Convenience stores hope to acquire full-strength beer

By Jimy Valenti
THE COLORADO STATESMAN

Coloradans wanting to fill up their gas tank, buy a bag of chips and a pack of cigarettes at their local corner store are closer than ever to being able to add a full-strength six pack of beer to their list.

Lawmakers moved House Bill 1186, allowing convenience stores under 5,000 square feet to sell full strength beer, out of the House Business Affairs and Labor Committee with a 7-4 bipartisan vote on Feb. 10, after hours of testimony from 7-11 franchisees, local convenience and liquor storeowners, craft brewers and beer enthusiasts.

The bill comes a year after legislators gave liquor stores the ability to sell beer on Sundays, which convenience stores say has devastated their sale of 3.2 beer — previously the only kind of beer available on Sundays outside of bars and restaurants.

“July 1, 2008 was the day we became an inconvenience store,” Scott Paulson testified in committee, referencing the day a ban on Sunday sales was lifted. He is part owner of Silco Oil Co. that owns and operates 16 convenience stores in the state. Paulson and others said that beer sales have dropped up to 90 percent since last July.

The bill’s sponsor, Rep. Larry Liston, R-Colorado Springs, discussed a history of unfortunate legislation for convenience stores starting with a 2007 removal of gasoline low-cost selling regulations allowing grocery stores to sell gas below cost.

In 2008, the Legislature repealed a 75-year-old prohibition of Sunday sales in Colorado. According to Liston this gave liquor stores a virtual monopoly on beer sales and upset the convenience store business model.

“It [allowing Sunday beer sales] smashed the regulatory frame work convenience stores used to sell 3.2 beer,” said Liston in his opening remarks to the committee.

Liquor storeowners argued that they could legally operate only one store, while convenience storeowners can operate as many stores as they wish. Opponents argued this would give convenience stores an unfair advantage in marketing and purchasing power.

Many of those in attendance have made this committee hearing an annual event, as similar bills died the last two years in this same committee. Chairman Joe Rice, D-Littleton, jokingly welcomed back the packed room and recognized many of those who testified.

In years past grocery and convenience stores have unsuccessfully teamed up to get full-strength beer into their coolers. The debate, commonly framed as David vs. Goliath or large faceless corporations vs. small local business, worked well for liquor stores wishing to keep full-strength beer out of other retailers.

This year convenience stores broke away from grocery store chains and argued that they are just as local as any liquor retailer. They also only asked to sell full-strength beer and not wine or spirits like in years past. According to Liston, more than 70 percent of Colorado’s convenience stores are locally owned.

A grocery bill was introduced separately last Friday allowing grocery stores to buy out the liquor license of liquor retailers within 1,000 feet of their premises.

HB 1186 offers liquor stores some compromise by allowing them to sell non-perishable goods. Brandi Fisher-Pollock owns the 26,000 square-foot Fisher’s Liquor Barn in Grand Junction and said she doesn’t think this is much of a compromise.

“I don’t want to be in the food business,” said Fisher-Pollock. “I want to be in the beer business.”

Liquor storeowners testified for hours that beer was their so-called bread and butter, making up more than half their sales. Allowing convenience stores to sell beer, according to liquor retailers, would put hundreds of the state’s 1,600 liquor stores out of business.

Bill Graham owns Ska Brewery in Durango, and said that Colorado’s strong craft brew industry results directly from current regulations. He said he is afraid convenience stores will not have the shelf room for smaller craft beers like his own.

“We have a unique and healthy craft brewing market here in Colorado and this bill has the potential to really destroy that,” said Graham. “Lets face it, a convenience store isn’t going to stock the kind of brands that a mom and pop liquor store is going to carry.”

Mark Larson, the executive director of Colorado Wyoming Petroleum Marketers Association, said convenience stores across the state would welcome craft beer in a letter to the Colorado Craft Brewers Guild printed in the Feb. 5 Colorado Statesman.

In the letter, Larson offered to host a craft beer seminar at their annual Colorado/Wyoming trade show. Larson said that small beer labels, even those based in Colorado, are available in corner stores across 44 other states. Larson said local brewery fears of being overlooked in convenience stores are unwarranted.

“Convenience stores are already very attuned to turning products like milk, juice, tobacco products and a host of other perishable products,” said Larson “Why would craft beer be any different?”

Graham said he would attend the trade show, but isn’t convinced Larson’s motives are pure.

‘That’s basically a lot of pomp and circumstance,” said Graham. “They might say one thing and actually do another.”

The bill may have a tough road ahead as Senate President Brandon Shaffer, D-Longmont, said the state’s liquor laws are well balanced. He said he is leaning against it.

Representatives David Balmer, Laura Bradord, Edward Casso, Larry Liston, Kevin Priola, John Soper and Amy Stephens voted in favor of the bill; Reps. Andrew Kerr, Karen Middleton, Sarah Gagliardi and Joe Rice voted against it.

The bill will move to the House Finance Committee and is scheduled for a hearing on Feb. 24.

Jimy@coloradostatesman.com