I wonder if we would have more local cheese crafters if we had a law that said all cheese could only be sold in cheese stores.
In response to danga - Those are great questions, let me see if I can shed some light.
1. The 3-tier system was set up largely in response to organized crime and its involvement with alcohol during prohibition. The system requires that the production, distribution, and retail of alcohol not be controlled by a single entity. This was thought to give fair market access and has largely succeeded since prohibition. There is a good entry on Wikipedia on the subject at http://en.wikipedia.org/wiki/Three-tier_(a…). Colorado, along with many other states, has made exceptions to the system as necessary. For example, in Colorado, small brewers can distribute beer themselves as long as they hold a wholesalers license. The most common exception is the brewpub, which produces and retails without the need for a distributor. There are pros and cons to the 3-tier system which are beyond the scope of this post, but I hope that gives you an idea.
2. Initially, I don't see the 3-tier system at play much in this debate. Down the road it will come into play. The large grocery and big box stores don't like the distributor as a middle man. The more power we give to these large corporations the more likely it is they will try and dismantle the system to their benefit. The best example so far is Costco v. State of Washington - you should research the case if you are interested. Basically, Costco wanted to buy direct from the large brewers and bypass the distributor. This may seem like a more efficient system, but it opens up many questions about state control of alcohol, excise taxes, fair access to market, etc. Again, the analysis is beyond the scope of a post, but there is much written about it online.
3. I'm sure all liquor stores and craft brewers would try to adjust to the ramifications of HB1284 if it were to pass. These adjustments may include downsizing, closing altogether (primarily smaller liquor stores and breweries), raising prices, stopping production of specialty and seasonal beers, reducing in-kind and monetary support to the community, and sending beer out of state. The landscape of the industry will change significantly because the regulatory system we have built our businesses around will have changed in the middle of the game.
As to the "compelling evidence by supporters regarding other states" it's important to separate the spin from the facts. There really isn't a compelling example for comparison. For example, in other states such as California, the craft brewing industry evolved with grocery and convenience store beer sales already in place. The rules were set before the game began. If you look closely, the beer culture in other states is actually quite different than Colorado's—fewer breweries, higher prices, and much less diversity and selection. That's why Colorado—not California, not Oregon, not Texas—is known as "the Napa Valley of Beer."
Having said that, the only state in the last 25 years to authorize grocery/convenience store sales was Iowa (1986) and because it was a state-controlled market before, it isn't really applicable here. The closest comparison might be South Dakota. In 1987 SD increased the number of licenses per owner from 1 to 3 (with a sweetener for grocery stores - an additional 3 liquor store licenses for them). Remember, Colorado has a 1 license per owner system - anyone can own 1 liquor store license including grocery and convenience stores. The impact in South Dakota is as follows:
US Census 1985 - South Dakota - 383 independent liquor stores, 262 convenience stores/grocery stores
US Census 1990 - South Dakota - 159 independent liquor stores, 533 convenience stores/grocery stores
US Census 2005 - South Dakota - 116 independent liquor stores, 608 convenience stores/grocery stores
If this gives us any indication, the estimate of 900 liquor store closings in Colorado may be low. And while some may think of this as just the cost of making this transition, they're ignoring the fact that even liquor store owners have families to support, and their life savings are likely wrapped up in their businesses.
The other thing to remember is that this proposal doesn't create an even environment in which the liquor stores can compete. As originally written, HB1284 doesn't change any of the current requirements for liquor stores - they would still not be able to sell food, they could still only hold 1 license, they would still require approval by the local licensing authority. None of these requirements would apply to grocery/convenience stores. It's my understanding that there have been a couple of amendments proposed that would allow liquor stores to sell non-perishable food and have additional licenses as long as the stores were less than 5,000 square feet. I don't see how that helps them to compete - I'm not even sure what non-perishable food is and I don't know how a liquor store will compete with a big box store if they're limited to 5,000 square feet. It's clear from these amendments that the grocery store lobby is not interested in an even playing field.
I hope that helps.
In response to afluffypinkcloud - thanks for taking the time to present a thoughtful post on the subject. In your post, you ask some questions that I would like to answer:
"Are all of your current distributors headquartered in Colorado?"
