Wash. liquor stores closing as Ore. liquor sales boom
VANCOUVER, Wash. - An Oregon man is getting out of the Washington state liquor business after fees drove up his prices and consumers found cheaper booze in chain stores and across the state line.
And he's not the only one - dozens of other privatized liquor stores have also closed in Washington state, according to one estimate.
Don Sidhu had $2.1 million in investor money that he spent on four former state-run liquor stores privatized when the state switched away from a state-operated liquor system this year.
Customers told Sidhu that they would buy their booze at Oregon's lower-priced, state-operated stores, The Vancouver Columbian reported.
Sidhu apologized to customers for the fees, which in some cases led to prices 22 percent higher than those in Oregon.
"They said, 'Don't be sorry, you're the one who's going to lose your business,'" said Sidhu, a Woodburn, Ore., resident who closed his stores in Kennewick and Kirkland and plans to shutter his remaining two stores in Vancouver some time next month.
Liquor sales in Oregon increased 9.4 percent in October 2012, compared to October 2011. At Oregon's 12 border stores, sales increased by 34 percent.
Compounding the problem is distributors, who in many cases charge smaller stores between 25 percent and 35 percent more than they charge volume discounters like Costco.
"In the old system, everybody in the state paid the same price, and now, if you're not close to a Costco or big box, you're paying a whole lot more for the same product," said John Guadnola of the Washington Beer & Wine Distributors Association. "It's so much cheaper to deliver a truckload to one place and have the customer break it up and deliver it out to the individual stores."
Sidhu isn't alone in facing a quick, devastating business failure in Washington's new free-market liquor sales environment.
Of the 167 former state-run liquor stores that Washington auctioned off, Sidhu estimates only 60 or 70 remain open.
He said he had a disadvantage in being a small store. The lack of volume discounts from distributors, competition from Oregon, and the loss of commercial sales that were a key profit center for the former state-run liquor stores have all contributed to the demise of the former state-run stores.
"I will keep my head high," he said, "and move forward."
And he's not the only one - dozens of other privatized liquor stores have also closed in Washington state, according to one estimate.
Don Sidhu had $2.1 million in investor money that he spent on four former state-run liquor stores privatized when the state switched away from a state-operated liquor system this year.
Customers told Sidhu that they would buy their booze at Oregon's lower-priced, state-operated stores, The Vancouver Columbian reported.
Sidhu apologized to customers for the fees, which in some cases led to prices 22 percent higher than those in Oregon.
"They said, 'Don't be sorry, you're the one who's going to lose your business,'" said Sidhu, a Woodburn, Ore., resident who closed his stores in Kennewick and Kirkland and plans to shutter his remaining two stores in Vancouver some time next month.
Liquor sales in Oregon increased 9.4 percent in October 2012, compared to October 2011. At Oregon's 12 border stores, sales increased by 34 percent.
Compounding the problem is distributors, who in many cases charge smaller stores between 25 percent and 35 percent more than they charge volume discounters like Costco.
"In the old system, everybody in the state paid the same price, and now, if you're not close to a Costco or big box, you're paying a whole lot more for the same product," said John Guadnola of the Washington Beer & Wine Distributors Association. "It's so much cheaper to deliver a truckload to one place and have the customer break it up and deliver it out to the individual stores."
Sidhu isn't alone in facing a quick, devastating business failure in Washington's new free-market liquor sales environment.
Of the 167 former state-run liquor stores that Washington auctioned off, Sidhu estimates only 60 or 70 remain open.
He said he had a disadvantage in being a small store. The lack of volume discounts from distributors, competition from Oregon, and the loss of commercial sales that were a key profit center for the former state-run liquor stores have all contributed to the demise of the former state-run stores.
"I will keep my head high," he said, "and move forward."
Despite the new taxes, being able to buy hooch at places like big box stores, or most grocery stores during nearly all hours of the day, and any day of the week, is really nice. Since I don't drink that much and I make a good living, the extra cost is no big deal to me. Sure, they'll always be a few gotta-have-it types that will go out of state to satiate their vices, but they will always be in the minority, because most people can't be bothered to do that.
ok, first of all, let's find out how many liquor stores that have gone out of business had nothing to do with people going across the border to buy cheaper booze.   You know - the ones within reasonable driving distance of the state border.
