Price Check On Fireball

Forget free-market dogma and protecting the little guy: We just want to know whether getting government out of the liquor business will save us money.

It's a key question facing Oregon voters as large grocers and big-box retailers push initiatives onto the 2014 ballot aimed at dissolving the Oregon Liquor Control Commission, the state agency that has monopolized the sale and distribution of spirits here since the end of Prohibition.

The debate in Oregon over the OLCC has been going on a long time. But last week, a group called Oregonians for Competition filed five initiatives that closely resemble Washington state Measure 1183, which voters approved in 2011, ending state control of liquor sales there. 

That campaign spent an epic $22 million—financed almost entirely by Costco. The opposition spent more than $10 million, making it the most expensive initiative campaign in the state's history. Voters passed the measure with a 59 percent majority. 

The pro-1183 campaign argued that the measure would bring down liquor prices. But that wasn't the case.

Seven months after 1183 went into effect, WW reported OLCC border stores such as those in Jantzen Beach and Rainier had seen huge spikes in sales ("Driving to Drink," WW, Dec. 12, 2012). And a year later, the OLCC says sales in its 12 border stores still remain about 30 percent higher than they were pre-1183.

In Washington, we paid $168.06.

The same liquor in Oregon would have cost us $132.65.

We found a wide variety in shelf prices, but most of the bottles at two of the stores, Fred Meyer and Safeway, were already priced higher than those at OLCC stores.

Both Safeway and Fred Meyer offered discounts—the clerk at Safeway knocked $11.40 off our purchase even after we declined to sign up for a club card. 

But despite the discounts, the Washington booze was still pricier at checkout. Washington has imposed two big taxes on liquor at the cash register: a 20.5 percent sales tax, and a per-liter tax that works out to a flat $2.83 on each 750 ml bottle we bought.

And we could have paid more. Depending on how we split up our purchases, the same basket of booze at these stores could have cost us between $169.75 and $224.58.

The best prices were at BevMo!, a California-based liquor chain famous for its well-lit, aesthetically friendly stores with quotes on its walls extolling drinking from such sources as Thomas Jefferson, John Maynard Keynes and Ecclesiastes. 

BevMo! beat the OLCC's shelf prices for five out of seven products, but the Washington taxes taken at the till wiped out the savings.

Pat McCormick, a spokesman for Oregonians for Competition, says the campaign will focus on arguments other than lower liquor prices, including customer convenience, introducing competition, and eliminating the government agency go-between.

"I'm not trying to predict prices," he says. "We've learned from the Washington process."

Paul Romain, a lobbyist for the Oregon Beer & Wine Distributors Association, which opposes the initiatives to shut down the OLCC, says the price issue should be a campaign focus. The Washington case, he says, should give Oregon voters pause.

"When they ran ads, they said prices would fall," Romain says. "But you can't do that without eliminating the state's take. Needless to say, that didn't happen.” 

WWeek 2015