Why you haven't seen beer, liquor in grocery stores

Liquor stores prep for increased competition when grocers enter the beer market in 2019

Jacob Laxen
The Coloradoan
Dom Gambone selects a 12-pack of beer from Odell Brewing Company at Bullfrog Wine and Spirits on N. College Avenue on Thursday, July 27, 2017.

As Bullfrog Wine & Spirits general manager Josh Beard glances out of his office window, he notices three gas station convenience stores and one of Colorado’s largest grocery stores.

All four establishments in Beard’s periphery from the North Fort Collins liquor store will soon become Bullfrog’s competitors as Colorado’s alcohol laws are overhauled with the most significant changes since Prohibition.

The low-alcohol beer currently stocked at grocery and convenience stores across Colorado is scheduled to become extinct in 2019, when retailers currently capped at selling 3.2 percent alcohol beers will be allowed to sell full-strength beer and malt beverages like Mike’s Hard Lemonade and Smirnoff Ice.

That means the state's approximately 1,600 liquor stores are expecting to see double the competition within two years.

“We all will have to do something different,” Beard said. “Some of us (liquor stores) are planning to get bigger. Some are planning to get smaller. Some will probably have to close.”

Dom Gambone selects a 12-pack of beer from Odell Brewing Company at Bullfrog Wine and Spirits on N. College Avenue on Thursday, July 27, 2017.

Though the ability to sell wine and spirits will still set liquor stores apart in 2019, that relief could be short-lived. Under the current schedule, Colorado grocery and convenience stores will be allowed to sell wine and spirits starting in 2037.

Both looming dates are the best-case scenarios for their neighboring liquor stores. Grocers operating under the existing 3.2 percent cap have the option to bypass the graduated laws — if they're willing to open up their checkbooks. 

Stores seeking to immediately sell full-strength alcohol have to buy two existing liquor licenses and any others within 1,500 feet, or five football fields, in an urban location. That boundary doubles in rural areas.

The prices of those licenses are negotiable, a measure to protect independent liquor stores from being immediately run out of business by the major grocers. 

Only one grocer has taken advantage of the process so far, according to the Colorado Department of Revenue.

Because the investigation and background check required to obtain the license is still pending, the state has declined to identify exactly who has applied. The application process typically takes about 90 days.

Bullfrog's main potential competition, King Soopers, and other eligible establishments have examined purchasing full-strength liquor licenses ahead of the set dates. There are six King Soopers stores in Fort Collins.

“We would love to sell alcohol, but the limitations in place make it difficult right now,” King Soopers spokesperson Kelli McGannon said. “But we continue to explore our options.”

Even if King Soopers decided to pursue early licenses, the chain wouldn't be able to buy a licence for every store in the state. Grocery stores are limited to five fully licensed locations in 2017, eight in 2022, 13 in 2027, and 20 in 2032. After 2037, open competition ensues.

Those limitations are a relief to liquor stores compared to a previous proposal to allow full-strength alcohol sales in grocery and liquor stores more immediately. 

Trever Craig works the front counter at Bullfrog Wine and Spirits on N. College Avenue on Thursday, July 27, 2017.

The territory stipulations and phased dates for full-strength sales were part of a legislative compromise in Senate Bill 197, which was signed into law last summer. The bipartisan bill staved off a potential statewide ballot initiative that was expected to vote in grocery store liquor sales during the last presidential election.

“Had it passed, it would have been catastrophic for independent liquor stores,” said Chuck Carlson, owner of Mulberry Max liquor store. “On a single day, competition would have doubled.”

Carlson is part of a 20-member congressional advisory group meeting monthly to sort out the final details of the alcohol sales transition. Many sides of the debate get a spot at the table, including grocery stores, liquor stores, distributors, consumer advocacy groups and other members of the alcohol industry.

As a result of that group's work, the law that started out as three paragraphs is now 26 pages.

“Down at the capital, if it’s about water or liquor, then bring your knives,” Carlson joked. “It seems like people will fight to the death over those issues. It has become a very complicated debate.”

While liquor store employees will still need to be 21 and older, 18-year-olds will be allowed to ring up alcohol purchases at grocery and convenience stores.

Walmart will be allowed full-strength beer sales, but was disallowed wine and liquor sales in a provision passed earlier this spring excluding the chain because of a licensing technicality. Target will be allowed wine and liquor sales.

Varieties of craft beer are purchased at Bullfrog Wine and Spirits on N. College Avenue on Thursday, July 27, 2017.

Other rules could be added before the 2019 full-strength beer launch date. There’s even a lobby to keep 3.2 products available in Colorado as a low-alcohol option.

Liquor stores have seen some regulations relaxed in the new legislation.

Independent liquor store owners can now own two stores in Colorado after previously being allowed just one. By 2027 they can own four. Some liquor store owners in the state have bought second stores, although none have yet in Fort Collins.

Though liquor stores previously weren't allowed to sell food, they now can as long as alcohol and tobacco products account for 80 percent of all sales.

But even with those additions, Colorado liquor stores are preparing for competition like they've never seen before.

“We are going to have to bank on better selection and better customer service," Beard said of Colorado liquor stores. "They are going to have convenience.”

More:4 things to know about Colorado's new liquor laws

Full-strength alcohol timeline in Colorado

Now: Grocery and convenience stores seeking to immediately sell full-strength alcohol have to buy two existing liquor licenses and any others within 1,500 feet, or five football fields, in an urban location or double that in a rural area.

2019: All grocery and convenience stores can sell full-strength beer and 3.2 percent alcohol beer is scheduled to go extinct. 

2037: All grocery and convenience stores can sell full-strength beer, wine and liquor.

Follow Jacob Laxen on Twitter and Instagram @jacoblaxen.

Varieties of beer are purchased at Bullfrog Wine and Spirits on N. College Avenue on Thursday, July 27, 2017.