Initiative 1183 – A Sign of Change For the Liquor Industry?
On November 8, Washington voters will have the opportunity to privatize liquor sales via Initiative 1183. In Washington, as in 18 states in the US, liquor sales are controlled by the states.
But 1183 goes beyond abolishing the state liquor store. It’s causing trouble in the liquor industry by threatening the way of life of many in the business – the three-tiered liquor, wine, and beer distribution system that was set up post-prohibition. Manufacturers sell to distributors/wholesalers, who in turn sell to retail or restaurants.
Many states ban quantity discounts on liquor, beer and wine. 1183 would continue the ban on quantity discounts for beer, but remove the ban for wine and liquor sales, meaning that retailers could negotiate for cheaper prices on wine and liquor directly with the manufacturers. Many wholesalers oppose it.
John Guadnola, director of the Washington Beer and Wine Wholesalers Association, says “I-1183 would emasculate the three-tier system of regulation, [and therefore] discourages excessive drinking. I don’t think alcohol should be marketed like oatmeal, myself,” Guadnola further states.”
Costco, based in Washington, is a major supporter of the initiative, which would give them and other bulk retailers and restaurants greater buying power on these products.
Washington isn’t the only state confronting changes in the alcoholic beverages industry. Massachusetts wholesalers are pitted against small brewers with their own dueling proposals; Wisconsin (home of MIllerCoors) is considering legislation that prevents brewers from owning beer distributorships – a move they fear would allow Anheuser-Busch to drive state distributors out of business.
Industry consolidation and the emergence of craft brewers, among other factors, have changed the realities of the beverage industry in the US since the 3-tier system was created and legislatively enforced. What do you think about altering or introducing new regulations to respond to these industry changes? Is change inevitable? Is it good for consumers, businesspeople, or both?