Archive for Sunday, January 11, 2015

Grocery store industry begins new push to allow strong beer, wine, liquor sales

January 11, 2015

There’s a new plan and a new face working to convince Kansas lawmakers to allow grocery stores across the state to sell “strong beer," wine and liquor.

Native Kansan David Dillon, the retired CEO and chairman of grocery giant The Kroger Co., has become the leader of the Uncork Kansas coalition, which is seeking legislation to end the longtime Kansas law that limits liquor sales only to licensed liquor stores.

“Consumers are going to win on convenience, variety and price because there is more competition,” Dillon said.

Previous attempts to change the law in Kansas have failed. Dillon said Uncork Kansas is proposing a new plan this year. Unlike past efforts, convenience stores would not be allowed to sell liquor and wine under the proposal. But convenience stores would be able to sell “strong beer.” Currently, only liquor stores are allowed to sell strong beer, while convenience stores and grocery stores are limited to beer that has an alcohol content of 3.2 percent or less.

Grocery stores would be allowed to sell the trio of strong beer, wine and liquor. But grocery stores would be required to purchase a liquor retail license from an existing liquor store. The coalition also is proposing that the number of liquor store licenses forever be capped at its current level of 752 licenses. Dillon said that would make existing licenses much more valuable, and would serve as a way of compensating existing liquor store owners who want to exit the industry.

“If you don’t want to sell, I can’t make you sell,” Dillon said. “I would have to get the price high enough to make you want to sell your license.”

Opponents of the law change, however, note that the convenience stores would not need to buy an existing liquor license to begin selling strong beer. That would potentially add thousands of new competitors to liquor stores, many of which rely heavily on beer sales.

“We have studies showing that 40 to 50 percent of liquor stores won’t remain profitable,” Amy Campbell, executive director of the Kansas Association of Beverage Retailers, said of a widespread expansion of strong beer.

She said the law change would put many small businesses out of business, and the current system is doing a good job of keeping liquor out of the hands of minors.

“I would suggest it is a solution in search of a problem,” Campbell said.

Dillon said customers have been asking for the change for years. Many have lived in states where wine and liquor sales in grocery stores are common. He said with the increase in craft beers, many of which don’t produce 3.2 percent beer, the need for grocery stores to sell strong beer has increased.

Plus, Dillon said he thinks the new law could help shore up the financial health of some grocery stores in rural Kansas communities.

“The value of a grocery store in a small community is really, really important,” Dillon said. “If you can add wine and regular beer to those stores’ mix, it increases their viability.”

The Uncork Kansas effort marks a return to the state for Dillon, who is the great-grandson of the founder of the Dillons grocery store brand. Dillon retired as Kroger’s chairman last month, and has moved with his family back to the Kansas City metro area, he said. Dillon is a graduate of KU’s School of Business, and he said he hopes to be more active in KU efforts in future years.

“I know I’m going to get to use my own Kansas basketball tickets instead of my kids using all of them,” Dillon said. “I am looking forward to becoming involved in more Kansas issues.”

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