Liquor board reverses course on discounts to restaurants

Staff writerJune 4, 2014 

DEAN J. KOEPFLER

The state Liquor Control Board on Wednesday reversed itself on a policy with the potential to affect which businesses benefit from liquor privatization and how much drinkers pay.

The divided board voted 2-1 to propose new rules for liquor and wine pricing, but managed to satisfy neither side of the divide in the alcohol industry.

The board called for letting liquor and wine distributors offer different prices to restaurants and bars than to grocery or liquor stores buying the same large quantity.

Distributors have been charging restaurants and bars lower prices - so-called "channel pricing." The liquor board had previously said that was not allowed and had been moving toward writing the policy into rule. 

Instead, board members Sharon Foster and Chris Marr voted to allow the price differentiation for volume discounts. Bars and stores are different and have different customers, Marr said.

"Or as the average consumer would (see) it, I go to a restaurant to get a beer or a Jack Daniels on the rocks and a burger, and I go to a liquor store to pick up a fifth of Jack Daniels," Marr said.

A final vote is expected July 16. Board member Ruthann Kurose voted against the proposal, she said because she wanted to help the former state and contract liquor stores whose owners are struggling.

When bars get discounts that stores don't, it undercuts the small stores' ability to resell to the bars.

Jas Sangha, president of the Washington Liquor Store Association, said his group's members were told when they bought former state stores during the 2012 privatization of hard-liquor sales that that they would be able to sell to local restaurants.

"It was a great bait and switch," he said. "The oligopoly that controls this marketplace now engineered this for the little guys to fail."

Restaurants and bars weren't satisfied by the proposed rules either, even though they had wanted channel pricing. The new rules allow such discounts only based on volume, not as exchange for bars showcasing certain brands of alcohol.

"The law clearly says price differentials are allowed for all sorts of business reasons," said Bruce Beckett, chief lobbyist for the Washington Restaurant Association. He said the association might take the state to court.

Beckett said the rules could drive up alcohol prices. Prices of hard liquor in Washington are already some of the highest in the nation. 

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