, and so the consumers and the tax payers here are exactly the same subset of people. And those consumer/taxpayers now pay more (overall) for a weaker selection (overall) than before privatization.

                                                      1. re: Gizmo56

                                                        In reply to your grocery store spices analogy....

                                                        It's been a freakin year since the state closed up shop. Grocery stores have been around for how long? Give them some time.

                                                        1. re: jlbwendt

                                                          If you think that grocery stores will ever devote anything remotely approaching the shelf space and inventory of the WSLCB for liquor, don't hold your breath. They don't in other states where they've had liquor sales for decades, and they won't here. It is not their primary business, so they will only stock the most high traffic labels.

                                                          1. re: Gizmo56

                                                            I meant that grocery stores have been around long enough to figure out which common spices need shelf space. Give them a little more time and the types of liquor may change....not necessarily for the better!

                                                            You want specialty spices, go to World Spice Merchant/Penzey. You want specialty booze? Go to Total/Esquin/Wine World/Premier, etc... Heck, even Metropolitan Market and West Seattle Thriftway have a decent selection. No one has what you want? ASK for it!

                                                            1. re: jlbwendt

                                                              Yes, I can find what I want if I make a trip into the city. I did not have to make that trip until privitization.

                                                              Yes, I can "ASK" for it. That won't help if I need something on short notice, and I don't have the delusion that my individual request will cause a corporation like Costco or Safeway to change their shelf space allocation to different labels. I didn't have to "ASK" for it before privitization. But I do completely agree with you that the breadth of selection ahead may well not be for the better. I have already noticed local outlets doing close-outs on various labels over the past few weeks in order to narrow the already meager selection even further.

                                                              Kaleo's basic observation that prices have climbed and selection (for those who do not reside close by the super stores you mention) has dwindled remains true. The retailers are the beneficiaries of the change, not the consumers.

                                                              1. re: Gizmo56

                                                                Completely agree with your last statement.

                                                                But to answer the question that is this thread topic... it's workin' out just fine, since I'm more of a wine drinker anyway! ;-)

                                                      2. re: GreenYoshi

                                                        I've got to say that this 'rebuttal' confirms everything that Kaleo said. The faith you demonstrate is palpable.

                                                        1. re: GreenYoshi

                                                          Thanks for saying what I (not an economist) could not. I see nothing wrong with a store stocking what sells. Most people know they're not going to find specialty items at Safeway/QFC.

                                                          When we had the State Stores I found them all to be more or less the same. I visit California regularly and find it to be the similar there. Just like with food; you want a special item, you go to a specialty store.

                                                          1. re: GreenYoshi

                                                            Hi, GY:

                                                            Gee, I was just responding to the comment "Must not be much of a demand for it." Of *course* there's some demand for it, otherwise it would not be made for sale--at least for long.

                                                            You have a strange view of subsidies. The state (aka we taxpayers) subsidizes plenty, and I for one would rather the state's 6.9 million people subsidize Gismo's rare Midori and your 1x/lifetime Galliano purchase (and really, try to quantify that "cost"!) than I would the Costco/big grocery chains oligarchy.

                                                            We *could* take a brave stand against subsidies by privatizing every mile of public right of way, too. Live in the mountains? Not much demand for roads there. Wanna drive to a subsidized pro sports arena? Gonna have to pay RoadCorp. Those horrible subsidies to put out fires and rescue people should go, while we're at it.

                                                            Yes, WSLCB "cost" the taxpayers something, if by that you mean their overhead. But revenues were amply covering that cost AND generating the same gross level of tax revenue as liquor sales--supposedly--do now. We taxpayers "saved" that "cost" by agreeing to crappy selection at much higher prices. I say let the invisible hand work--if it would just take the other hand out of my pocket

                                                            I was in Oregon over the weekend, and even the smallest state-run socialistic stores have a wider selection of spirits than Costco, Bevmo, the few remaining WSLCB skeletonized stores, Esquin and the grocery stores. I haven't been to Wine World yet, but I'd be surprised if they come close.

                                                            I'm gonna look into the Oregon price list and do a little comparison. Might take a few days...


                                                            1. re: kaleokahu

                                                              Ok, here we go. Two things from the various discussions that recently spawned.

                                                              1. Actually, as others have noted, I think saffron is a PERFECT example of the free market at play. 20 years ago, you had to go to a special market to get the exotic spice, but as demand grew and more and more home cooks wanted to try their hand at paella or saffron rice, big supermarkets saw an increase demand that warranted them stocking it regularly. If Midori cocktails become the rage over the next 5 years, you can bet more stores will carry it. For now, it's a specialty item and you have go to speciality stores to get it (very much like saffron 20 years ago.)

