David Dillon leading fresh push for supermarket sales of full-strength liquor

John Love bags items for a customer at R&J Discount Liquor near Douglas and Hillside on Thursday. (Jan. 8, 2015)
John Love bags items for a customer at R&J Discount Liquor near Douglas and Hillside on Thursday. (Jan. 8, 2015) The Wichita Eagle

A coalition of supermarket and convenience store chains is getting ready to make another run at changing Kansas law to allow the chains to sell stronger booze.

Previous efforts over about the past five years have fallen short in the state Legislature, largely because of the potential to drive existing licensed liquor stores out of business.

But the coalition, called Uncork Kansas, has a new proposal and a new leader in David Dillon, retired chairman and chief executive of the Kroger Co. Kroger is the parent company of Dillons stores. It’s the nation’s largest supermarket chain and second-largest retailer behind Wal-Mart, which also supports the coalition along with Hy-Vee and QuikTrip.

The coalition’s new bill hasn’t been introduced yet. According to Dillon, it will include a provision to cap the number of liquor licenses to allay legislators’ fears that big-box booze will drive the owners of small and family-owned liquor stores into bankruptcy.

The cap would let owners of small liquor stores recoup their investment in the business by selling their license to a supermarket or convenience store, he said.

Those that want to stay in business would have to adapt, Dillon said. He suggested that they could, by specializing in offering a broader selection of wines and/or locally produced beverages such as microbrew beers and craft liquors.

Convenience stores, which are currently limited to selling 3.2 beer and low-alcohol wine coolers, would be able to sell full-strength beer, Dillon said.

Grocery stores and supermarkets, now limited to 3.2 beer and wine coolers, would be able to offer a full line of beer, wine and spirits.

Liquor stores, now limited to selling only alcoholic beverages, would be able to expand their product lines and offer mixers, snacks, cigarettes, ice and other goods that go with drinks.

House hearing

Rep. Mark Hutton, the chairman of the House Commerce and Labor Committee that will handle the bill, said he is committed to giving it a hearing and a vote to see if it rises or falls on its merits.

Hutton, R-Wichita, said he hasn’t seen the actual bill. “I’m anxious to read it like everybody else.”

Last year’s Uncork Kansas bill died in the committee, which was then chaired by Rep. Marvin Kleeb, R-Overland Park, who opposed it.

Hutton said he supports the concept of allowing supermarkets to sell the stronger alcoholic beverages and eliminating the current system where such sales are limited to stand-alone liquor stores.

“I’m a free-market guy and right now it’s not a very free market with the way it’s set up,” Hutton said. “But the transition to that has to protect the small business people who have invested their life savings and more in their businesses.”

The proposal may not be an easy sell to some lawmakers.

Rep. John Carmichael, D-Wichita, said he’s mostly concerned about potential social and law-enforcement impacts if the state opens grocery stores to full-strength alcohol sales.

“I’ve always taken the position that hard liquor and hard beer and those kinds of things don’t have any place in a supermarket,” Carmichael said. He said having alcoholic beverages “on the shelf next to the Coca-Cola” sends the wrong message to minors.

“I think it keeps young people from understanding the fact that alcoholic beverages are for adults,” he said.

He also said that some liquor stores, including one near his home, will refuse to sell even to a person of legal age if there are strong indications that they’re buying for minors outside in the parking lot.

“That’s not going to happen when it’s Wal-Mart and Dillons,” he said.

Dillon said such concerns are misplaced. Grocery stores already sell a variety of adult-only products, such as 3.2 beer, cigarettes and pharmaceuticals, and are as capable of preventing sales to minors as anyone else, he said.

Liquor stores’ reaction

Keep Kansans in Business, an organization of liquor stores that has fended off previous Uncork Kansas bills, said the store owners as a group remain skeptical.

“As far as we know, nothing’s changed,” said Spencer Duncan, director of Keep Kansans in Business. “History tells us that what they say and what they put on paper are two very different things, and until we see a bill that does anything that they claim it will do, nobody’s believing it.”

Duncan said the liquor store owners and Uncork Kansas have had informal talks and Keep Kansans in Business members have attended legislative meetings where Uncork has pitched its ideas.

“Last year they went around and told (liquor store) retailers that they were writing a bill that gave them value for their license and would have people have to buy their license,” Duncan said. “That was not in the bill, but you had many retailers who they stood in their store and told that to.”

He said the group isn’t fundamentally opposed to capping the number of licenses and making grocery stores have to buy licenses from existing liquor stores.

“But what is that system going to look like?” Duncan said. “Is it going to be a cap for one year, or two years, for infinity? ‘Cause that makes a big difference.”

He also said there would need to be some provision for protecting access for stores that are not part of deep-pocket chains.

“Who do you think’s going to buy those licenses?” he said. “It’s not going to be the mom-and-pop grocery store and it’s not going to be the mom-and-pop convenience store. It’s going to be the big corporate Wal-Marts, Krogers. They can afford to buy those licenses.”

The Legislature returns to Topeka for its annual session beginning Monday. The bill is expected to be introduced soon after.

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.