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Washington's example shows that price spikes follow big-box privatization

Don’t let out-of-state, big-box grocery stores do to Oregon what they did to Washington.

Oregon’s alcohol laws, labeled “antiquated and outdated” by large grocers like Cincinnati-based Kroger and Pleasanton, Calif.-based Safeway, keep alcohol prices lower and maximize selection for Oregon consumers.

Privatization of the distilled spirits distribution and sales system in Washington has cost the Washington consumer plenty. In Washington, consumers can buy distilled alcohol products such as vodka and whiskey at more locations, but also at higher prices and with fewer brand choices.

A 750-ml bottle of Makers Mark costs the consumer $29.95 in an Oregon liquor store. That same bottle costs the consumer $48.61 in a Safeway and $38.97 in a Fred Meyer store in Washington. Absolut Vodka is $19.95 in Oregon, and $32.94 in Safeway or $24.51 in Fred Meyer in Washington. The list is endless, and the message of higher prices in Washington is steady.

Factoring in taxes, a bottle of liquor that sells for $10 wholesale sells at retail for about $16.87 in California; $20.80 in Oregon; and $25.69 in Washington. Sales of liquor products like vodka and whiskey are the fifth-largest revenue source for the state of Oregon, and the price could be reduced by lowering state taxes on liquor products. However, lowering taxes would dramatically reduce the amount of money available for state and local programs in Oregon.

Let’s talk about product selection. In Oregon, consumers can order any distilled spirits product available in the United States, and the state will bring it to the store of the consumer’s choice at no additional cost. No state, not even California and especially not Washington, matches the consumer choice of product provided in Oregon. If you are lucky, you may be able to find your favorite product among the few carried in Washington big-box stores like Costco, but your selection is extremely limited.

Our homegrown Oregon distillers know this message well. Hood River Distillers, founded in 1934, is Oregon’s oldest importer and producer of distilled spirits. Hood River Distillers Vodka, in a 1.75-liter bottle, is the biggest-selling liquor item in Oregon. Hood River Distillers saw its Washington sales drop by about 50 percent after voters in the state decided to privatize liquor sales in 2012, with losses estimated around $4.5 million.

Privatization in Oregon would hurt the state’s burgeoning craft distillery market. Oregon is home to more than 50 distilleries that produce more than 480 products and comprise 12 percent of liquor revenues in the state. If the big-box chains have their way, then they could knock Oregon producers off the shelves.

Great product selection at a fair price is the key to the success of the small Oregon craft distiller. The lowest price for Oregon-produced products is in Oregon liquor stores. Because of the small demand outside of the state, Oregon products outside of the state are priced higher to compensate the retailer for the time the product may spend on the shelf.

The Oregon craft distiller knows that the private system designed by the large grocers is made to move high-volume products, not those produced by small distillers. In Washington, small distillers went from a state system that fostered their growth to a private system that found them losing shelf space and sales.

In addition to higher prices, less product selection and the harm done to our local craft distillers, Washington also has a very large alcohol theft problem with liquor in grocery stores, creating serious safety and public health concerns for law enforcement and the community at large.

For these reasons and many

more, don’t let out-of-state big box grocers sell you a bag of goods called privatization.

Ron Dodge is president and chief executive officer of Hood River Distillers. Paul and Danelle Romain represent the Oregon Beer & Wine Distributors Association.

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