                                                              2. The economic principle I think you're missing when not acknowledging the subsidy that existed before is "opportunity cost". Even if the state liquor stores were running at a profit (which I agree they were), if they were not maximizing profit (by stocking lower dollar profit item like Midori) there is some net cost to taxpayer. That is, they COULD have been making more money for the state than they were. That's effectively a subsidy.

                                                              Now, I don't mind that (and actually think that's right), since the government was restricting liquor to only their stores and should be acting more as a public service than a retail operation. But that's what it was.

                                                              The convenience of having Midori or Galliano readily available is not free. WSLCB stores regularly carrying it came at a certain cost. And just like a sports fan or rural resident benefits from the public stadium or country road, you (as a lover of specialty booze) benefitted from the WSLCB not optimizing for profit but rather citizen satisfaction. Again, nothing wrong with that, but let's recognize it for what it is.

                                                              Overall, let's remember that businesses (especially large corporations) do not exist to be convenient for you, they are there to make money. If you don't like it, you should pay the premium to support small, independent stores that are a little more concerned about providing selection and service that you may want. For me, I'm good with the price and selection of Costco, Total Wine and others like them (with the occasional stop in a specialty place like Wine World for something I can't get otherwise).

                                                              1. re: GreenYoshi

                                                                "The convenience of having Midori or Galliano readily available is not free. WSLCB stores regularly carrying it came at a certain cost."

                                                                GY, We now pay more and have less selection. Having giant retailers taking profit has come "at a certain cost" on top of the what consumers had to bear under the old regime. It is odd that you say that there was "a certain cost" connected to the lower prices we paid when zero profit were being taken at each level in the supply chain.

                                                                And, again, selection at Costco pales compared to selection at WSLCB. Selection at Total Wine and the few other super stores is good, but these stores are only accessible to a small portion of Washington's consumers.

                                                                You say "you should pay the premium to support small, independent stores that are a little more concerned about providing selection and service that you may want" but the law forbids "small, independent stores" via the square foot rule.

                                                                "Overall, let's remember that businesses (especially large corporations) do not exist to be convenient for you, they are there to make money." Yes, please, let's all remember that, we voted to allow them to take additional money out of our pockets when we buy liquor, and that's why we now pay more and have a more narrow selection.

                                                                1. re: GreenYoshi

                                                                  Hi, GY:

                                                                  Saffron isn't something the state has handed to the cabal as a monopoly.

                                                                  Oh, I'm recognizing the opportunity cost, all right. WSLCB could have banished your bottles of scotch and boubon to make room for heroin or slaves to maximize its profit. Why should we as taxpayers pay the opportunity cost of subsidizing your favorite bottle when there's money to be made pushing and slaving?

                                                                  "Businesses don't exist to be convenient to consumers." Is *that* what they're teaching at Wharton and U of Chicago these days? We're doomed if it is. That statement is a legal tautology and is quite useless for anything other than apologia.

                                                                  In a very important way, retail businesses *do* exist to be convenient to consumers, at least in a free market. If they sought to be *in*convenient, they'd be OUT of business.

                                                                  Small, indie liquor stores with a selection and prices comparable to the old WSLCB regime? Where do I go to find them, California or Louisiana?


                                                                  1. re: kaleokahu

                                                                    Kaleo, Jfood and I are grads of U. of Chicago and Wharton, and I think you get our nod of agreement.

                                                                    1. re: Veggo

                                                                      Hi, Veggo:

                                                                      Well, add my Stanford to the mix then.


                                                                    2. re: kaleokahu

                                                                      That's absolutely right, we don't have those small, indie liquor stores. That's NOT the free market, that's specifically part of the law that PREVENTS free market competition. Your "free market doesn't work" argument is bunk when you don't have a free market.

                                                                      The free market equilibrium state here is one where large corporations do the best at providing the mass market vodkas and whiskeys (at lower prices, which is happening despite Gizmo's unsubstantiated claims...) while specialty stores (with higher prices/margins) provide more unique selection to a specific customer set.

                                                                      And did you really just compare heroin and slaves to the retail sale of alcohol? Maybe you should just bring up Hitler somehow and make the craziness or your argument complete...

                                                                      I tried my best to actually have an intelligent conversation about this, but if that's where you're going to take this, I think I'm done here.

                                                                      1. re: GreenYoshi

                                                                        "(at lower prices, which is happening despite Gizmo's unsubstantiated claims...) "

                                                                        Please substantiate your own claim of "mass market vodkas and whiskeys," or indeed of any specific product, having a lower price at the register -anywhere- post-privitazation. That is not my experience.

