Competition in the retail beverage alcohol business continues to intensify in just about every market of the country. “The traditional off-sale business has changed,” says Dustin Mitzel, CEO of Happy Harry’s Bottle Shops, which operates five stores in North Dakota. Mitzel points to the entry of new deep-pocketed licensees in his market as some of his biggest competition. “We take every competitor seriously, but now our competitors include grocery and big box retailers.”
Indeed, numerous grocery—and even some convenience store—chains have greatly expanded their presence in the beverage alcohol space in recent years through enhanced in-store offerings, additional licenses, and in some cases, new freestanding liquor stores of their own. In North Dakota, for example, in addition to the likes of Walmart, Target, and Costco, Happy Harry’s now counts regional grocers such as Coborn’s, Hugo’s, and Family Fare as competitors. Mitzel believes the grocers are attracted to the category’s relatively high margins as compared to other products they carry. Covid-19 also likely helped fuel the trend, he adds, as “consumers didn’t want to make a lot of stops. Groceries saw this and started to carry more inventory.”
Scott Scanlon, executive vice president of alcoholic beverages at research firm Circana, agrees that in addition to the strong margins on spirits, free-standing liquor stores for supermarket companies “give them an environment to focus exclusively on beverage alcohol, unlike in grocery, where so many consumer packaged goods products are a distraction.” The abundance of space that comes with a dedicated store allows the companies to offer a wider selection of products like RTDs than they can carry at traditional groceries, Scanlon adds.
Varying state, county, and municipal regulations, of course, dictate the ability of supermarkets and c-stores to sell any form of beverage alcohol in their traditional stores, as well as in new ventures. In many cases, restrictions on selling products like spirits in groceries has forced the operators to be creative in carving out solutions. In Minnesota, for example, groceries can sell only 3.2% abv beer, but an adjoining liquor store with a separate entrance is permitted. This model has become quite popular. According to the Minnesota Licensed Beverage Association, in 2007, there were about 70 liquor stores owned by grocery stores and warehouse store chains in the state. By 2024, the number had more than tripled to 223 big box-, grocery-, and convenience-owned liquor stores, including those operated by Coborn’s, Cub Foods, Hy-Vee, Casey’s, and Kwik Trip.
Master Merchandiser
Lakeland, Florida-based Publix has mastered the free-standing liquor store model, operating more than 350 such sites, mostly all in the Sunshine State. Florida law prohibits the sale of full-strength spirits in groceries and c-stores, but most of the chain’s near 900 groceries in the state offer beer and wine. Publix Liquors stores, launched in 2003, are often located adjacent to a sibling grocery store, providing convenience for shoppers. But the regional grocer appears to have set its liquor store sights beyond Florida—last year, Publix expanded into Kentucky, including the opening of a liquor store in Louisville that features more than 150 Bourbons. At least one more liquor store is planned for the area.
Winn-Dixie is another southeastern grocer with a chain of liquor stores, and similar to Publix, in Florida its beverage alcohol shops are usually located adjacent to a sister supermarket. In a unique example, in Apoka, Florida, a glass wall separates the two businesses, a feature designed to “increase customer awareness and drive traffic,” according to Dewayne Rabon, chief merchandising officer at Southeastern Grocers, the parent company of Winn-Dixie and Harvey’s supermarkets. A Belleview, Florida Winn-Dixie liquor store, meanwhile, offers drive-thru service.
Earlier this year, a consortium of private investors and C&S Wholesale Grocers acquired Southeastern Grocers (SEG) and its existing liquor store business from Aldi, which had purchased the operations in 2024. According to an SEG spokesperson, the company plans to reopen select liquor stores that previously closed as part of the Aldi conversion. The grocer will share additional information about its liquor store business as it becomes available, the spokesperson said. Aldi sells its private-label beers and wines at many locations but has avoided spirits sales in the U.S. so far. With a rebranding of some Winn-Dixies to Aldis already underway, those stores were not part of the sale to the consortium.
In an interesting development four years ago, Southeastern Grocers opened a free-standing liquor store in Jacksonville, Florida not adjacent to a supermarket, and with a distinctive identity. WD’s Wine, Beer & Spirits “provides a unique destination for customers to explore our extensive selection of more than 1,700 wines, 500 beer varieties, and 1,400 spirits,” says Rabon, who notes the store also features a beer cave, a cigar humidor, and a seating area for events. “The positive response to this concept has been overwhelming,” he adds. As for recent trends for beverage alcohol at Southeastern Grocers, Rabon points to the emergence of RTDs, “while spirits like Tequila, whisk(e)y, and gin continue to gain momentum.” He adds that while “wine has faced some challenges aligned with national trends,” most recently the company is seeing a resurgence in consumer interest. In beer, imports, super-premiums, FMBs, and non-alcoholic brews are leading growth, he says.
