Liquor sales law changes could hurt small local retailers

A proposed change to laws affecting liquor stores in the state is sparking concern among area independent sellers. The law will be discussed during the 2012 legislative session in Hartford, which begins Feb. 8.

On Jan. 14, Gov. Dannel Malloy released a proposal for revamping Connecticut’s liquor sales laws, entitled, “Modernizing Connecticut’s Liquor Laws.” Details can be found online at www.governor.ct.gov/malloy and search for “blue laws.”

Independent retail liquor store owners in the Northwest Corner said they are less worried about the longer hours in the plan than they are with proposed provisions that would give a price advantage to larger chains and stores.

Extended hours

The proposed extended sales hours provision would allow package and grocery stores to sell alcohol until 10 p.m. (instead of the current 8 p.m.); allow Sunday sales; eliminate some mandated holiday closings; and allow on-premises vendors (bars and restaurants) to sell alcohol until 2 a.m. seven days a week.

Ira Smith, proprietor of Kent Wine and Spirits, said, “Sunday sales are a reasonable measure that provide more convenience for the consumer. That is not to say I did not mind a legislated day off. But if it is more convenient for the consumer and the market asks for it, of course we’d go along with that.”

Warren Carter, manager of Salisbury Wines, echoed Smith’s sentiments.

“The argument has fallen around whether smaller stores can afford to be open, although there’s nothing requiring them to be open. That’s an important distinction,” Carter said. “There’s no question we’re losing revenue to bordering states. In terms of a logical argument against it, I don’t have one. I’m not wild about opening Sunday because it’s nice to have a day off, but I can’t argue from an economic standpoint that Connecticut stores should stay closed.”

If Malloy’s proposal comes to fruition, Carter said he’d consider opening for limited hours on Sunday. He suggested that each store needs to look at the profitability of opening an extra day.

“If it’s not profitable, don’t open,” he said.

Rick Hotaling of Rick’s Wine & Spirits in Sharon, is opposed to the extended hours and days.

“I’ve always maintained ‘no.’ For 17 years I owned a convenience store that was open seven days a week. I worked seven days a week. I don’t want to work seven days a week nor do I want to force my help into it.”

Robain Dionne, owner of Lakeville Wine & Spirits, is also opposed to opening on Sundays.

“Everybody deserves a holiday,” she said. “I don’t see a great deal of increased revenue in this instance. It will put the burden on the shop owners because someone has has to be here. We’re used to being on the border. Everyone around here is going to New York and Massachusetts.”

Invitation to chain stores?

Overall, though, the question of store hours seemed less worrisome to local liquor retailers  than the parts of proposal that impact purchasing protocols. The governor, in his proposal, is saying the changes would be a way to invite competition among retailers.

One store owner would only comment anonymously, but said, “This is basically an invitation to large chains to come into the state. The second thing they are doing is looking at changing the way goods are priced. In layman’s terms that means whoever has the deepest pockets will get the lowest [wholesale] price.”

Under current regulations, wholesale liquor distributors must charge all retailers the same price per bottle and cannot offer quantity discounts. The small independent retailer pays the same per-bottle price as the large retailer who buys 100 cases at a time.

If the governor’s proposals are adopted, wholesale distributors would be able to charge lower per-bottle prices for higher-quantity purchases.

One store owner gave this example: “If I buy one case of Southern Comfort or 101 cases, it all costs me the same per bottle. With this change it sounds like the big guys can buy 20 cases and get five cases free. They now have 25 cases, for which they paid for only 20. They can drop their prices significantly or just make a much higher profit margin. The small guy can’t afford to tie up money in inventory like that.”

Could be the end for many

A salesman for a liquor wholesale distributor, who also would not give his name, was interviewed at the Cornwall Package Store. He said, “If these pricing changes go through, 30 percent of the small independent package stores in Connecticut will be out of business within 12 months.”

Hotaling said, “My prediction is, if all the proposed changes are enacted, it will be difficult for the small guy where there is a big guy down the street. Maybe here in the Northwest Corner that is not a problem so much. It would be a boon for the big stores; they have the cash flow already. It’s all about cash flow.”

“Here is the part they don’t tell you,” the anonymous storeowner said. “The price of liquor, in terms of being competitive from state-to-state — and this is an issue all retailers care about — the issue of being competitive interstate is determined not by any kind of rule about pricing. It is determined by the level of excise tax levied on the products at the state level, exactly the same way as gasoline. Coincidently, Connecticut has among the highest gas prices in the country, and that is not because gas station owners make more money. It’s because Connecticut levies one of the highest excise taxes on fuel before it ever gets to the retailer. This is exactly the same situation with liquor. The retailers are not getting rich; the money goes to the state.”

One store owner estimated that liquor taxes went up 20 percent last year.

Richard Bramley, owner of the Cornwall Package Store, said, “From my perspective, this whole thing revolves around four points. First, consumer convenience. Second, consumer pricing. Third, revenue for the state. Fourth, underage drinking and alcoholism.”

When asked to explain what he meant, Bramley said, “It is possible what the governor is talking about may help consumer convenience. I am not convinced it will help consumer pricing. I’m reluctant to say it will help state revenue; if it does, it will be marginal at best. I have a concern about underage drinking and alcoholism. With bars open until 2 a.m., beer sales in convenience stores and increasing the availability of alcohol on Sundays, these are things that lead to more problems, not fewer problems.”

Darryl Gangloff contributed to this article.