State Funding Initiatives Aside from Raising Taxes

FILED JANUARY 1, 2010

There are a few trusty ways states can garner more money from the alcohol business with tax increases being number one. Tax increases are a constant concern in this industry, especially in recent years as the recession (and let’s face it, internal mismanagement) led many states close to bankruptcy. When considering tax increases, alcohol and tobacco are usually the top two industries that come to legislators’ minds. However, several states are considering alternative methods of generating income that almost always result in deregulating alcohol. Some of the changes are for the sake of a more “open market” but with hopes of raising much needed state revenue. The bright side is that these states are considering initiatives other than raising taxes. The negative side, well, depends on who you are.

PRIVATIZING LIQUOR STORES. For example, Gov Perdue of North Carolina has appointed a committee to investigate whether or not the state’s ABC system for spirits sales should stay, go, or just be tweaked. Beer and wine are privatized but spirits are sold through state owned stores. With regards to the committee, Gov Perdue told local reporters that “you may see some public-private partnership there.” Recently a local paper uncovered that Diageo had taken several ABC officials out to dinner, which is against state ABC policy. Supposedly this so called offense has raised concerns that ABC officials are abusing the system, leading to an investigation. There have also been alleged instances of embezzlement in state run stores and unaccounted for bonuses given to ABC officials. Privatization could be a long shot since privatizing North Carolina liquor stores would result in lost revenue for the state. The outcome remains to be seen.

Meanwhile, Gov-elect Bob McDonnell of Virginia is proposing privatizing the state’s alcohol system to fund transportation. A Virginia Senator introduced a bill last year aimed at privatizing the ABC stores but it didn’t pass the general assembly. Pennsylvania has also tossed around the idea of privatization.

WINE SALES IN GROCERY STORES. Every year there are states that consider legislation to allow the sale of wine and even spirits in grocery stores. This year is no different, and so far New York, Tennessee, Connecticut and many others are considering such proposals. We don’t need to tell you that package stores greatly oppose such measures, claiming it would put them out of business.

As a sort-of compromise (although many are crying foul), Pennsylvania will begin allowing wine kiosks in 100 grocery stores across the state this May or June. Pennsylvania is a control state and does not allow wine to be sold in grocery stores. The grocery stores do not need a liquor license to operate a kiosk, which act as “a state store within the grocery store," said Pennsylvania Liquor Control Board spokesman Nick Hays. Consumers need only to insert their driver’s license into the machine and a PLCB agent will verify the license and ensure the picture matches the person purchasing the wine via live video. Then the customer must blow on a receptor to verify that they do not have a blood alcohol level above 0.05. The kiosks can carry up to 500 bottles of as many as 50 wines, and customers must pay with a debit or credit card.

SUNDAY SALES. We expect again a number of states to fight for Sunday alcohol sales with help from Discus. Colorado was one of the most recent states to do so. Proponents of Sunday sales argue it raises more money for the state and benefits consumers. Opponents say it merely spreads revenue across a 7 day week rather than a 6 day week and kills small liquor store owners.

IS THE CENTERS FOR DISEASE CONTROL MANIPULATING AMERICANS TO RAISE ALCOHOL TAXES?

An interesting article in The Washington Times argues that the Centers for Disease Control is just as political as it is medical and uses questionable studies to manipulate the public into believing what they want us to believe is healthy. This is important to our industry because alcohol, along with tobacco and food, are three vices they often attack. Says the article’s author, Dan Gainor: “For at least a decade, CDC has been making suspect claims about what it views as vices - food, alcohol and tobacco.” He contends that the organization won’t gain the publicity and congressional funding it desires by slowly going after society’s true health challenges. Instead, they benefit more by “changing the subject and even changing the definition of public health...That's why the CDC's public health mission quietly transforms into political health manipulation.”

The beginning of the article talks about their allegedly botched involvement with the H1N1 vaccine rollout and attempts to create hysteria over something that wasn’t as serious as we were led to believe. It was also responsible for grossly overestimating the impact of obesity on American society. CDC claimed in 2005 that obesity was America’s largest problem and was responsible for killing 400,000 Americans a year. Now the number is believed to be only 26,000 but CDC refuses to accept it or use the new numbers in public awareness campaigns, according to the article. “Once again, the CDC wanted to alarm people just enough so that agency bureaucrats would have a compliant public willing to take their advice. And again, reality wasn't quite so alarming,” writes Dan.

CDC also references studies that they claim links alcohol use to certain, ahem, diseases in certain age groups. Their solution? Raise alcohol taxes and keep the minimum legal drinking age high. The CDC also granted $4 million to the Center for Alcohol Marketing and Youth in order to "develop web-based tools to evaluate the potential impact of prevention strategies to reduce youth exposure to alcohol marketing." The article definitely brings up an interesting perspective.

WSD BRIEFS:

STOLICHNAYA IS LAUNCHING A NEW BOTTLE CAP in early 2010 to match a new bottle design and label. The label changes include updated illustrations with holographic ink, embossed Cyrillic type, and a thinner gold banding around the bottle. The bottle is now sleeker and taller and features a curvy red “S” across the bottle top stemming from Stolichnaya’s original name.

PATRON TEQUILA has secured partnerships with DFASS to offer Patrón Silver tequila for duty free sales onboard international flights on American Airlines, Delta Airlines, and Canada’s Air Transat. Additional airline listings are also planned.

CALLING ALL TRUTH SQUADERS. Please let us know your thoughts on the industry, the holidays, the upcoming year or just any issue that’s been eating away at you. As usual, all emails and identities remain anonymous.

Until tomorrow, Megan

“Life is a moderately good play with a badly written third act.”
Truman Capote

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