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Liquor Stores May Fear Full-Strength Beer’s Topple of Near-Beer

As of January 1, 2019, full-strength beer has reached the shelves of grocery and convenience stores for consumers to purchase. But could this pose a threat for small individual liquor stores?

This content was originally published by the Longmont Observer and is licensed under a Creative Commons license.

As of January 1, 2019, full-strength beer has reached the shelves of grocery and convenience stores for consumers to purchase. But could this pose a threat for small individual liquor stores?

Dr. Marco Costanigro, Associate Professor in Agriculture and Resource Economics and Joe Cannon, Professor of Marketing at Colorado State University (CSU), have collaborated to study changes in the distribution of beer in Colorado.

“We are currently doing research to find the answers to this question. We anticipate that the new law will shift at least some beer sales to grocery stores. This will probably be particularly challenging for liquor stores with a larger portion of sales in beer as opposed to wine and spirits.”

The size of the liquor stores and what they sell can be an important factor of their outcome. Many grocery stores are adding craft beers as well as larger national brands. Many craft beer drinkers will seek out the larger selection at many liquor stores, but availability of shelf space could be the main constraint for smaller liquor stores.

Adam Williamson of Corporate Affairs at King Soopers/City Market Division gave a statement about 2019 full-strength beer sales:

“Our customers have asked for a one-stop shopping experience, and this will give them the convenience they are looking for. You may have noticed expanded refrigeration sets in your stores with cold soda and sparkling water and thought that was strange… well those are the spaces that will have the great selection of full-strength beer and local offerings starting January 1. Each stores' selection will reflect the unique neighborhoods and their buying preferences. At King Soopers, we have a proven track record of selling age-restrictive products responsibly and our teams look forward to continuing this responsibility. Our prices will be competitive, just as our customers are accustomed to throughout the store.”

Photo by Adam Steininger

At 7-Eleven, it will take a little time for the logistics to fully roll out, but within a few weeks, consumers should see new full-strength beer options. 7-Eleven is a board member of the Colorado Wyoming Petroleum Marketers Association and Grier W. Bailey, Executive Director of CWPMA said:

“Convenience stores are limited to just beer. If you are talking about specialty beers then there is always a risk in helping new products to market, but we want to be responsive to Colorado consumers, and support the Colorado beer industry, so we will be working with local businesses.”

Costanigro and Cannon say we will most likely see small liquor stores go out of business because they can’t compete with large grocery and convenience store chains, but those liquor stores that are in the same proximity of a grocery store could have a more complex outcome.

“Competition will also come from convenience stores in gas stations. This suggests that liquor stores leveraging proximity to grocery stores as their only comparative advantage will suffer the most. However, those stores may still benefit from the traffic the grocery store brings. They may adapt their product mix to promote more wine and spirits—or take on more craft beer. That strategy may help them. Another avenue is adding value by means of service and expertise that grocery stores can’t provide.”