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Archive for Saturday, February 5, 2011

Liquor statistics

The economic picture being painted by retailers who want to extend liquor sales to grocery and convenience stores in Kansas may not be as rosy as it seems.

February 5, 2011

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Proponents of changing Kansas liquor laws to allow liquor sales in Kansas grocery and convenience stores are presenting some figures that are pretty attractive to a state in need of jobs and tax revenue.

A coalition of retailers, including the Walmart, Hy-Vee and QuikTrip chains, is making its case for such a change by contending that it would generate more than 12,000 new jobs in Kansas while adding $216 million in wages and $72 million in new tax revenue for the state.

Opponents of the bill say those numbers are exaggerated, but the proponents, known as the Coalition for Jobs and Consumer Choice, didn’t just pull their figures out of the air. They came from a study conducted for the group by Kansas University’s Center for Applied Economics.

The 16-page report carefully supports its claims with a variety of data that leave some room for questions.

Although the report concedes that the change would eliminate about 341 liquor stores and 1,154 jobs in Kansas, that number would be offset by an increase of 116 grocery stores with 3,987 jobs and 449 convenience stores with 9,349 jobs. And the new jobs would pay better and contribute more to the state economy.

The report arrives at these figures by comparing the per-capita number of liquor, grocery and convenience stores in five states like Kansas with “restricted” liquor sales to the number of stores in five “unrestricted” states like Missouri and Nebraska. The report found there are more grocery and convenience stores per capita in the unrestricted states and, therefore, concluded that its sample “provides clear evidence that the market supports more grocery stores and convenience stores than specialized liquor stores when the market is deregulated.” The statistics may support that claim, but it’s a pretty shaky basis on which to promise that changing state liquor laws will bring 116 new grocery stores and 449 new convenience stores to the state.

The report also addresses how changing the liquor laws could produce more alcohol-related taxes without raising alcohol consumption in the state. This contention rests heavily on shifting more alcohol sales back to Kansas from border states, such as Missouri. The report looks specifically at the Kansas City metropolitan area, which has 48 grocery, convenience or liquor stores on the Missouri side within a quarter mile of the Kansas border.

Granted, allowing liquor to be sold in grocery and convenience stores on the Kansas side might be a convenience for some, but it won’t address the tax issue that will keep many of those sales in Missouri. Missouri charges an excise tax of $2 per gallon on liquor, while Kansas charges an excise tax of $2.50 plus an enforcement tax of 8 percent on packaged liquor.

While the statistics in the KU report aren’t wrong, they may not tell the whole story. The companies that commissioned the report have an obvious financial interest in a legal change that would allow their stores to sell wine and liquor. The losers in this equation would mostly be small independently owned liquor stores across the state.

Maybe the change would be a good financial deal for the state, but it’s probably not quite as good a deal as the coalition and its report contend. Kansas legislators need to look beyond the rosy predictions.

Comments

Scott Morgan 3 years, 10 months ago

increase of 116 grocery stores with 3,987 jobs and 449 convenience stores with 9,349 jobs.

If a few of those grocery stores could prosper in rural areas currently not served by a store, well I'll drink to the new law.

Richard Heckler 3 years, 10 months ago

I say leave it alone. Let the small business people stay in business. The motivation by big business people is selfish!

If these stores want in the liquor business open up liquor stores. HyVee Leawood has a store a few blocks from one of their stores on State Street.

Kendall Simmons 3 years, 10 months ago

I did the math. $216 million in supposed additional wages divided by 12,000 in supposed new jobs results in $18,000 a year jobs.

I also read the report, written by Arthur Hall, the director at the Center for Applied Economics, who used to work for Koch Industries as chief economist.

According to the report, Kansas currently has 581 liquor stores. 341 would be eliminated under this plan...or almost 60% of them. So much for conservatives supporting small businesses. That leaves 240 liquor stores. Yet Clark says this competition would result in "hundreds of liquor stores would become more efficient, competitive and convenient for consumers, which would likely make them more profitable, leading to increases in their average number of employees at a higher average wage."

Exactly WHAT "hundreds" of liquor stores is he talking about??? Did Clark not bother using his calculator?

How about that none of the 5 states we're being compared to went from our system to theirs? Instead, they all went from state-owned liquor stores. And the 4 other states supposedly like us for statistic purposes? North Dakota doesn't allow grocery/convenience stores to sell 3.2 beer...and Oklahoma doesn't allow liquor stores to sell refrigerated beer or wine!

