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Jim Shpall Of Applejack Wine & Spirits Talks Trends And Issues In The Colorado Market

July 8, 2011

Wheat Ridge, Colorado-based Applejack Wine & Spirits is widely acknowledged to be the largest single beverage alcohol retailer in the state, with over 15,000 SKUs sold and 50,000 square feet of retail space. President and CEO Jim Shpall has been an outspoken opponent of recent attempts by state legislators to change state law to allow for multiple beverage alcohol licenses. The most recent initiative was House Bill 1284, which was rejected by the State House in April. That bill would have allowed convenience and grocery stores to sell full strength beer, a measure that some believe would eventually open the door to sales of wine and spirits by chains such as Safeway and 7-Eleven. Shanken News Daily recently interviewed Shpall on this issue and trends in his market.

SND: What’s your position on the recently defeated Colorado legislative initiative to allow retailers to hold multiple licenses in Colorado?

Shpall: I’m against it, because I think it’s bad for the consumer. For the last five years, legislation has been introduced in Colorado that’s proffered by the grocery store and/or convenience store chains to allow them to sell beer, or beer and wine—or beer, wine and spirits—with multiple licenses.

SND: Who’s leading the charge for multiple licenses in Colorado?

Shpall: It’s being led by Safeway and 7-Eleven.

SND: Do you anticipate that the same bill will be introduced in next year’s legislative session?

Shpall: There’s always that possibility, but the legislature has become far more educated on the negative impact of the idea. The reality is that once you allow chains to come in—and by the way, I think Applejack would do well even in that environment—Safeway, for example, would bring in the top 500 to 1,000 SKUs. Those are usually the top national brands, in only one or two sizes for spirits, or a few hundred wines or a few top beers. Initially, they will lower the price to drive the local mom-and-pop stores out of business. Once that happens, they’ll raise their prices. Consumers are left only with chains that offer around 1,000 SKUs, so they end up with far less selection and higher prices.

SND: Have you been involved in fighting that legislatively?

Shpall: I’m always involved in some fashion—not necessarily in fighting but in educating the legislature, because I believe it’s bad for the consumer.

SND: Is there any consumer movement in the state for allowing chain/grocery store sales?

Shpall: The data show that once consumers are educated, they realize it’s not in their best interest to have chains. Our current system works, and there really isn’t a public outcry for change. People realize that Colorado has some of the lowest prices on wine, beer and spirits anywhere in the country. I can’t tell you how many people have come into my store and said they can buy a bottle of California wine for less here than in California.

SND: Why is that so?

Shpall: Because there’s so much competition in Colorado that we’re able to negotiate good prices. There isn’t the same competition in California for these wines, and I think that’s directly related to the fact that supermarket chains are so powerful there.

SND: Are you the largest retailer in the state of Colorado?

Shpall: We don’t share our figures, so there’s no way to really know. But we’ve been told by our suppliers that we’re their biggest account.

SND: Can you confirm that you do over $50 million in sales a year?

Shpall: I can neither confirm nor deny. We’ve been told over the years that we’re the largest single store in the country, volume-wise. Other stores have reported their figures, and we do beat them.

SND: Who are your biggest competitors?

Shpall: Right now, Colorado has approximately 1,600 independent liquor stores, all single-unit operations competing against each other. We do well because we work hard and we constantly try to ensure that we’re on the cutting edge of selection, service and price. My goal is to convince people that there’s an advantage to shopping at Applejack even if it means driving past six or seven other stores to get here. I don’t care so much about being the biggest. I want to make sure that I’m the best, and if I’m the best, the rest of it will follow.

SND: What are the most notable trends in the Denver market?

Shpall: We’re seeing a huge shift to craft, or what I call artisanal spirits. Anything that’s innovative is lapped up. In Colorado, we have a whiskey brand called Stranahan’s that’s on fire, and it was just bought by Proximo. There’s another whiskey called Breckenridge that’s also growing fast. Then there’s Leopold Brothers, which makes absinthe, whiskey, apple whiskey, blackberry liqueur, coffee liqueur, herbal liqueur, peach whiskey, peach liqueur and rye whiskey. Their portfolio is doing amazingly well. People are looking for a unique drink. They want to be on the cutting edge.

SND: What wine trends are you seeing in the Denver market? Is the business based on price?

Shpall: Everything is based on price. I still don’t see any growth at the high end. When the recession hit in 2008, the expensive wines—except for perhaps a few big name ones—all took a dive. I don’t see them recovering. I see the consumer always searching for the Holy Grail. For my customers, that means finding a wine that’s $15 or under with a high rating from Wine Spectator.

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