We only sell beer in Colorado - we distribute our beer ourselves in Southern Colorado and use a Denver-based distributor for the rest of Colorado. So in our case, the production, distribution, and retailing are all in Colorado.
"Is King Soopers headquartered in Denver?"
No - and this is really an important part of the issue. King Soopers is part of Kroger (along with City Market, Loaf'N'Jug and KwikStop, among others) and is headquartered in Cincinnati. None of the major grocery or convenience stores are headquartered in Colorado - not Safeway, King Soopers, WalMart, 7-eleven, or Whole Foods.
"… for 'sends our money out of state' - how much money are we talking about?"
Based on an economic analysis by the firm Summit Economics (link here: http://www.bristolbrewing.com/cp_upload/Ec…), the dollar sales shifted from Colorado liquor stores to out-of-state grocery and convenience stores would be $700 million annually. This would translate to roughly $140 million in retailer margin sent out of state annually (based on standard industry mark-up for beer).
"I would like to ask if, beer is sold in chain grocery stores, there is any research done that indicates the consumer price of the (microbrewery) beer will fall, remain constant, or rise?"
The study referenced above predicts that beer prices will fall temporarily as the chain stores drive liquor stores out of business. Beer prices will then increase back to existing levels. Interestingly, any temporary decrease in beer prices will be offset by increases for wine and spirits as liquor stores struggle to survive. Anyone who has bought beer in California knows that grocery stores are not the answer for low beer prices. My own opinion is that with fewer companies controlling beer sales, prices will actually rise (see competition below).
A few additional comments on some of your points:
"I think that the microbreweries in Colorado would be excited at the prospect of increased sales due to convenience"
For the reasons given in the original article, I am aware of no Colorado microbreweries that support this legislation and concept. Our beers are not likely to be the ones you're going to find on grocery and convenience store shelves.
"This comes back to competition and sales; the market."
After the estimated 900 liquor store closings, the number of companies selling beer will have actually decreased (remember, there are only a handful of grocery and convenience store chains), which will create less competition. Put another way, there may be more outlets to buy beer, but less companies selling it - the individual stores of a particular chain don't compete with each other. In the end we go from 1600+ businesses competing to less than 800 or so.
"Maybe I like microbrews from Utah, not Colorado"
You will have a much easier time getting your local liquor store to stock a particular favorite beer than you will with a grocery store. That's exactly why Colorado has the best selection of beer in the country - the store owners are competing to keep you happy. How would you even begin to request a particular beer to be stocked at Safeway?
Once again I appreciate the questions and point of view. It appears that we see some of these things differently and I respect that.
Representative Liston is certain that he and the legislature know what's good for my business - I beg to differ. It's a bit like the old saying regarding bacon and eggs for breakfast - the chicken has a contribution to make, but the pig is fully committed. I'm feeling a lot like that pig right now.
Mike's two arguments that prices would be higher for beer in grocery stores and that local products would be squeezed out are both specious and, simply, wrong. Volume buying drives prices lower. I just got back from Seattle, where I bought a 6-pack of Pike Place Pale Ale at Kroger-owned QFC. As a King Sooper card holder I bought that pack (which was regularly 8.99) on sale for 6.99. Pike Place is a local craft brewery in Seattle that has a significant presence in the nationwide chain's stores in the Northwest.
However, like Mike, I am concerned for the private liquor store owner and its employees. Now is not the time to affect the jobs of thousands of workers.
Also legit is Mike's argument that you would not be able to get the variety or the information at a grocery store that you can get at a mom-and-pop. Your mom-and-pop will also handle special orders through its distributors. Your favorite obscure beer not in their cooler? The owner will gladly check with his distributor and get it for you if he can. That won't happen at Albertson's. Need a keg for the church picnic? Good luck getting one through the grocery store.
And remember that this is about more than just beer. I don't know if this legislation involves grocery stores selling wine and spirits, but that will be soon forthcoming if the beer legislation passes. If you enjoy unique spirits and wines (port is a fave of mine), you will not be pleased with the selection at the grocery.
When liquor stores were closed on Sundays and the alternative for the forgetful shopper was 3.2%, I was in favor of full strength beer at grocery stores. Now that liquor stores are open on Sunday, my view has changed.
I'm in favor of this legislation not passing.
