On their first grocery-run of the new year, many Coloradans and Boulder County residents were delighted to find that after decades of only being able to sell low-alcohol beer, the markets they frequent had the same brews that just days prior had only been available in liquor stores.
But not everyone was happy to see the change — for many small business owners around the county and state, it meant the end of a semi-protected industry that helped local shops thrive.
The consequences are already being felt, too, according to Eric Berg, the owner of Fox Creek Liquors in Longmont.
“The effect on my business has been extremely negative,” he wrote in an email. “I have had to cut a full time employee as well as reduce hours for the employees I have.”
Berg said that before 2019, beer accounted for 35-40% of his store’s revenue.
In Boulder, Ben Kobi, the general manager and beer buyer at Pettyjohn’s Liquor and Wine, said that his store has lost hundreds of monthly customers.
“Depending on what month — a lot of the summer holidays that people are buying beer for and barbecue food for, they’re already at the grocery store, so if they just need beer they can just buy it there,” he said.
During the introduction and debate of Senate Bill 16-197, which set into motion the process that ended with 2019’s repeal of the law prohibiting grocery and convenience stores from selling full-strength beer, State Sen. Pat Steadman, a Democrat representing downtown and north-central Denver who was a primary sponsor of the bill, acknowledged that immediate change could negatively disrupt the liquor industry in the state.
During a Senate Business, Labor and Technology Committee hearing in early May, 2016, he argued that legislators should pass a law that would phase the state into new regulations, in order to avoid the possibility of voters deciding the issue through a ballot measure and enacting it right away.
“Because we have legislated these businesses to be small and vulnerable, there’s the possibility that if voters were to approve ballot initiatives, they would suddenly become vulnerable to the competition of much larger chain stores,” he said during the hearing.
Steadman also said at the hearing, though, that many Coloradans feel that the laws governing alcohol in the state are “antiquated.”
“Indeed, they do date back about 80 years to when prohibition ended,” Steadman said. “And during all that time we have required, as a matter of state law, for package retail liquor stores to be independently owned, small businesses. And we’ve not allowed the owner of one liquor store license to have any ownership interest in any other.”
The law ended up passing the house with 57 yes votes, seven no votes and one not present. In the senate, it passed 34-4, with the four no votes all coming from Republican members.
Two years later, the law went into full effect, allowing any store with a license to sell beer that was 3.2% alcohol by weight to sell full-strength beer. According to Steve Findley, the executive director of the Colorado Beer Distributors Association, beer sales for grocery and convenience stores spiked by around 20% at the beginning of the year due to them trying to fill their shelves, then leveled off later on.
On top of being forced to compete with much larger companies, as Steadman said. another factor in the loss of business that these stores are facing is their proximity to grocery stores. A consequence of the near-century of stricter regulation, in many locations, the stores popped up and were maintained as de facto wine, beer and liquor sections of adjacent markets.
Fearing ‘a huge loss’
Berg, whose Fox Creek Liquors store is less than 1,000 feet from a King Soopers, said “being next to a grocery store was essential to the health of my store.”
Suzanne Berry, owner of Harvest Wine and Spirits, which sits right next to King Soopers’ 30th Street location in Boulder, said that she wouldn’t have purchased the store in 2016 had she known what the liquor business would eventually look like after new regulations were enacted.
Overall, she said, the store has taken around a 25% hit to sales.
“It’s not a huge loss at this point, but if things continue the way they are, it will be a huge loss,” Berry said.
And though the store mostly focuses on wine, she said that fewer people coming in means that less people will pick up a bottle of wine while shopping for beer.
“(It’s) been a domino effect,” she said. “I mean it’s been all encompassing in terms of liquor, beer and wine.”
Some liquor store owners aren’t as worried about the negative consequences of the change, though, like Yvan Lehuerou, the owner of B-Town Wine and Spirits, a more boutique outlet located relatively far from a grocery store.
While he said that sales of beer have been down for him, he’s open to what he sees as the unconstrained free market working things out.
“I think it’s a… trend, it’s the way it should be — free market,” he said. “Why not?”
‘These are resilient people’
Lehuerou said that his store will maneuver and side-step the negative effects of deregulation by offering products that people “can’t find anywhere else.”
He added that larger brands that have traditionally held a lot of shelf space, like New Belgium, are being scaled down within his store.
Berry also said that her store will try to become more “niche” and “boutique,” offering wines that are picked out by staff that’s trained and certified by the Wine and Spirits Education Trust, an organization that offers sommolier-like training for retail liquor sellers.
While many stores have been rushing to adapt to the change, according to Findley, the bottom hasn’t fallen out completely for smaller liquor stores.
He said that as of this summer, there hadn’t been a significant drop in the number of liquor licenses in the state.
“We’re not seeing a lot of people go out of business but they definitely — from what I’ve been reading and hearing — their sales have dropped, and that’s shifted over to grocery stores,” Findley said.
Jeanne McEvoy, the president and CEO of the Colorado Licensed Beverage Association, said that she doesn’t see things changing in the future. And while she feels that the situation looks grim for small liquor store owners — she said, based on what she had heard from members of CLBA, that a 30-40% loss in revenue is the norm — they’ll find a way to tough it out.
“It’ll be okay, I mean, these are resilient people, but we didn’t expect this change overnight,” she said. “That’s not what we agreed to back in 2016, but that’s what we got.”