Oklahoma voters have expanded where they can buy beer with a higher alcohol content, leaving some in Kansas to wonder how that will affect the future of so-called “near beer.”
“We are examining the potential impact of the vote in Oklahoma,” said Jeannine Koranda, spokeswoman for the Kansas Department of Revenue, which includes Alcoholic Beverage Control.
Currently, if you visit a grocery or convenience store in Kansas or Oklahoma, you can buy only that beer that has a lower alcoholic content, 3.2 percent by weight. You have to go to a liquor store for beer with a higher alcoholic content.
Oklahomans could be able to buy full-strength beer at groceries and convenience stores starting in October 2018 after voters approved State Question 792 last week. Opponents of the initiative may try to block it in court.
In Kansas, a push by grocery and convenience stores to sell full-strength beer and alcohol has failed repeatedly in the Legislature.
The question becomes how much equipment and resources are the brewers going to designate to make the 3.2 (percent) product. … That’s what we’ll want to keep an eye on: the availability of the 3.2 (percent) product.
Jason Watkins, Kansas Beer Wholesalers’ Association executive director
But the vote in the Sooner State has prompted reflection about the demand for 3.2 percent beer moving forward.
“The question becomes how much equipment and resources are the brewers going to designate to make the 3.2 product,” said Jason Watkins, executive director of the Kansas Beer Wholesalers’ Association. “That’s what we’ll want to keep an eye on: the availability of the 3.2 product.
“There’s still a considerable amount of time before Oklahoma basically no longer has to have 3.2 beer,” Watkins added.
Watkins doubted 3.2 percent beer would ever completely disappear, but he said the variety of choices could change.
“It’s going to be what products are available in 3.2 (percent) and what packages are available in 3.2 (percent),” Watkins said.
Production expected to drop
Convenience store chain QuikTrip, which operates in 11 states, wants to sell full-strength beer in its Kansas stores.
Mike Thornbrugh, a QuikTrip public and government affairs manager, said Oklahoma’s shift to allow full-strength beer in more places will dramatically decrease the production of 3.2 percent beer, because the state is such a massive consumer of it.
“Oklahoma has always been the lynchpin,” he said.
Oklahoma has always been the lynchpin.
Mike Thornbrugh, a QuikTrip public and government affairs manager
Following Oklahoma’s vote, Kansas is set to become the only state out of 11 where QuikTrip operates that will still have 3.2 percent beer, Thornbrugh said. He hopes the state Legislature acts soon so convenience stores won’t be left to sell a type of beer that brewers may shift away from altogether.
“This is really supposed to be, last time I checked, about the consumer and about competition,” he said. “Now is really the time to act upon it.”
Amy Campbell is the executive director of the Kansas Association of Beverage Retailers, which represents independent retail liquor stores. She said Kansas regulations have little in common with Oklahoma’s other than that both states have laws related to 3.2 percent beer. For example, Kansas liquor stores sell refrigerated full-strength beer and allow in-store tastings.
The Kansas liquor retail system is not the same as Oklahoma’s and really shouldn’t be impacted by choices that are made there.
Amy Campbell, Kansas Association of Beverage Retailers
“The Kansas liquor retail system is not the same as Oklahoma’s and really shouldn’t be impacted by choices that are made there,” Campbell said.
“Of course, we’re all watching what other states are doing,” she said. “We will certainly be open to learning from changes that happen around us.”
States watching industry
Minnesota and Utah have similar restrictions regulating beer sales using the 3.2 percent benchmark.
Utah officials are analyzing the impact of the Oklahoma vote to see whether it would result in breweries eliminating 3.2 percent beer, according to the Salt Lake Tribune.
Campbell doubts the brewers would halt 3.2 percent beer production altogether.
“We’re not anticipating that they intend to stop making or shipping the 3.2 product,” Campbell said.
Anheuser-Busch, a major brewer of 3.2 percent beer, praised the “consumer-driven effort” to modernize Oklahoma’s alcohol regulations.
Most importantly, we will continue to provide 3.2 beer to Kansas.
“Anheuser-Busch is a proud member of the Kansas beer community and has provided Kansas beer drinkers with their choice of beer, regardless of the alcohol content, for decades,” a company spokesperson said in a statement. “Ultimately, our focus is on the customer and we are prepared to continue to provide Kansas beer drinkers with the products they demand.
“Most importantly, we will continue to provide 3.2 beer to Kansas.”
3.2 beer tax revenue dropping
But some data suggests the demand for 3.2 percent beer is declining in Kansas anyway.
Beer with 3.2 percent alcohol by weight is taxed in Kansas as “cereal malt beverage.” Retailers are taxed by the gallon of what they buy from wholesalers.
In the 2012 fiscal year, the state made $2.1 million from cereal malt beverage taxes, according to the Kansas Department of Revenue.
$1,849,542 cereal malt beverage tax revenue, 2013 state fiscal year
$1,685,221 cereal malt beverage tax revenue, 2014 state fiscal year
$1,566,165 cereal malt beverage tax revenue, 2015 state fiscal year
$1,409,987 cereal malt beverage tax revenue, 2016 state fiscal year
It has dropped each of the past four fiscal years since then. The state made $1.4 million in taxes on cereal malt beverages in the 2016 fiscal year.
Some wholesalers pushed for a bill in the state Legislature this past session that would have allowed grocery and convenience stores to apply to the state to sell full-strength beer if tax revenue from 3.2 percent beer declined enough.
Liquor store owners opposed the bill, which later stalled.