This article sure wasn't written from the perspective of anyone who has any deeper knowledge of PERA other than the past few years debate. The program was of central importance when attracting qualified persons to public service positions and has been for many the only real reward for their selflessness.
Lo siento mucho (translation: I am very sorry). As and old journalist turned legal assistant, I am, not only by nature but also by training, a questions asker. So, ask I must:
What would cause the CO state legislature to not do all it can, in these local and national, so troubled economic times , to strengthen and support local business? Are lobbyists, in any manner whatsoever, attempting to screw locals, such as Bristol Brewing Co., out of competition? Is the local, national, and international staph infection of greed and power addiction in any way whatsoever, behind this proposed legislation?
One of many reasons I support Richard Skorman for mayor is that he is adament in our needing to support small local businesses, and encourage their growth vs. their death. And, being of dual citizenship, Irish and U.S., with ancestors of the Daugherty/Donahue clan who owned a small brewery in Pueblo, to where my Irish grandmother came to in the late 1890's, and where my father was born in 1913, I support the Bristol's now, in their fight to protect their local brewery.
As we Irish say: "For God's sake, we need our stout." And beer/stout does not get better than what Bristol Brewing makes.
Response Requested: Guy seeking more information..
One thing missing from both sides of this debate is information related to the 'three tiered' alcohol distribution system as I've heard it referenced. I'm curious:
1. How does this system work? Info only here.. divorced from this debate.
2. From both perspectives, concerning the 3 tiered system, what factors are at play?
Then a third, potentially unrelated question I've not seen adequately addressed:
3. What, if anything, will prevent Colorado businesses from adjusting to this HB1284 if it passes? There is compelling evidence that has been presented by those supporting this bill regarding states that allow sales of beer over 3.2% at convenience/grocery stores. All examples reveal a competitive, thriving craft-beer market. Specific to this, what evidence exists that Colorado's market would respond in a different way?
As a Coloradan that cares about local beer markets, I'd like to be better informed. I love Bristol's beer offerings and their community involvement, and I'd appreciate if the opponents of this bill would offer more information regarding the above questions. I've heard very little in way of a exchange/debate. Instead I find each side repeating the same arguments. More dialogue please.
I agree with above comment, this guy you call friend, makes it his business to tell the already sadly misguided community of Colorado Springs terrible lies, just as most republicans this guy is only good at critisizing, twisting facts and spreading hatered
They give us no new ideas they just dog on Democrats instead of being united, giving people hope and allowing good things to happen by not obstructing passage of important legislation aimed at helping the masses in this country, they would rather see America turn into a 2nd world country while they the rich 5% continue to get tax breaks as they get their money washed and funneled to offshore accounts by billions! Brilliant. Only problem with that is: its killing America. Thats ok, because when this economy crashes, poverty stricken people become majority and the Asians no longer lend us money, you'll finally get the "changes" you've been so good at resisting, this time by force! Also it will become alot more difficult for you to continue to rob this great country.
The following is written without knowing the exact details of the current distribution chain for microbreweries in Colorado. Mark-ups, shelf space, lead times, transit times, volume deals with consumer outlets.
Let me define the “regional economy” as Colorado; “chain grocery stores” as Wal-Mart, King Soopers/City Market, Albertsons, Safeway; “domestics” as Anheuser-Busch InBev, MillerCoors, Pabst, etc.
I think this would be good for consumers on the points of implied market efficiency and convenience. I think that the microbrewers in Colorado would be excited at the prospect of increased sales due to convenience. I welcome the removal of regulations for increased competition. I disagree with the point of “sends our money out of state”, prices going up, and a loss of selection.
The regional economy
Keep in mind the money multiplier; the more money spent within a regional economy circulates (and compounds) itself. The theory and practice of the money multiplier only achieves its maximum if no money is exported out of the regional economy. The money multiplier would be near the theoretical maximum in a “vertically integrated” industry that gets all inputs and sells all outputs within the regional economy.
The local beer is still made here and employs workers in the state; both the production and the labor are taxed and contribute to the regional economy. The workers and business owners spend their money inside or outside the regional economy, etc.
Are all of your current distributors headquartered in Colorado? Perhaps money is already leaving the regional economy with the current system.
