Alcohol retailers: How is the beer law overhaul likely to affect me?

The biggest and most controversial change to Kansas alcohol regulation in decades looms in the not-too-distant future.

Grocery and convenience stores will be able to sell stronger beer starting in April 2019. And liquor stores can sell more non-alcoholic items – ice, lottery tickets, cigarettes, mixers and shot glasses – in their main businesses.

The change will give consumers more options.

“We are thrilled that we’re going to offer our customers the same convenience as … other states,” said Dana Knott, a Dillons communications manager in Hutchinson. Dillons is part of Uncork Kansas, a group of grocery and convenience store chains that sought the change.

Liquor store owners have a range of views about what the change will mean, from acceptance to fears it will put dozens if not hundreds of “mom-and-pop” stores out of business.

“I am glad to have some sort of compromise, but it’s certainly going to cost me money,” said Jeff Breault, an owner of R&J Discount Liquor at Douglas and Hillside. “Neither party is entirely happy with it. In that case, it usually tells you it was a good compromise.”

Jeremy Dawkins said he will likely shut down the Twilight Liquor store he runs with his dad at Pawnee and Hydraulic.

“Eighty percent of our sales are beer,” Dawkins said. “It won’t be viable to maintain.

“It was a ploy and it wasn’t a compromise,” he said of the bill signed into law. “Kansas government has sold out small businesses.”

What will change

Grocery and convenience stores will be able to sell beer with an alcoholic content of 6 percent by volume starting in April 2019 under the law signed by Gov. Sam Brownback on Tuesday. Those stores now sell beer with an alcoholic content of only 3.2 percent by weight.

Liquor stores will be able to sell non-alcoholic items in their main store instead of “smoke shops” to the side. Those items, other than tobacco and lottery tickets, can’t be more than 20 percent of a store’s gross sales.

Wine will remain exclusively at liquor stores. And Alcoholic Beverage Control would publish a 2029 study on the effect of the changes.

Uncork Kansas advocates said during a committee hearing this month that they will stop pushing for major changes in alcohol regulations while they wait for the 2029 assessment. But that isn’t binding, and the Legislature in the future can push for more changes.

Brian Davis, president of the Kansas Association of Beverage Retailers and owner of a Wichita liquor store, said he hopes the law will remain in effect for several years without more Uncork lobbying.

“At the end of the day, it’s a gentleman’s handshake,” said Davis, who owns the Davis Liquor store near K-15 and 47th Street South. “We just hope that they’ll hold to their word.”

The fate of 3.2 beer

The change in law comes after years of efforts by Uncork to sell wine and full-strength beer in grocery and convenience stores.

The attempts didn’t gain traction until this year, after Oklahoma and Colorado opted to allow full-strength beer in such stores.

Uncork advocates contended that brewers would back away from 3.2 beer because of declining demand. They say they worried about being stuck selling a type of beer with a shrinking supply and variety.

“3.2 beer, as we know it, was going to be severely diminished,” said Mike Thornbrugh, a QuikTrip government relations director in Tulsa. “Our biggest concern was addressed in that we will be able to remain in the beer business.”

He said that the change encourages chains like QuikTrip to add more stores in Kansas.

“Beer is a key category for the convenience store industry,” he said. “With the (3.2 beer) sales declining every year in Kansas, it didn’t give us a lot of incentive to add more stores.”

Liquor store owners – both those who support and oppose the changes – said Uncork was overplaying the dire fate of 3.2 beer.

“They were certainly crying wolf very loudly,” Breault said.

‘Something was going to happen’

Liquor store groups such as the Kansas Association of Beverage Retailers worked with Uncork advocates on the bill that became law.

Davis, its president, said House Republican leadership was adamant that the issue be addressed during this legislative session.

“Whether we were involved in it or not, something was going to happen,” Davis said. “It’s very hard to just sit there and not try.”

He said it was important to keep wine sales in liquor stores and have non-alcoholic sales partially offset declining beer sales.

“If we lost wine, we’d be in a world of hurt,” Davis said. “Instead of losing it all, I’d rather lose a little.”

Breault expects to take “a pretty good hit” on beer sales at his store, which sits across from a Dillons. And he says his store’s small footprint, at least compared to a Dillons store, means he won’t make up the difference through other products.

“I would assume that it will have a large negative effect on my store and my employee base,” Breault said.

“(But) you give up part of your leg to keep your other leg and your arm,” he added. “None of us were really happy to have this conversation. … We felt that this was something we needed to get on top of sooner rather than later.”

‘Gone within a year’

With the law signed, Dawkins said he probably won’t renew his liquor license for his store at the end of 2018.

“I’m planning on shutting down,” he said. “I know how it’s going to turn out: Fifty percent of the liquor stores are going to be gone within a year.”

Dawkins said he felt small stores didn’t get a chance to add input before the bill advanced in Topeka. He also said chains like QuikTrip, Dillons and Wal-Mart will be able to sell stronger beer with a smaller markup.

“They don’t need the profit to survive,” Dawkins said. “We can’t match that.”

Tammy Eflin owns Oxford Cork & Brew in Oxford, a town that sits between Winfield and Wellington in Sumner County. She said she was disappointed to see a lot of “yes” votes “that hadn’t been there in the past.”

“This bill, for whatever reason, went through really quickly,” Eflin said. “It was under the radar a little bit.”

Eflin says it’s hard to gauge the impact on her store since many residents commute for work. But she, too, worries about the drop in beer sales.

“I just don’t expect we’re going to make up those sales with lotteries and mixers,” Eflin said. “My hope is that people will support their local stores regardless of what town they’re in.”

Eflin also worries about stronger beer moving into a less-regulated environment. She doubts Alcoholic Beverage Control can keep up with the dramatic uptick in outlets selling strong beer.

“They (grocery stores) are going to have strong beer where anybody can get it. They’re going to have untrained clerks selling it,” Eflin said. “It’s going to be too easy for underage people to get strong beer.”

She also said closing liquor stores could be used by Uncork advocates to push for wine and hard liquor in more stores.

“We’re on a slippery slope,” Eflin said. “(And) the first step has been taken.”

This story was originally published April 23, 2017 at 3:41 PM with the headline "Alcohol retailers: How is the beer law overhaul likely to affect me?."