                                                                        You previously provided us with a link to an old WSLCB price list and made a vague claim that you are getting ~something~ at a lower price at Costco, but failed to specify what is less expensive and also admitted you weren't sure of the final cost at the register after taxes. And, of course, Costco charges a membership fee and is not present in communities large and small, state-wide.

                                                                        But I am glad you agree that the law written by giant corporate retailers to take over the fomerly public monopoly is anything but a free market manuever.

                                                                        1. re: GreenYoshi

                                                                          Hi, GY: ""And did you really just compare heroin and slaves to the retail sale of alcohol? Maybe you should just bring up Hitler somehow..."

                                                                          Why, yes I did, as the absurdity we end up with when we start down the "opportunity cost"/subsidy rabbithole. Argumentum ad absurdum has been a mode of intelligent conversation since at least 500 BC. The offensive part would be comparing your debate opponent to Hitler.

                                                                          Hmmm... Since you requested it, how about if we agree that Der Fuhrer was, among other things, a great salesman, and a meta-salesman at that--he knew what to sell (and not sell) so as to maximize his own evil kind of profit like no one in history. We could say with some force he was perhaps the greatest bunk salesman ever. What would be the "opportunity cost" of WSLCB persisting in making Midori available to Gizmo at a reasonable price, if they could just return a greater profit by turning over the state monopoly to Adolph (if we could find him on the correct desert island)? Would it not be irresponsible *not* to do so under your analysis? I could prolly do better with Mussolini than the Paperhanger, but it was your request...

                                                                          Sorry if I gave any offense.


                                                                        2. re: kaleokahu


                                                                          Arizona. I lived in Tucson for 30 years before moving to Seattle. They have pretty open liquor laws, and here's the scenario that evolved:

                                                                          Until recently:

                                                                          Grocery stores carried bulk liquor, big plastic bottles of major brands, plus a small selection of "luxury" liquor and mixers like Grand Marnier, Remy Martin, Crown Royal, Drambuie, etc.

                                                                          Local liquor stores (small stores, at or smaller than the size of a convenience store, typically) carried smaller bottles of major brands (pints, fifths, etc), 350's of both major brands and liquors that catered to the make-up of their neighborhood such as a better tequila selection, or lots of vodka and Jagermeister, etc. This stores varied in quality/cleanliness/selection based on the affluence of their neighborhood

                                                                          Specialty stores (there were two or three in town) carried a wide variety of unusual or high end liquor at a considerable mark-up, and usually also had excellent wine and beer selections. They catered to the liquor equivalent of Chow-Hounds (Booze-Hounds?), and often had one or two bottles of that weird liquor you just heard of and wanted to try. They also carried the super-premium luxury liquors like the $100+/bottle scotch selections and single barrel bourbons.

                                                                          Lately, some of the booze superstores arrived (BevMo etc) with a much larger floorspace mixing the specialty and supermarket models, but at a higher price point than the super markets, and with less over-all selection then the specialty stores.

                                                                          1. re: Booklegger451

                                                                            Hi, Booklegger: "Local liquor stores (small stores, at or smaller than the size of a convenience store, typically)..."

                                                                            That's what we're missing here. Costco and Big Grocery wrote our law to *exclude* this sort of competition. You need I believe 1,500 square feet of floorspace (even though most grocery and drugstore liquor outlets have only a partial aisle or an island of liquor).

                                                                            The way I look at it, pretty much everyone in the state had a "specialty store" within a reasonable distance before the Costco initiative. Now, we have a handful statewide.

                                                                            I would *love* to see small corner liquor stores to keep check on the cabal's abuses.


                                                                            1. re: kaleokahu

                                                                              From friends in the business I hear the its all about the distributors....and their ability to manipulate prices. It is not the retailer! With the state out of the wholesale business I understand a few BIG wholesalers control most of the distribution, and the prices.
                                                                              And you may remember that the first initiative that allowed corner stores was turned down by the voters who feared "liquor everywhere."

                                                                              1. re: DonJ

                                                                                You mean that the first initiative was turned down because it wasn't bankrolled by the 800 pound gorillas. Or at least I'd like to see some data for your assertion.

                                                                                And my friends in the business tell a different story than yours do.

                                                                                1. re: seattle_lee

                                                                                  No...I think Costco did sponsor the first initiative also...but my memory may be poor. I seem to recall them saying they wrote the next initiative to take into account the fear of selling liquor in the gas stations, and 7/11's.

                                                                                  I think your friends are misleading you about the power of the distributors.

