Latest effort to expand beer into supermarkets fizzles out

Sponsor acknowledges bill had gone flat
The Colorado Statesman

Rep. Kevin Priola, R-Henderson, had hoped that his beer bill this year would ferment into a balanced approach to allow full-strength craft beer in supermarkets and convenience stores, while expanding the number of liquor licenses allowed. But when it became apparent that his measure had gone flat, he simply decided to kill it.

Priola on Tuesday acknowledged that he did not have the support of the 11 members who sit on the House Business, Labor, Economic and Workforce Development Committee. Rather than waste the committee’s time on House Bill 1178, he asked to spike it.

“In the interest of time and because the majority of this committee has indicated an unwillingness to move this bill forward, regardless of the merits or public policy of any amendments, I would simply ask for legislative courtesy and make a motion to PI this bill,” Priola explained to the committee, delightfully shocking craft brewers and liquor retailers who showed up to oppose the bill.

Since speculation began last year that Priola would introduce the measure, Colorado’s growing craft brew industry said the legislation was unnecessary, noting double-digit growth under the current regulatory model. Retailers also raised concerns that the measure would cut business by allowing more alcohol in competitive supermarkets and convenience stores.

This year marked the fifth most recent attempt at allowing full-strength beer in grocery and convenience stores. The last effort was in 2011. This year’s attempt would have:

• Allowed grocery and convenience stores to expand their liquor licenses from one to five. Current Colorado law prohibits the sale of full-strength beer, wine and liquor in most supermarkets and convenience stores, but it permits owners to hold one liquor license. All other locations are restricted to selling 3.2 percent or lower beer;

• Allowed breweries that produce under 6 million barrels of craft beer per year to sell their product in all supermarkets and convenience stores in the state; and

• Banned the sale of caffeinated alcoholic beverages and placed an alcohol limit of 10 percent on so-called “alco-pops,” or flavored alcoholic beverages.

The Colorado Brewers Guild, the Wine and Spirits Wholesalers Association of Colorado and the Colorado Licensed Beverage Association had all raised concerns. But despite the seemingly insurmountable opposition, Priola believed it was at least worth introducing the measure.

“I think it’s the right policy going forward,” he told The Colorado Statesman following the hearing.

Priola pointed out that since 1933, there have been 601 changes to the state’s liquor code, and that since 1973, there has been 469 changes. He said that is an indication that the liquor code needs to be modernized.

“This is still a modest proposal,” he said of his bill. “I just wanted to have time to talk to folks.”

But the craft brew industry felt there was little to talk about. While Priola said the bill was drafted to accommodate the industry, few craft brewers actually desired any change.

Sales of craft beers rose 14 percent in the first half of 2012 over the same period in 2011, and production rose by 12 percent, according to the Boulder-based Brewers Association. The industry also saw revenue growth of 12 percent in 2010 and 15 percent in 2011.

Colorado ranks second for the most number of breweries, and it ranks third in breweries per capita. There are 161 licensed craft breweries in Colorado, with over 60 in planning, according to the Colorado Brewers Guild.

“The reason that we have so many craft brewers, and the reason craft beer is so successful in Colorado, and the reason we’re called the Napa Valley of beer is because of our current regulatory environment, and any change in that makes us all really twitchy,” said Kevin DeLange, owner of Aurora-based Dry Dock Brewery.

DeLange recently took out a $5 million loan for a new production facility: “I am more nervous about regulatory uncertainty than I was signing that $5 million loan because I know what the rules are now, and I was willing to take out that $5 million loan, but the fact that they might change scares the crap out of us,” he lamented.

Steve Kurowski, spokesman for the Colorado Brewers Guild, said the reason there was no support is because lawmakers were afraid that they would negatively impact small businesses.

“Between independent liquor stores, independent breweries and the voice of small business, I think that’s what really came to the top in this whole discussion,” opined Kurowski. “This was a true vote for small businesses and independent business in Colorado.”

Jeanne McEvoy, executive director of the Colorado Licensed Beverage Association, believes the fact that Priola was unable to sway lawmakers is an indication that there is no public support for changing the model. She said much of the issue came down to safety, suggesting that smaller liquor stores do a better job prohibiting minors from purchasing alcohol than larger chains.

“The committee members really understood that this was about safety and keeping access away from minors,” she said. “To more than triple the number of locations where alcohol can be sold was not wise.

“And No. 2,” continued McEvoy, “It was about jobs, shifting a market from independent mom and pops to large corporate structures. It wasn’t palatable.”

But Priola rejected that argument. Before asking the committee to kill his own bill, he said it is unfair to suspect that supermarkets and convenience stores would be unable to regulate safety concerns.

“I’ve heard and read statements by some members of this committee that they honestly believe that letting grocery stores and convenience stores sell regular beer will increase access to min-ors,” expressed Priola, pointing out that Colorado would join more than 40 other states with his legislation. “Colleagues, it is a clear fact that grocery stores and convenience stores have been selling alcohol since 1933. And consistently have less total instances of selling to minors than liquor stores.”

Priola also took a jab at the craft brew industry, accusing it of hypocrisy for opposing the measure in Colorado, when they sell their products in supermarkets and convenience stores in other states.

“It amuses me that the same companies that are shut out of the market here, are the same ones that currently do business in other states,” he chided.

Kris Staaf, spokeswoman for Safeway, said her industry is disappointed by the lack of support Priola received.

“The arguments against the legislation just don’t hold up,” she said. “We have proven over the past five years that our one liquor store in Littleton sells responsibly, offers great Colorado craft products and competes with local liquor stores. We hear from our customers every day asking us why they can’t buy beer and wine in grocery stores.”

That said there have not been discussions taking place to perhaps run a ballot initiative — an idea that has been floated in the past.

“Campaigns are expensive,” explained Chris Howes, president of the Colorado Retail Council, which had supported Priola’s measure.

“I’m optimistic that there will be another vehicle where we see some progress in modernizing our statutes,” he concluded.

Peter@coloradostatesman.com