Â
The brand new liquor store in North Bend shut down within months of opening. I'm sure that's included in the 'dozens of privately owned liquor stores have gone out of business', but we're so far away from any state border that there's no way it was because of Oregon's cheaper liquor.
Â
Â
Â
Â
It's true with any new market. There are those that will fail in business. In any small business you must be flexible, diversify and advertise. Anyone who bought an old liquor store and didn't add other products was shooting themselves in the foot. Leading up to the vote, we all saw the consequences of privatization. Whining about it now is ridiculous!
yippie Washington is going to be the next California!!!!!
hahahahahaha...you get what you vote for!!
Well, Oregon doesn't charge tax, nor are their built in booze taxes, or their cigarette taxes as stupid as ours. Way cheaper there. I buy cartons of smokes there for around $40-45. Here I pay $67-70. Not a hard decision for me.
Alcohol, cigarettes and most other shopping is much better in Oregon. Washington State is a complete rip off when it comes to taxation ......
It is odd that it keeps getting reported that prices are lower in Oregon, when most of my friends in Portland are finding liquor cheaper in Washington (even with the taxes, they are taxes, not fees), than in Oregon.
Time to get marijuana in the stores. Let's do some special legislation. Oregon can't compete there.Â
Don't forget that the real agenda was Costco being able to sell booze.
Mission Accomplished
The rest is just fallout.
 @Larrygg true. Costco 1--gullible ****s 0
 @chandler  @Larrygg Apparently neither one of you have tried the Costco branded liquor. They sell their own brand along side the big brands. And they generally have the best prices in the state. Their brand is actually very good, top shelf liquor.
Â
The goal was to let the law of supply and demand run the market. We removed the state from the equation. Now supply and demand are working as can be seen by the evidence. If you can't offer the product for nearly the same or less than your competitor(s), then you will likely go out of business because you made the poor assumption that you could compete with artificially high prices like the state had. Clearly it does not work that way. Simple stuff.
they tax alcohol people either buy in another state or don't buy at all,they toll the bridge people stop taking it,when will washington realize people will avoid anything that costs them more money
 @elway Never?
I will not buy liquor in Washington. The tax structure is ridiculous! Fortunately, I have enough work in Oregon that I get paid for the drive, and reap a windfall if I buy liquor.
This is, after California, the dumbest state ever. Tax everything too much and people will look elsewhere. Just dumb.
lol
I'll bet you can copy and paste this article with a few words edited in a few months in regards to weed. State run + taxes = $$$$, or, your cheaper supplier?
 @SgtPepperSpray excellent point.... Many will just try and get an MMC or continue getting it from their outlaw grower.
No problem, just double the tax. That always seems to work real well here.
I suspect it has very little to do with the extra fees and a lot to do with the convenience factor. I buy all my liquor at Safeway while doing my regular shopping. I have not stepped foot in a liquor store since the law passed, and it has nothing to do with fees and taxes. It's all about one-stop-shopping.
It's funny because that the exact same thing the Canadian gas stations face that are just shy of the border. They've dealt with it for decades.
I know that i can buy 1.75 litres of Jim Beam bourbon at a mom n pop store in South Dakota AFTER TAXES for $24.31 ..Â
which means
A) too much taxes in WA state and
B) distributors are committing highway robbery.Â
because not even costco and Sams club can match that price BEFORE taxes.Â
Â
soo .. screw WA state.. i'll keep buying my liquor in SD and importing it to WA.
Â
Â
 @everyoneelse People vote for benefits others must pay for - the downside of unlimited democracy.
This comment has been deleted
 @deadcandance So did you vote for the initiative just to screw the rest of us over out of spite?
 @sleever So how is having the state out of the booze price-fixing game SCREWING us, exactly? I don't think you thought your post through very thoroughly.
 @deadcandance ...and I'll bet he's a Bud Lite guy.  :-D
 @deadcandance Because the world is all about what you like.
I don't understand the system in place In Washington, but you asked for it you have it! Not everyone is close to Oregon, but there are ways to get bootlegged liquor.
Let me guess... The solution is going to be to raise the liquor taxes to make up for the lost revenue?