                                                                                  1. re: DonJ

                                                                                    The retailers blame distributors and the distributors blame taxes and fees.

                                                                                    Nobody owns up to the fact that both add a mark-up and take their profits, which consumers are now paying as an add-on for the first time.

                                                                                    "Large retailers blame the higher prices on distributors who fought the initiative and lost.

                                                                                    "Distributors are taking a huge margin in the middle," said Joe Gilliam, president of the Northwest Grocery Association, citing what he estimates as a 30 percent markup.

                                                                                    "Over time there will be competition, and distillers will complain," said Gilliam, whose organization counts Costco, Safeway and other big grocers among its members.

                                                                                    The distributors disagree.

                                                                                    "My understanding is that (distributors') margins in Washington are as low as anywhere in the country, and suppliers are not very happy about it," said John Guadnola, executive director of the Washington Spirits & Wine Distributors Association."


                                                                                    1. re: Gizmo56

                                                                                      Thanks for the clarifying info. My understanding is that with WSLCB out of the picture a few large distributors are monopolizing the situation, creating the possibility for price manipulation that didn't exist with WSLCB in the middle. But I did hear that from a small distributor who felt he was going to be edged out of the market( he was bought by a big California (I think) company about 6 mos after the law went into effect.
                                                                                      I voted for the new law thinking about how well it works price and distribution wise in California. i didn't know that they don't tax liquor in California.
                                                                                      I think I have access to a broader variety of liquor...but it sure is expensive!

                                                                                      1. re: DonJ

                                                                                        At least you have access. I have marginally better convenience, much higher prices, and a dreadful selection, absent making a long drive, and I'm afraid most of the state's population is facing the same thing.

                                                                                        So, in reality, I only have "convenience" in that there are more locations at which I can spend lots more with next to nothing to choose from.

                                                                                          1. re: Gizmo56

                                                                                            Excellent word choice, that: dreadful.

                                                                                          2. re: DonJ

                                                                                            And a lot of people did not understand that other states have different tax systems than Washington and we can't just ignore old laws. After prohibition, Washington voters decided to use liquor taxes to fund public goods (schools, hospitals, public health...), and we've spent the century since maintaining and strengthening these services. Whatever voters decide about distribution systems, fee and tax revenues must at least cover mandated costs in Washington. Not California, which has income tax, Hollywood, cheap booze, the Sierra Nevada and 38 million people, for Pete's sake.

                                                                                            1. re: mrnelso

                                                                                              And to me that brings us back to thinking about overhauling our very crazy tax system.

                                                                                              1. re: DonJ

                                                                                                Study Ron Sims' campaign for Governor in 2004 to see how receptive Washington voters here are to "overhaul."

                                                                                                The post-privitization higher prices/reduced selection here really have next-to-nothing to do with our admittedly nutty ways of raising revenue.

                                                                                                1. re: Gizmo56

                                                                                                  The high level of taxation of liquor sales certainly is an example of our nutty ways of raising revenue.

                                                                                                  1. re: Gizmo56

                                                                                                    Sure...and the strong turn down of the Bill Gates Sr. Income Tax proposal a few years ago.

                                                                                          3. re: DonJ


                                                                                            1. Costco did support 1100...but they spent on it only a fraction of the 22.5 million that they spent on 1183, I think (exact data on their 1100 spending is difficult to find) [EDIT: they spend nearly $4 million on 1100]. Given the narrow margin by which 1100 was rejected, it seems pretty likely that it would have passed given the extra funding. It might well have passed if it had been on the ballot without 1105. Hard to say, and we'll never really know.

                                                                                            2. I'm pretty sure that my friends in the business aren't misleading me about the power of the distributors. And I'm 100% sure that any analysis that involves "the power of the distributors" without distinguishing between the size of said distributors is vapid at best. Because the bill was written to the advantage of large businesses, both retailers and distributors. The real story is obviously more complex than the simplistic version your ITB friends are feeding you, yet you somehow dismiss my friends' version of the story without even knowing what it is. I have friends who work at both large and small distributorships. It's pretty damn obvious that their businesses have different opinions of 1183.

                                                                                          4. re: seattle_lee

                                                                                            A fairly good summary of the 2010 failed ballot initiative for privatization can be found here:


                                                                                            Note that Costco spent $3.5 million+ on I-1100 and then ponied up a whopping $20,880,659.80 a year later on I-1183.


                                                                                            Obviously, there was a concern that both initiatives might create more access to alcohol for minors. Costco seized on that argument as a fig leaf for the square foot rule, by focusing on the fact that liquor could not be sold at convenience stores (as though there is no middle ground between the square footage of a 7-11 and a huge supermarket or big box retailer).

