The nineteen control states this magazine profiles are diverse in their handling of beverage alcohol control, but they all maintain a top-down approach to managing sales and distribution. Although that management system is more common among control jurisdictions and offers efficiencies of scale, there are other approaches that better fit local customs and attitudes.
In Minnesota, there is no universal control system. Many cities and towns do regulate beverage alcohol sales, but their efforts are decentralized. More than 200 municipalities operate local liquor stores, out of approximately 850 cities and towns in the state, and those control jurisdictions represent more than $200 million in annual sales, or about 10 percent of alcohol volume sold in Minnesota.
How did this hybrid system develop? Paul Kaspszak, Executive Director of the Minnesota Municipal Beverage Association, the organization that advises local control jurisdictions, says it all started after prohibition ended.
“The cities decided that if there was going to be distribution, it would be better if they controlled it,” he says. “Local authorities decide how restrictive they want to be as far as sale times, days, and whether to offer licenses to private businesses. For on-premise, cities can also decide if they want both private and public sale, which requires a referendum.”
Each community in Minnesota makes its own decisions about how to balance sales in a responsible way that conforms to their local norms. For example, some towns don’t allow kegs because the residents feel it leads to underage drinking. The stores also balance pricing and product selection with their need to remain competitive. While they enjoy geographic exclusivity within their municipality, there’s often a privately-owned store down the road in the next town over competing for business.
“The municipal stores face the same pressures as anyone else, control state or not,” says Kaspszak. “They face the privatization question, often for different reasons than the ones state legislatures are using now in control states. Often a town privatizes for philosophical reasons, because the town itself is absorbed into another municipality, or the city council is unwilling to provide the necessary funds and infrastructure to compete in the marketplace.”
In general, Kaspszak says most towns are modernizing and expanding their operations, and the ones that pay attention to market trends are succeeding. His organization, the MMBA, actively visits member stores and gives them the tools and information to succeed in a difficult economic environment and a unique control structure. One such member store is Rogers Wines & Spirits in Rogers, MN.
A Control Mechanism and a Community Asset
As the largest combination on- and off-sale store in the state of Minnesota, Rogers Wine & Spirits demonstrates how a public store can survive – and thrive – in a hybrid control system. Liquor Operations Manager Gary Buysse attributes his store’s success (his annual sales are approximately $3 million) to community involvement.
“We work with high school parents and sponsor alcohol-free events for graduates, we encourage organizations to utilize us as a fundraiser by hosting wine events, and we consider ourselves a community asset,” Buysse says.
Like most private and public outlets, Rogers struggles to retain customer numbers and profitability in the touch economic conditions. The store was helped by an expansion from a 900 square-foot facility into its current 11,000 square-foot on- and off-premise operation. The extra space not only provides additional room for product selection, but allows Buysse to hold events.
“Our approach to wine events is very innovative, because we use them to generate revenue for causes,” Buysse says. “We’ve raised money for highschools, churches, groups that volunteer in the Dominic Republic. We’re not just a liquor dispensary; we want to help our community.”