Is King Soopers headquartered in Denver? Perhaps we should help expand their revenue potential to boost state tax revenues by removing alcohol regulations.
One could argue that if you are not sourcing inputs, created within the regional economy – not just from a Colorado distributor, for your brewery, you would already be sending money outside of our regional economy.
The only loss I can off-handedly estimate is you sell to a distributor for 10-20% profit, they sell to the liquor store or chain grocery store for 10% profit, and the grocery store sells for 10-15% profit. (I think each transaction is taxed which makes the real margins lower) – for “sends our money out of state” – how much money are we talking about?
Removal of regulations
Will there be some liquor stores that close? Probably. The stores that will stay open will probably specialize in a way the grocery stores cannot.
As for breweries closing, perhaps the barrier of entry into the market is currently not high enough - perhaps there might be a lack of competition. The same goes for liquor stores; their growth and proliferation is largely due to our alcohol laws. Perhaps the current situation is not economically efficient and optimal for me as a consumer. To me, if a state law exists, and supports a market inefficiency, I think it is a bad reason for me to be stuck on “path dependency”, just because there will be a transition.
I would like to ask if, beer is sold in chain grocery stores, there is any research done that indicates the consumer price of the (microbrewery) beer will fall, remain constant, or rise? Your article mentions that prices will rise, but does not reference a reason why I think prices will fall because liquor stores will have to compete.
So an aspect I like is convenience - not having to go somewhere else might make me inclined to buy more beer. I also like the idea of magnet specialty stores, like Wilbur's in Fort Collins.
Greater selection and convenience
I think due to economies of scale the larger outlets (speciality stores and grocery stores) can also provide a greater selection of beer. Maybe I like microbrews from Utah, not Colorado.
I as well am a Colorado native – I was in Fort Collins until 24. Then I lived in Colorado Springs for three years, and I did not see a wide selection of Northern/Central Colorado breweries (Fort Collins, Boulder, Longmont, Denver) offered in local liquor stores – not much Odell’s, Fort Collins Brewery, Great Divide Brewery, etc. This goes back to regional competition, which I think does not really exist in a lot of Colorado Springs liquor stores.
Microbrewery beer is already a taste and preferences argument - we have already demonstrated our willingness to pay for a "higher quality" product. I go for micros for taste, but I can also go to “domestics” for value.
The assumption that you might not be picked up in a chain store is valid. I think the assumption that a chain store would not adjust their Colorado stores to meet Colorado demand is not completely founded. Look at California – beer, wine, liquor can all be sold in chain grocery stores. If you go to a Ralph’s in California, odds are they have more of a wine selection than the Kroger in Texas. Why would a grocery want to lose revenue to liquor store, if the liquor store is the only one carrying a popular local product?
As an anecdote, I have seen Kroger (parent of King Soopers/Ralph’s/City Market) in Houston with the only sizable local brewery, “Saint Arnold’s” occupying at least 5 spaces on a rack. If you argue about shelf space and being squeezed out by larger national breweries, I believe you. I think a large amount of national consumption is still the domestics and imports. I also assume that the chain grocery stores will also use the same local distributors?
This comes back to competition and sales; the market. I think Colorado is lucky to have Coors and Budweiser – it probably helped create and sustain our regional specialty – beer. What is good for the beer industry in general is good for you – you are ultimately competing with wine and spirits as well as any other drugs.
A retired teacher told me that whatever she gets from PERA is deducted from her Social Security benefit.
We need more balanced reporting! Amazing that the Independent had such a one sided article. But, knowing how Pam has reported over the last ten years I really shouldn't be surprised.
I think it is also important to point out that "Joe,"the average PERA retiree, is getting a monthly pension of $2,800 a month, and out of that, "Joe" pays $1,000 for health insurance. That leaves "Joe" with $1,800 a month to live on. That doesn't sound like a "sweet" deal to me!
is growth really the answer? the growth taking place throughout the world and all this economic progress is slowly killing our planet, sure our skyline might look prettier but all those tall buildings will just be more nails in our coffins. How bout less growth and more community, how bout less consumption and more preservation, our futures depend on it
As a native it also seems to be about what was torn down in the 60's and 70's such as the Burns Opera House and the ridiculous idea in the past few years of turning The City Auditorium into "lofts" instead of preserving it. I certainly want to see a vital downtown, but the Tejon Street bar scene is getting out of hand and driving normal businesses elsewhere. The parking rules and tickets the CSPD hand out chase people away and that should be considered as well.