                                                                                            And WSLCB is developing data that shows privatization is resulting in lax id-checking, despite the current scheme. For example: http://liq.wa.gov/pressreleases/tri-c...

                                                                                        1. re: kaleokahu

                                                                                          Try *10,000* square feet: "Except as otherwise provided in (c) of this subsection, the board may issue spirits retail licenses only for premises comprising at least ten thousand square feet of fully enclosed retail space within a single structure,..." RCW 66.24.630.

                                                                                          In May there was a proposal to allow more smaller stores by tweaking the exception to the 10K square-foot rule for stores in underserved "trade areas," by measuring such areas in terms of driving distance, perhaps it was 20 miles? Not sure about the latest on that.

                                                                                          Editorial: To me the 10,000 square foot rule was and is the most pernicious part of this legislation and the most naked assertion of big box/Costco power and perversion of touted free-market principles. I could go on at length about the absurdity of correlating store floor space with urban blight and alcoholism. I was aware of this at time of voting, but was duped into believing that the initiative was on balance pro-consumer and revenue-positive. Fool me once...shame on...you (or me?) How does it go again?

                                                                        3. re: jlbwendt

                                                                          I believe there is certainly a steady demand for Midori.

                                                                          The problem, I believe, is the square foot rule that the giant retailers built in to the initiative to award themselves a shared monopoly. In a more free market (example: California) the medium-sized liquor stores will compete on selection, as well as price. Costco, Safeway, Walmart, RiteAid, etc, see their shelf space as a precious commodity, and thus only want to stock labels that will turn over on a daily basis.

                                                                          This is why Smirnoff, Jim Beam, Jose Cuervo, etc. dominate the small spaces the big chains allot to liquor, and it is why vodka often occupies much as half of the real estate on their shelves.

                                                                          I am glad the grocery stores don't take the same approach to spices, or all we would get would be salt and pepper.

                                                                          The chains approach liquor as a sideline aspect of their operation,s and an easy windfall for profits, if they stick with a narrow range of mediocre best sellers.

                                                                    3. re: Gizmo56

                                                                      Just as you've had the Midori effect I've found the opposite with whisky. Even the big State liquor stores didn't have a great and varied selection of these spirits, I've found a much better selection at WIne World.
                                                                      Having said that, I still believe that the State should balance their budget in ways other than taxing booze.
                                                                      Similar craziness in taxing is with newly classified medications.
                                                                      If the State licenses a substance as a medication, why do they tax it?
                                                                      Doesn't make sense does it?
                                                                      More tax craziness: If there were a sane tax policy, religious institutions would pay real estate taxes. i.e. Why should the taxpayer subsidize a religion in which they don't participate?

                                                                      None of this helps with the Midori effect and I feel your pain.
                                                                      So, get a melon, soak it in vodka for a year, add sugar...

                                                                      1. re: JayDK

                                                                        I am not arguing that the selection at the "super stores" is not good. It is. The problem is there are only a limited number of super stores, and there is a new major inconvenience for many of us in getting to them, because of distance.

                                                                        As I mentioned at the outset, my nearest super store is a 40 minute drive in each direction. During the WSLCB era I had three state stores, all of which stocked Midor i (for example), within five to ten minutes of my home.

                                                                        I live in King County, and access to the selection at such stores is far worse for residents in most other counties in Washington than it is for me. The law continues to prohibit those stores from shipping their liquor products, so privatization has made many formerly easily found products completely disappear from many Washingtonians' local communities.

                                                                        I don't want to get into a discussion about tax policy on liquor, non-for-profit organizations, medications...that's a whole other subject.

                                                                    4. usually when some law is passed as "privatization", it's anything but

                                                                      the government "selling" the "right" or licenses to sell liquor is BY DEFINITION NOT free market. So let's not pretend any of this is a commentary on the free market

                                                                      maybe things are fritzy now, but coming from a state that, from what I understand, already did this long ago (New Jersey), we definitely have plenty of the obscure liquors available in a lot of places, and stuff's pretty convenient. I've never been in a state where the state controls liquor sales (what does that even mean?), so I don't know what it's like. But New Jersey's liquors are pretty convenient except for blue laws. You guys couldn't buy beer in a supermarket before? that's weird.

                                                                      1 Reply
                                                                      1. re: EdwinNJ

                                                                        We could always buy beer and wine in our supermarkets. The state's monopoly was for the distribution and sale of spirits.

                                                                        I think all states "control" liquor, in that there are always state-based regulations that govern sales, even if they are limited to issues like age and hours.