On the Road to Cold, Strong Beer

Posted by Vance Gregory, Owner of Edmond Wine Shop on 06/13/2018

In November, 2016, Oklahoma voters approved State Question 792. The effects of that change to the Oklahoma Constitution and Oklahoma statutes that govern the possession, distribution and sale of alcoholic beverages will become very apparent in October of this year. Many of my customers & friends have been asking exactly what to expect after October 1, 2018, as many still aren’t aware of all of the consequences that these changes will bring.

Here is a short recap of what to look for.

Cold, strong beer (up to 9% alcohol) and wine (up to 15% alcohol) will now be available to purchase at retail outlets other than an Oklahoma licensed liquor store, effective October 1, 2018.

The new vendors will have to obtain a “Retail Beer and Wine License” or “Retail Beer License” from the Oklahoma ABLE Commission. The employees that will be selling these products can be 18 years of age or older but must complete an alcohol vendors and servers course that is approved by ABLE. So, pretty much any retailer can obtain a license to sell these products at retail including grocery stores, wholesale clubs, drug stores, convenience stores, gas stations, specialty retail gift stores and miscellaneous other retail environments. The availability of these products will be as widely distributed as any other market that I am aware of and can be sold 7 days per week in these stores between the hours of 6AM and 2AM the following day. Liquor stores will remain to be the sole retail outlet for spirits and may sell other products at retail up to 20% of the gross sales of alcohol.

This is all to provide convenience to the Oklahoma consumer but, of course, the proponents of this who funded the TV, radio and newspaper ads expect to cash in as well. While the increased retail availability will be welcomed by many, there are some negative consequences that were not widely foreseen by the public, particularly at the distribution level.

The first of these is price increases. Since November of 2016, the wholesale markup on spirits has risen from 6.95% to the current 13%. The increase is due to the decline in the number of liquor wholesalers who chose not to stay in business after the vote on SQ792. The distribution for wine and liquor, while confusing to those not in the industry, provided strong checks and balances against high prices at the wholesale level. Since the change in the law will effectively reduce the number of wholesale liquor outlets to two major statewide distributors, it doesn’t take rocket surgery to understand how prices at wholesale would rise.

In addition, the pricing applied to split cases by these new wholesalers is very likely to increase. A lot. This is the charge that a retailer must pay per bottle when less than a full case of spirits or wine is purchased. In November, 2016, this amounted to 56 cents per liter or $1.12 per 1.75L, or $6.72 per mixed case.

It has increase to $7.68 per case since the vote and is expected to rise substantially more, perhaps to as much as $1.00 per bottle. Since not every retailer can purchase all products is case multiples, this additional cost will be passed on to the consumer.

Another unfortunate consequence will be the loss of many strong beer brands that many of my customers are used to getting. The new strong beer distribution in Oklahoma will be dominated by the two giant multi-national conglomerates – MillerCoors and AB InBev –who have their own agenda when it comes to what labels to continue to promote. What this means for Oklahoma beer drinkers is that some previously available items might not make the cut for future representation here. Some independent beer brands have already become frustratingly hard to keep in stock with very little meaningful explanation. These include stalwarts such as Sam Adams, Sierra Nevada, Caldera, Becks, Shiner, Ommegang and others.

So while Oklahoma wine and beers drinkers have reason to rejoice at the relative ease they will have in shopping for a chardonnay at the local grocery along with cold, strong beer virtually everywhere, there might continue to be some bumpy prices felt on the road ahead.