Issue link: http://winesandvines.uberflip.com/i/83237
OCT OBER NEWS Washington Wine Sales in 'State of Flux' S State fees drive up retail prices in spite of lower costs expected after privatization "Some of the eattle, Wash.—The first three months of privatization in Wash- ington state have raised concerns regarding wine pricing, but some of the worst fears have yet to be confirmed. Washington state got out of the liquor business (including wine sales) at the end of May, following the passage of Novem- ber 2011 ballot Initiative 1183. Successful bidders in an auction of former state-run liquor stores, which primarily sold spirits but also wine, opened their doors for business. The number of liquor retailers rose from 328 in May to more than 1,500, ac- cording to Washington State Liquor Control Board information. But pricing has been a point of contention. Many people expected a greater number of retailers to heighten competition and in turn drive down prices. State liquor authorities, which are now re- sponsible solely for regulating and over- seeing the industry rather than retailing its products, say this is a near impossibility for big guys are trying to do broken-case charges and offer quantity discounts." —Michael Teer, Pike and Western Wine Shop the first two years of privatization. I-1183 "added a 10% fee at distribution and a 17% fee at retail," according to the FAQ on the Washington state Liquor Con- trol Board's website. "So, what you have is: distributors marking up the product (includes cost of goods, operating costs and profit) and adding a 10% fee, then retailers marking up the product (includes cost of goods, operating costs and profit) and adding a 17% fee." owns the Pike and Western Wine Shop opposite Seattle's winesandvines.com Pike Place market as well as Soul Wine in the South Lake Union neighborhood, says the impact on his wine prices hasn't been great because he largely works directly with Washington state win- eries or smaller distributors that aren't of- fering volume discounts or charging for split cases. Learn more: Search keywords "Washington flux." — Peter Mitham WSLCB estimates indicate that mark- ups post-privatization could total as much as 72% vs. the 51.9% mark-up at state- run stores. Distributors have to pay the state $150 million by March 31, 2013, en- suring higher prices until then, but the dis- tribution fee is set to drop to 5% after two years. Whether this results in lower prices at that point is unknown; the FAQ from WSLCB simply states: "Maybe." Seattle wine merchant Michael Teer, who WINES & VINES OCTOBER 2012 15