Beginning March 1, Durango residents will be able to go to the grocery store to find their favorite pinot noir thanks to the passing of Colorado Proposition 125.
The law, which allows to wine to be sold in grocery stores, is sure to shake up Colorado’s liquor retail industry and seemed to be favored heavily by more urban populations of the state.
Prop. 125 passed with 50.6% of voters in favor and 49.4% against – out of 2,428,613 ballots cast. Most of the votes against the measure came from rural counties. A majority of La Plata County residents voted against the proposition with 57.3% of voters electing to keep wine out of grocery stores.
Seventeen of the 64 counties in Colorado voted in favor of the legislation. Out of those 17 were Arapahoe, Denver, Adams and El Paso counties, which make up four of the five most populous counties in the state.
Durango is home to 14 liquor stores with additional liquor stores in neighboring communities like Hermosa, Three Springs and Elmore’s Corner. With these new laws, could Durango see a decline in liquor stores over the next few years?
Many local stores are gearing up for hefty sales losses.
For Star Liquor, this could equate to a 30% decrease in wine sales or close to $1 million lost in 2023. While Star’s vast selection of wine could give the store an edge for premium wine consumers, value wine is where the store will be impacted the most.
“It’s all the value brands and box wine that keep your lights on,” said store manager Mike Vermette. “We can have as much exciting wine as we want, but we have to have what people want to buy.”
Value brands like Barefoot, Sutter Home and any type of box wine make up 65% of the store’s wine sales. He said Colorado is the highest ranked state for box wine sales in the country. Adding grocery store competition is estimated to have a 15% impact on Star’s gross sales as a whole.
Vermette said the store is going to have to make some adjustments in order to keep from losing profits. He said the store will retain all of its staff members but to compete with the purchasing power of grocery corporations, the store will have to cut prices.
“If we responded to this like a lot of retailers do, we’d be laying people off.” Vermette said. “Technically, we'd have to lay off two full-timers and a part-timer if we really were to play the monster retailer game. But we’re absolutely not going to do that.”
Until he sees how grocery stores are going to price their wine, it’s hard to say what kind of price decreases the store will commit to. Vermette said Star Liquor currently has 40% of the market share in Durango. These numbers are sure to drop when competing against Durango’s five grocery stores that don’t have a liquor store already attached.
This will also impact Star’s ability to give back to the community. Star Liquor often donates money to a plethora local nonprofits such as the Women’s Resource Center, iAM MUSIC Foundation and Parker’s Animal Rescue.
“The less money we make, the less we can give back,” Vermette said.
Spirits of the West owner Larson Eoff said he’d be surprised if his business makes it because of the passing of Prop. 125.
When Senate Bill 243 passed in 2018 allowing grocery stores to sell higher than 3.2% alcohol content beer, it cut Spirit of the West’s sales by 25%. Eoff can only assume that wine will have an even greater impact because he sells more wine than both beer and hard liquor.
Eoff is frustrated that the voting for the bill was dominated by larger counties in urban areas.
“It passed in Grand Junction, Denver, Colorado Springs. The cities ran that deal,” Eoff said.
The legislation was heavily supported by large grocery corporations.
Supporters raised around $14.6 million for Prop. 125 and 126 (which did not pass) with its top donors including DoorDash, InstaCart, Target, Albertsons, Safeway and Kroger.
Eoff said liquor stores are at a disadvantage compared to large grocery store chains and big box stores. He said big box stores like Walmart don’t need to strictly profit off alcohol because they sell an assortment of products compared to liquor stores.
“Since they sell tires, pants, hats and boots and everything else, they don’t even make anything on moves. They make 15 cents a package on beer when I have to make $3 because I have to pay my help,” he said.
However, even if Eoff wanted to close up shop, he’s still stuck with predicament of his inventory. He said it could take five years to sell the rest of what he has in stock.
“If Colorado is going to continue to change the liquor laws, they need to change all the liquor laws,” he said.
Eoff is referring to the Colorado law that only allows liquor stores to buy liquor from authorized liquor distributors. If he was able to sell off his inventory to other liquor stores, he said he might be able to break even.
“I can’t go down to Liquor World and buy a bottle of whiskey and sell it here. That’d be breaking the law. You have to buy it through these distributors that don’t give you about half of what you want, anyway,” Eoff said.
However, some liquor store owners aren’t as concerned about the new law as others. Owner of Wagon Wheel Liquor James Dempsey said the new law may have an immediate impact on sales through the first year but it won’t be long term.
He is confident in his staff’s experience and the store’s variety of wines.
“They can speak to the customers about the wines, what they taste like and what they go with and make an impact on customers. Grocery stores are going to have all the less expensive name brands,” Dempsey said.
Dempsey is also confident in his customer base, which has been loyal to Wagon Wheel over the years.
“Us being the oldest store in town, we’ve got a lot of long-term relationships with people that come here and have come here for a long time,” Dempsey said.
Much like Star Liquor, Dempsey predicts that the addition of grocery stores will impact the price of value wines in his store. He said the grocery stores will most likely bring in lower quality wines and price them lower than the liquor stores to entice customers.
Dempsey is also going to emphasize selling hard liquor and quality wines that grocery stores don’t have. Instead of displaying value wines in the front of the store, he will display hard liquor and higher quality wine to attract customers.
tbrown@durangoherald.com
