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Colorado Retailers Face New Competition From Supermarkets After Change In State Law

February 22, 2019

Colorado’s retail market is facing a new reality this year, as supermarkets and convenience stores gained the right to sell full-strength beer on January 1. Some retailers say sales are already being impacted, while others caution that it’s too early for a full assessment. But there’s widespread consensus that the ranks of Colorado’s package store industry will diminish in the coming years.

“We expect that 20%-30% of the beer market will shift to the chain channel,” says Steve Findley, executive director of the Colorado Beer Distributors Association. The new law allows grocers and c-stores to sell full-strength beer, instead of the 3.2% abv beer previously allowed. Just one week after the measure became law, beer sales at Cheers Liquor Mart in Colorado Springs were down about 10%, notes co-owner Jack Backman, who adds that a Safeway near his store has installed a 30-door cooler. Mat Dinsmore, owner of Wilbur’s Total Beverage in Fort Collins, says his store was seeing a slowdown in both customer count and beer sales early in 2019. But Dinsmore adds that it’s too soon to tell whether the new law will result in an overall sales decline.

Colorado’s 1,600 independent liquor stores have never faced such competition, and many are taking steps to soften the blow. Liquor Mart in Boulder is putting greater focus on wine and spirits, particularly on local Colorado distilleries, while refining the store’s beer product mix. Dinsmore at Wilbur’s Total Beverage—where wine and spirits comprise 80% of sales—says that when it comes to mainstream beer, “it will be a race to the bottom for prices, and we won’t be able to beat the chains.” As a result, “we’re focusing on customer service and managing selection,” he says.

Still, Colorado retailers are already concerned about the impact the change could have on their wine and spirits sales if some beer shoppers—who in the past would also pick up a bottle of wine or Bourbon—no longer patronize their stores. “That’s a high risk,” says Bruce Dierking, co-founder of Hazel’s Beverage World in Boulder.

Dierking and his fellow Colorado retailers are particularly worried about prospects for small operators who rely heavily on beer sales and those located near chain stores. Package store closures are a certainty, they predict. “We’ll see 100-200 small liquor stores go out of business within the next two years,” says Backman. And Dierking adds, “When you double the number of outlets in the state that can sell beer, they won’t all survive. People aren’t going to drink more.”Terri Allan

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