Liquor sales switch hurts wine volume, helps wine revenue
By DAN WHEAT
KENNEWICK, Wash. -- Wine sold in Washington has declined 2 percent in volume while increasing 2.8 percent in dollars since the state got out of the liquor business, a wine distributor says.
Initiative 1183 passed by 59 percent in the Nov. 8, 2011, election and ended the state monopoly on liquor sales. Some 300 state liquor stores were closed, their licenses were sold to private businesses and liquor has since been sold in retail stores of a certain size.
That has altered the landscape and presented new challenges for the wine industry, Dan Ewer, a senior vice president of one of the state's largest wine distributors, Young's Market Co., Kent, told the annual meeting of the Washington Association of Wine Grape Growers. The four-day event was at Three Rivers Convention Center in Kennewick.
The state is now more attractive to big national players, Ewer said. Total Wine and BevMo each plan to open a dozen stores selling wine, liquor and beer, he said.
"Spirits (liquor) has opened the avenue for these guys because it is so much more profitable," he said.
In grocery stores, liquor is cutting into wine shelf space and advertising, he said. Grocery chains are moving to bulk purchases of wine and distribution from their own central warehouses instead of each store buying the wine it wants, Ewer said. That contributes to less selection, he said. The hope is, he said, that lower-volume wines will be picked up by the new, independent stores that were formerly state liquor stores.
All of the changes increase risk, he said.
"We're at risk of declining sales if we can't promote it as much," he said. "It's too early to tell the impact but there's risk and concern."
In 2012, $346 million worth of wine was sold in Washington compared with $375 million worth of beer and $304 million of liquor, according to Nielsen tracking, Ewer said. That's 36.6 percent beer, 33.7 percent wine and 29.6 percent liquor in dollars.
By cases sold, it was 14.8 million (69.6 percent) beer, 4.4 million (20.7 percent) wine and 2 million (9.6 percent) liquor, he said.
By the case, wine volume has declined 2 percent each month while revenue increased, he said.
"So people are paying more for the same bottle of wine or buying higher-priced wines," he said. A big component is price, the average unit price went up 35 cents for Washington-produced wines and 44 cents for all wine sold in the state, he said.
The good news, he said, is that Washington wines are selling at a faster clip than total wine.
"That should make everyone in the room," he said, "feel a little warmer."