Clark himself also admits "On average, the unrestricted states tend to employ more people per establishment in liquor stores and convenience stores, but slightly less in grocery stores."

Plus we have exactly the same number of grocery stores per capita as Missouri.

Clark writes "In 2006, 213 grocery stores were open for business in rural Kansas communities. Since that time, 82 have closed. Access to the profit potential associated with the sale of beer, wine and spirits may help slow or reverse this trend." However, he doesn't provide any data whatsoever regarding dry communities, already-existing liquor stores, rural population changes, or anything else that could put these figures into perspective. And yet that is exactly the kind of data we need to make informed decisions.

Over 65% of Kansas counties have less than 10,000 residents! You can't compare them to the Kansas City or Topeka metropolitan areas...or assume that groceries are going to move into or afford to stay because they can sell liquor. Yet that's what Clark does.

Why don't you ask "Alvin" why he got into the liquor store business...opening one of them right next door to his grocery and then closed his grocery store? I did, years ago. (Hint: It's because he found liquor stores were far more profitable for far less work.)

There's nothing keeping grocery or convenience stores from opening liquor stores. This push is designed to increase the profits of out-of-state corporations and drive locally-owned competition out of business.

littlexav 3 years, 10 months ago

perfectly stated. i hope if this law comes down the pike, you'll ask your state legislator to invite you to testify before the hearing committee.

speakmymind 3 years, 10 months ago

I am very much in support of allowing grocery stores full access to liquor. The end result is a better experience for the consumer. I can purchase liquor while at the grocery store and we should see lower prices due to an increase of purchasing power for a large chain vs a single liquor store. Grocery stores will also have a larger selection of product. The consumer wins in this deal!

texburgh 3 years, 10 months ago

Sadly, as long as the state maintains tight control over which distributors the retailers can use, you won't see a larger selection. A needed change is to get the state out of the business of approving which distributors a retailer can use.

texburgh 3 years, 10 months ago

Here is how Art Hall and the Koch-endowed Center for Applied Economics does research: First, write the conclusion, then pick facts which support that conclusion, finally if you don't have enough facts make some up.

Their study on the sales tax increase was done for the Kansas Policy Institute (Koch's Kansas "think tank") and American's for Prosperity (Koch's "grassroots" organization). They found that the 1 cent increase would devastate the economy and cost tens of thousands of jobs. In fact, since the increase, the Kansas unemployment rate has declined and the economy is in a slow recovery.

So it's no wonder that Hall would "create" a study to support the desires of his corporate handlers. The only real fact in the study is the part that says independent liquor stores would go out of business. That would probably happen to Alvin's if the HyVee next door were permitted to sell all the product available at Alvin's.

Personally I could care less if the law allows supermarkets to sell liquor. It would be more convenient. But a better reform of our alcohol laws is to get the state out of regulating where the retailers get their product. The state keeps such a tight control over product that our liquor stores can't compete when it comes to selection with their neighbors in Missouri. It's not just the tax difference; it's the selection difference.

Isn't it time Kansas dropped the last of its prohibition era regulations?

notajayhawk 3 years, 10 months ago

" In fact, since the increase, the Kansas unemployment rate has declined and the economy is in a slow recovery."

Well, I suppose we could use Obama-logic and just say 'It would have been even better without the tax increase.'

littlexav 3 years, 10 months ago

as a former grocery store employee, i can say that's not exactly accurate. some stores merchandise certain products - like in Walmart, the Hallmark cards and the bread and the soda. Dairy, produce, meat, pasta, canned veggies, and practically everything else are all stocked by hard-working store employees.

I will agree that stores like Walmart, that intentionally understaff in order to save money, would be a horrible place to sell liquor (god, can you imagine the underage kids problem?) and horrible place for those of us who are of age to try to buy liquor.

sr80 3 years, 10 months ago

i remember when you couldn't buy booze on sundays in kansas, it was a sunday ritual to drive over to mizzery to buy booze. time to make the change. time is a wasting away.

sr80 3 years, 10 months ago

i remember when you couldn't buy booze on sundays in kansas, it was a sunday ritual to drive over to mizzery to buy booze. time to make the change. time is a wasting away.

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