Exclusive Destination
Midwestern supermarket chains are also investing in freestanding liquor stores. With nearly 300 grocery stores in eight states and growing, Hy-Vee Inc. has long offered beer, wine, and spirits in its stores. But four years ago, the company launched a chain of stand-alone liquor stores under the Wall to Wall Wine & Spirits banner, with three locations in Nebraska, and one in its home state of Iowa. Ranging in size from 15,000 to 30,000 square feet, Wall to Wall stores feature an “eclectic” selection of wine and spirits, along with craft brews, at a “price point for all customers,” says Jay Wilson, vice president of wine & spirits at Hy-Vee and COO at Wall to Wall. The liquor stores also employ knowledgeable team members such as certified sommeliers “to help guide customers in their product selection and share information behind each beverage,” Wilson says. Store features include wine tasting bars, temperature-controlled wine rooms, walk-in humidors, and single-barrel offerings. Customer feedback on the concept has been “extremely positive,” the retailer notes. “We’ve positioned Wall to Wall as an exclusive destination for special and unique wines, beers, spirits, and more,” a move that has enabled the company to expand its customer base significantly, Wilson adds.
Minnesota-based grocer Coborn’s Inc. operates several liquor store chains, including Coborn’s Liquor and Cash Wise Liquor, both extensions of its supermarket banners. The company has also acquired small family-owned liquor store chains, such as Captain Jack’s Liquor Land in North Dakota, as well as Andy’s Liquors in Minnesota, purchased from the Chafoulias family in 2020. Other midwestern grocers with dedicated liquor stores include Fareway and its Fareway Spirits & More concept in Minnesota, Hugo’s Family Marketplace’s Hugo’s Wine & Spirits chain in Minnesota and North Dakota, and Cub Foods’ Cub Wine & Spirits and Cub Liquors in Minnesota.
C-Store Contenders
Major c-store chains have also been leaning into beverage alcohol in recent years, both in store and via freestanding shops in some markets. Iowa-based Casey’s General Stores, with nearly 2,900 locations in 20 states, maintains that it’s the fourth-largest holder of liquor licenses in the country. Many Casey’s stores are located in rural midwestern markets, offering a wide variety of products, including spirits, where legal. The fifth-largest pizza chain in the US, Casey’s has additionally put a big focus on beer in recent years. But freestanding stores may also hold potential for Casey’s. Late last year, the c-store chain purchased Wow! Foodmart LLC and its retail portfolio, which includes four liquor stores in Kentucky.
Wisconsin-based Kwik Trip, meanwhile, launched its Kwik Spirits arm of liquor stores three years ago. With 31 locations already in Wisconsin, Minnesota, and Iowa, the Kwik Spirits chain is largely comprised of shops that adjoin sister c-stores, but a handful of locations in Wisconsin and Iowa are standalone stores. In addition to beverage alcohol, Kwik Spirits stores sell humidor cigars and other tobacco products. Elsewhere, Wallis Cos., a franchisee of the On the Run c-store chain, operates Dirt Cheap liquor stores, with 17 locations in Missouri.
According to Lock Reddic, president of Green’s Beverages, with stores in Georgia and South Carolina, small independent c-stores are also working to increase their beverage alcohol sales. He points to mom-and-pop stores in South Carolina that “chop off 250 square feet from the convenience store and put a separate door in,” allowing for the sale of full-strength spirits.
Fighting Back
Independent liquor store operators say the enhanced efforts by groceries and c-stores in the beverage alcohol space has ratcheted up competition. “I try to attract the Publix demographic,” says Barry Broudy, co-owner of Broudy’s Liquors in northeastern Florida. “When Publix opens near me with a liquor store, I feel it more than another independent opening a store. My customer count goes down.”
In South Carolina, meanwhile, Reddic says independent package stores have been somewhat protected from chain competition. He attributes that to proactive efforts by the state’s liquor stores to push back on any advances. “Of the 1,100 liquor stores in South Carolina, more than half are located in strip centers adjacent to grocery stores,” he explains. “That model has been in place for 90 years, and grocers have a hard time trying to put in their own liquor stores as they would be deemed too close to another licensee.”
Still, independent operators must work hard to compete with and differentiate from the much larger chains. Reddic says he pours over industry data and news reports that may point to emerging trends in an effort to get a leg up. Mitzel at Happy Harry’s adds that visits to other markets helps him pick up on new trends, and that at just five stores, his company can be nimble in making adjustments. At Broudy’s, “we try to connect with our customers by bringing liquid to lips through events like in-store tastings,” the retailer says. Those tastings, which include cocktail demos, are seldom seen at grocery-owned stores, Broudy adds.
By all accounts, beverage alcohol expansion efforts by supermarket and c-store operators are expected to continue. “Liquor used to be something that some stores in a chain did,” says Broudy. “Now, it’s become an entire department for them.” Southeastern Grocers’ Rabon doesn’t argue. “Looking ahead, we see immense potential for this category at Winn-Dixie,” the executive says. “Through exciting promotions and customer-focused innovations, we’re committed to solidifying our position as a premier destination for adult beverages.”