 @Vexorg did not work for the last gov when she tried to get rich off of smokers, i dough i hope r new gov knows better.
On the plus side, the new BevMo by Northgate in Seattle is awesome and Costco today had a 1.75L of Kirkland Spiced Rum for $16.99 ($27.07 after all the taxes) which will be a bargain if it's comparable to captain morgan.
Most of the Costco brands are awful....maybe you will have better luck.
 @mustang sally I have to admit I like the small batch bourbon they make. 1L for $25.99/$35.09 after taxes isn't that bad. Then again, my go to bottle was usually just Beam's Choice 5yr (which has gotten more expensive/tricky to find).
I also buy in Idaho...Nice drive and I do save considerable...Â
it appears that the biggest financial contributor to this new law, is the one that is gaining the most financially. amazing how that works. glad i don't drink.
 @jennieb Maybe you should.
I hear Nelson... and he's pointing his finger at everyone who voted for this scheme.
First of all if I had to pay almost 25% more for something I would go else where as well. As for the small stores, band together like the grocery stores did in a co-op so they can make larger purchases like the big boys. The bottom line is there is too much greed all the way up and down the line and people are going else where for their needs.
Were they expecting a level playing field? It is all about volume of sales as Costco, and the other big box stores knew.
These people need to have their heads examined. Just because you have money you can spend doesn't mean you should spend it. Just because you have money doesn't mean you can be a business owner. If you think you can, invest in something safe like a McDonalds, they are a license to print money.
Â
How did these investors not say hmmm...maybe owning a liquor only store, wouldn't be such a good idea when your neighbor tenant is say...Kroger!
Â
There is nothing proprietary about the product you sell, and you want to open up next to a national chain offering the same goods? And your going to bid on it? And there's going to be other people bidding against you?
Â
Â
Â
"Compounding the problem is distributors, who in many cases charge smaller stores between 25 percent and 35 percent more than they charge volume discounters like Costco."
Â
How is that legal?
 @Tom Allmendinger The same way wholesalers get discounts on anything that they buy in large numbers, usually the larger the number the cheaper the individual price. Costco itself passes this on to the consumer as often its best prices are when larger quantities are sold.
@Tom Allmendinger Umm...buying power?You think Walmart pays the same for goods as Dollar Tree?
@Jatok, keep in mind that the state did not set up the structure of fees and taxes and controls. Costco's initiative, which we the people (well, some of the people) voted for, did. Don't blame this current situation on the state. The state was happy enough simply running the lower priced state stores, as they'd done since pretty much the end of prohibition. You want to blame someone, look at who wins with this. The state doesn't, as it makes no more money now than it did before, and over time the fees/taxes go down. We the people don't win unless we like paying higher prices or are so bound to the free market concept that we'll overlook higher prices for it. The ones who win are the ones who wrote and promoted the initiative. Costco, Sams, Walmart, large grocery chains...Â
 @P.W.R. Actually, the state did throw a few more taxes on there at the end of last session which is why Costco is suing them.  Again.  We would never had been in this boat had A) the state did what it was supposed to do after the first time Costco sued their butts and the court sided with Costco or B) passed the first Costco backed initiative.
 @stamperzann  @P.W.R. or C)  people left well enough alone.  the fees/taxes were listed in the initiative.  that's why I voted against it. Â
 @sleever A lot of good that did, huh.
 @P.W.R. It is the dumb state that makes Wa one of the most expensive places to buy liquor in the US. I make a run to CA to see my son once a year and pay for my gas with the savings on a couple of cases of gin..Regardless get the gov out of the business - I 'd rather pay Costco.
 @readyaim321  @P.W.R. Readyaim...  how does that even make sense? You'd rather pay more to a private business simply to keep the government out of that business?  I thought privatizing was the dream...  lower prices and better service.
RE taxes are awful too.......what's the deal here; garbage fees going up and no benefit to the populace via the higher taxes....WA is not a consumer friendly state!
 @sleever  @mustang sally What? You mean there's no free lunch???
 @mustang sally Just curious...  what extra benefits are you expecting from garbage pickup?  When fedex or ups raises their rates do you get extra benefits?  Or are you simply covering the extra cost in fuel they have to pay? Â
Â
Do you expect the state to subsidize your garbage pickup? Â