Costco Initiative on WA Ballot

Would eliminate volume discounts and price restrictions on beer

Two ballot measures on the November ballot in Washington state — one heavily backed by Washington-based Costco Wholesale Corp. — would largely sweep away Washington’s existing state regulations on alcohol.

Initiative 1100 would abolish the state liquor distribution and sales system in favor of private businesses. It would also eliminate beer and wine price controls and bans against volume discounts, potentially having a big impact on craft brewers. Retailers with licenses to sell beer and wine would be eligible to add a liquor license and would gain the ability to buy directly from manufacturers.

Currently, consumers can only buy hard liquor by the bottle in the 315 state and contract stores.

Washington is among 18 so-called “control” or “monopoly” states that exercise broad powers over wholesale liquor distribution. Of those states, 13 — including Washington — are also involved in retail alcohol sales through either state-run liquor stores, outlets operated by private contractors, or both. Opponents argue that I-1100 goes too far by eliminating the three-tier system — producers, distributors and retailers — basically allowing Costco to cut out the middle man distributor.

Costco has poured money into the I-1100 campaign, giving more than $800,000 in contributions and an additional $380,000 in in-kind contributions that include gathering signatures that helped qualify it for the ballot, Web ads and staff support.

National wholesaler and liquor distributor groups are closely watching the outcome of the campaign, with some saying that it could be the first step for Costco to try and change the system in other states.

The company has long sought the changes that the initiative seeks to make. In 2004, the bulk retailer sued Washington state, arguing that the state’s rules blocked the company from using its vast buying power to make beer and wine cheaper for Washington customers. An appeals court upheld most of the rules.

Complicating this election for Costco and other big box stores is another liquor privatization initiative that will also appear on the ballot.

I-1105 would also privatize the liquor retail system but keep in place state laws that protect liquor distributors — which are the main financial supporters of I-1105. I-1105 would also keep in place prohibitions on bulk discounts for beer and wine, but would allow them for sales of hard liquor.

Comments

  1. farmbrewernw says

    I’ve already commented on this on another blog, I guess I’m wondering why this is going to hurt us? The Washington Brewers Guild is telling us all to fight it but their reasons are kind of weak such as all of the bars in Washington will become “tied houses”. People drink craft beer because they want something different, you can’t tell me that all of the establishments and stores in Washington will stop carrying craft brands just because they can now get stuff cheaper from the bigger guys, they’ve always been able to do that by the way. Shoot if Costco wants to come to me and by my beer fine as long as they can give me a price point I want and can sell the volume I’d like to see, otherwise I’m not having any trouble selling my beer in house.