Spot on. Great story. I was born and raised in this city and could recognize and agree with every single point. It's time this city council got some balls. Let's hope for the best with this new set up.
I think an interesting graphic would be that which you've described...
"Imagine how the city center would look if the regional headquarter buildings on the Interstate 25 corridor north of town had been built downtown; or, if the Colorado Springs World Arena and Sky Sox Stadium were downtown, instead of the south edge or halfway to Kansas."
I think citizens would be shocked to see what it would look like. I might just make that a homework assignment (fun with Photoshop).
I also had to chuckle at the bit about Palmer. If only he knew that one of the city's most historically-significant intersections (Platte and Nevada where his iconic statue stands), there exists as dilapidated gas station and the prestigious Carl's Jr. (home of the $6.00 burger). If only those who designed the statue would have had Palmer pointing at the Carl's Jr, talk about a crystal ball. Oh and only if Palmer knew that the third hotel of his they would build (the Antlers) would completely turn its back on his park and train station and instead, embrace a surface parking lot. Oh and only if Palmer knew that... I can go on, and on and on.
I think the heart of the issue is the perception of downtown and (whether we like it or not) "building things" or revitalization tends to be a catalyst for change. And yes, the city should be tasked to do this, in particular the leader of the city, lack of vision has gotten us this far.
Wow you nailed it John, I agree with everything you said 100%! I grew up in Greenville S.C. and you are right, the slum of a downtown that city used to have has been completely erased with a vibrant and attractive city center. It took around 20 years, but it happened and Greenville really is a good template for COS. You can bet that we live in a neglected city and it will take solid leadership and vision to make it the best it can be. I would be tickled to see the same outcome in Greenville for COS. Here are some of the ideas I would like to see: Bring the SkySox to Downtown! Kill Banning Lewis and the boondoggle that is SDS! Increase support for Trails and Open Space! No more sprawl (did you know the city limits of COS is larger than the City of Los Angeles?)! Make incentives for business to move back to the city center!
Seems to be all about building things. I would question whether construction is really the answer. And do we really think the City of Colorado Springs should be tasked so?
GrowthBusters & SaveTheSprings
I think most of the voters of Colorado Springs would agree with you John. These concerns have been voiced to the Mayor and city council . . . but have fallen on deaf ears.
Our next Mayor has be to an exceptional Leader!
He has to have vision, passion, be a great decision maker, a good team builder and most important be a man of character.
Just to clarify..the "Beltway" is a geographic area that comprises all the land inside I-495. To say that we're all having big parties at taxpayer expense is pretty comical. Perhaps you should get your rhetoric in order. My guess is what you are really talking about is Federal elected officials?? I live in PG county and we have a high unemployment rate and a serious foreclosure problem. There are similar situations throughout the "beltway" to varying degrees, especially in historically black neighborhoods. While it's true that many have found employment in the DC area, the majority of those folks have college degrees. In fact, we have a very high rate of advanced degrees per capita "inside the beltway". If you look at national statistics, people with college or advanced degrees aren't suffering nearly as much as those with high school or lower education. My guess is you are one of those with a Bachelors, Masters, or Ph.D. I'm also guessing that you're doing alright yourself in that you have enough time and disposable income to start a Website with no apparent revenue stream (Pot meet Kettle). Perhaps I'm wrong and you are one of the millions of unfortunate people (like myself), that are unemployed, but the tone of your piece makes me think that you really just want to capitalize on the anger so many have with their representatives in DC. By the way..where did you come up with your figure on average "compensation and benefits" (redundant) for Federal workers of $123,049? You don't site a source. Off hand I can think of about 25 people I know whom work for the Feds (admittedly a small sample size). Not single one is even close to 6 figures. Oh, and one more thing about actual residents of the District of Columbia, they pay federal taxes, just like everyone else (-Guam and Puerto Rico), but unlike everyone else, they have no representation in Congress. There is one Delegate to the House, Eleanor Holmes Norton, who was just stripped of her vote on the committee of the whole by the incoming Republican leadership.
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