Tuesday, April 28, 2009

SOMETIMES I JUST CAN'T UNDERSTAND IT SOMETIMES

So logistically, our stores sit on the south shores of the Ohio River, which, for those of you who know your geography, finds us right at the very top of Northern Kentucky. The significance of the river is not only a boundary between states, but between two completely different systems of alcohol distribution. Ohio is what is called a control state, thereby all alcohol - wine, beer, liquor - must be sold at a MANDATORY MINIMUM PRICE, which equals to 33% above the cost, so a bottle that costs $6.66 will be approximately $10 retail. Kentucky on the other hand, is not a control state, which means that technically that $6.66 wholesale cost would (after the 11% wholesale tax is factored in) could be sold, theoretically, for $7.40 a bottle if we were so inclined. Obviously, with the tax included, the bottle cost is $7.39 so at one penny profit, we would not be making any money, but you get the point.

The benefits of being in this market are, well, quite nice. As a "bridge" store, we find ourselves selling to Ohians often - it's cheaper for them to come across the river than to shop their local wine stores. Yet the drawbacks are that A LOT of the wine in the market today usually doesn't come to Kentucky, thanks to the state's aversion to direct shipping, and with beer moreso than wine, there are many instances where the price for a particular product is the same.

What is really infuriating to us, is that when a product is retailing for $5.99 in Ohio, and it's the same price here, usually what that infers is that Ohio retailers can buy one bottle of that product, yet for us to get to the SAME price, we may have to buy 10 cases, 20 cases, 50 cases, maybe even 100 cases. Inventory management takes on a whole new level of stupidity at that moment.

Beer wholesalers are especially nonsensical in this regard. And the sad fact of the matter is that, they just don't care. Ultimately, it's the consumers getting screwed, no matter where you make your beer purchases here in Kentucky, and thanks to the antiquated 3-tier system, there is nothing that can be done about it. Except bitch and moan. Or tell the Buds and Millers of the world to go screw themselves and drink better beer like Sam Adams, Newcastle or microbrews from Bell's, Goose Island, Great Lakes or many others. You could also opt for wine if so inclined, but the point I am trying to make is - is there a point? - that there needs to be a revolution of thought behind modernizing the liquor laws in this country. We need to get beyond the sticking points of underage drinking and Blue Laws, and treat the industry as any other. Yes, you don't have to tell me about underage drinking - it's stupid and dealt with appropriately by current regulations and though can be improved, is for all intensive purposes, of sound implementation. Yet each state, in their need for inconsistency, confounds even the most temperate of individuals; anyone with good business acumen knows that the current model is inadequate, inane and just plain ridiculous.

Some forward minded folks within and outside of the industry should put aside agendas and differences and come up with an adaptable construct that will work in any state's government schematic, and streamline things for the sake of the consumer. Will it be difficult for the current 3-tier system? Hell yes! But will it be more efficient? Who knows? But anything has got to be better than what we've got working now, right?

2 comments:

ruOTQIhuydb85lq2mndtu6HIYboB.XTSMzqfGGU- said...

Amen!

I joined "free the grapes" several years ago. As a recent citizen of the buckeye state, I was infuriated last year when they started limiting the amount of direct shipment wines based on the volume of production by the winery-- an obvious attempt to "protect" Ohio wineries (as if they are actually competing with California).

I enjoy your posts, your weekly newsletter, and visiting your store...of course, I only look, I wouldn't admit bootlegging liquor across the bridge...

k2 said...

Thanks for the comments. It's not bootlegging to shop us if you are from Ohio. I wouldn't say anything about it if it were illegal, and we wouldn't be in business if it were.