The long battle for where beer, wine and liquor can be sold in Colorado is finally be coming to an end—And the little guys may just win.
by Hudson Lindenberger
“This sucks. I thought Colorado had good beer, hell, we have a better selection back home” How many times have you heard some form of this conversation played out in the local supermarket over the years? Whether it’s a visiting out-of-state guest, a new resident or even you (if you are a transplant). The worst is when you try to explain to said person that all the beer they see on the grocery store shelves is, well, near-beer. Coloradans know not to buy beer at the supermarket.
There are just a few Colorado residents left who remember December 5, 1933, the date when Prohibition ended and the beer, wine and spirits finally began to flow across the state legally again. But many of the laws that the state legislature enacted for that historic day, have caused considerable heartache in the ensuing 83 years since. By creating 3.2-percent beer, and only allowing one liquor license per business entity, they created a unique framework that would have long-term consequences, unforeseen at the time. Unlike most of the rest of the country, grocery stores don’t dominate the beer, wine, and liquor markets in Colorado. Instead there are currently thousands of independent liquor stores and a thriving marketplace. That’s about to change.
Independent Growth
It was not always this way. Before Prohibition, you could buy your booze quite freely. And thanks to new legislation those days may be coming back once again. Chances are by this time next year your shopping experience will be quite different. But, is that really a good thing?
The problem is that the post Prohibition laws have left Colorado with 1,700-plus liquor stores today in 2016. These independent liquor stores come in all sizes and they offer up a variety of products. Finding a good one can be difficult, requiring patience and perseverance, but once you find a shop that clicks, chances are you will always come back. Many of these liquor stores share parking lots with major grocery stores, and almost all are local businesses with the owner working the counter. They have flourished in the framework of the state’s liquor laws, and many in the industry argue that they are the reason Colorado is such a force in the craft beer and micro-distilling scene.
“The only reason we were able to grow to the size we are today is because of the individual liquor stores,” says Al Laws, owner of Laws Whiskey House, a Denver-based distiller. “They are our partners and enthusiastically brought our whiskey in from day one, telling customers about it. That would never have happened in a big grocery store.”
Craft alcohol enthusiasts tout the ability of new producers to start small with independent liquor stores, something they feel would never happen if that state allows grocery stores to dominate alcohol sales.
“You can not allow over a thousand new liquor licenses into the market overnight. The effect would be sheer chaos.”
If most liquor store owners, brewers, and distillers had their way nothing would change in the state and the grocery stores would not be able to sell full strength beer, wine, and booze. But, with the legalization of marijuana, and an estimated 100,000 new residents entering Colorado each year, the large grocery stores decided that this year was the perfect time to update Colorado’s liquor laws. King Soopers, Safeway/Albertsons, Wal-Mart and Target all joined forces and created Your Choice Colorado, with a war chest of over 24 million dollars and the specific goal of allowing Colorado voters the chance to vote on the creation of a new framework, one that would give them access to full-strength beer and wine. No surprise, liquor store owners cried foul.
“You can not allow over a thousand new liquor licenses into the market overnight. The effect would be sheer chaos,” says Jim Dean manager of Hazel’s Beverage World and vice president of Legislative Policy at the Colorado Licensed Beverage Association (CLBA), the main organization representing the state’s independent liquor stores. “The pie only can be cut into so many pieces. We estimate that over half of the state’s independent stores would go out of business within two years if the grocery stores are allowed to sell full-strength beer and wine.”
Law of the Land
To counter that apocalypse, the CLBA has done something unprecedented. It met with members of the legislature and representatives from the grocery stores, as well as independent distillers, brewers and vintners to craft a historic compromise. The result, SD 16-197 passed overwhelmingly in the state legislature this May. Gov. Hickenlooper signed the bill into law in June—it paves the way for a gradual transition to an open market over the next 20 years.
The law allows grocery stores to slowly expand their footprint to five full liquor licenses in 2017, eight total by 2022, 13 total in 2027, 20 in 2032, and an unlimited amount by 2037. But, there is one caveat. Grocery stores cannot obtain a liquor license if there is another license within 1,500 feet. If they want to expand, they will have to purchase that liquor license from an existing store. The new legislation is designed to protect the independent liquor stores that have helmed the market for years and give them time to figure out their exit strategy or a better way to stay in the game.
“People are foolishly thinking that there is a large payday coming their way from the large grocery stores, nothing could be farther from the truth,” says Matt Chandler Spokesman for Your Choice Colorado, the group that represents large grocery store chains. “They [grocery stores] already operate on tight margins, there is no way they will swallow several hundred thousand dollars to buy out one [liquor] store. Multiply that by the 144 King Soopers there are in the state and you can quickly see how expensive this will become.”
He might be right, but the compromise does offer both the grocery stores and Colorado residents one gift. According to the new law, starting on January 1, 2019 the dreaded scourge of 3.2 beer will cease to exist in Colorado. In its place every single grocery store that did sell it will then be allowed to sell full-strength beer. In other words, when you pick up the steaks for the BBQ you also will be able to toss a couple of sixers of beer into your cart. Hopefully growler fill stations are not far behind.
Large breweries are being bought out—Breckenridge Brewery sold to Anheuser-Busch InBev in 2015, with rumors swirling that others are on the block.
The Future?
Many feel that the new legislation will severely damage the craft beer industry, but the Colorado Brewers Guild has remained neutral during this tumultuous time with many of its members worried about potential repercussions from grocery stores if they take up the fight. If you sell your beer out of state the last thing you want to do is anger some of the largest retailers you deal with—the grocery chains. By yanking just a few SKUs across the country, they can dramatically affect an individual brewer’s numbers. The same goes for local breweries: They cannot afford to anger their main customers—the liquor stores. It’s the ultimate catch 22.
In a state known for its vibrant craft beer and micro-distilling scene, the winds of change are blowing harder now than they ever have before. Large breweries are being bought out—Breckenridge Brewery sold to Anheuser-Busch InBev in 2015, with rumors swirling that others are on the block. The largest Colorado distillery, Stranahan’s, is now owned by a group out of New Jersey. Will an option to buy alcohol in the grocery store simply offer more choice to the consumer, as large grocers believe, or will it destroy the diversity that has created a thriving home for local brewers, distillers and vintners? It seems that this unique market, friendly to Colorado-grown beer and spirits, is poised to join the rest of the country by allowing grocery stores carry full-strength beer and wine. Whether or not that is a good thing still remains to be seen.
—Hudson Lindenberger is the author of Elevation Outdoors.com Liquid Gear column, a frequent contributor to Men’s Journal. He just completed a book project with polar explorer Eric Larsen.
