A new Colorado law nearly doubling the number of retail wine permits is squeezing sales at independent beverage alcohol stores statewide. Approved by a thin margin of votes in November 2022, Proposition 125 automatically allows wine sales at retailers with beer permits, including big box, grocery, and convenience stores. “It effectively doubled the number of wine licenses,” says Mat Dinsmore, owner of Wilbur’s Total Beverage in Fort Collins, Colorado, and manager of Wyatt’s Wet Goods in Longmont, Colorado. “At Wilbur’s and Wyatt’s, wine was about half of the business. How do we adapt [to this change]?”
Prior to the new law going into effect on March 1, Colorado had about 1,650 independent wine and spirits stores. “Another 1,600 licenses were added overnight,” Dinsmore says. “The vast majority are going to sell wine. It’s going to hurt. This legislation was nothing more than a cash grab by big businesses at the expense of mom-and-pop shops. Worst case scenario, 600 to 800 stores are gone in the next 12 to 24 months. Most of these stores grew up in a marketplace where there is a grocery store right next to them. Not everyone I know drinks, but everyone eats. People say they want to support small businesses, but on the other hand they do what is convenient for them.”
The law change is already impacting independent Colorado retailers. “Through March, wine sales for everyone I’ve talked to are off 8% to 30%, depending on the market and what is around you,” Dinsmore says. “Wilbur’s and Wyatt’s are both off not only in foot traffic, but it’s also changing the product mix of what’s going out the door.”
The decrease in retail wine sales appear to be down even further for smaller retailers. “Sales in some of the smaller stores are down 40% to 50%,” says Bruce Dierking, owner of Hazel’s Beverage World in Boulder, Colorado. “Most of us are going to lose some significant portion of our wine sales. Foot traffic is down, and everyone would be down even without this change.”
Wine sales have historically accounted for about 40% of overall sales at Hazel’s. “For us, there is a differentiation because we’ve always been a destination store,” Dierking says. “We are the store that has everything, and we have super knowledgeable people to talk about the products we sell. A lot of the big stores are not going to have anyone to knowledgeably discuss the products.”
In all, three propositions seeking to change the alcohol industry’s retail tier were on the Colorado ballot last year. Only Proposition 125 passed. Proposition 124 would have increased the number of retail liquor licenses a Colorado entity can hold to an unlimited number after 2037. Proposition 122 would have allowed third-party delivery of alcoholic beverages from companies such as Grubhub and Uber. “Between the three propositions our opponents spent $32 million—that’s Total Wine & More, Instacart, Grubhub, Doordash, Amazon, Walmart, and King Soopers,” Dinsmore says.
Colorado retailers, meanwhile, raised about $900,000 to fight the three ballot issues. “The big corporations outspent us on so many multiples, and yet we lost by less than 1%,” Dierking says. “They were able to use big money to change Colorado’s laws to their benefit. They’re all about the profit, and they truck the money out of town.”
In New York, wine and spirits retailers anticipate a major wine push in grocery stores from Wegmans, Costco, Amazon, and others. “Everyone wants a piece of the pie,” says Michael Correra, executive director of the Metro Package Store Association and owner of Michael-Towne Wines & Spirits in Brooklyn, New York. “We are very concerned. We’re going to continually let our voices be heard. Wines account for more than 75% of my overall sales.”
There are no beverage alcohol retail franchises in New York, where liquor licenses are limited to one per entity. “I’m optimistic the legislature and the leadership of our state will recognize this is an excellent system,” Correra says.
Now that Colorado grocers have secured wine sales, spirits sales are expected to be next in their crosshairs. “There is a bigger play at hand,” Dinsmore says. “Each state is getting picked off one at a time. Grocery stores don’t just want beer and wine. They want beer, wine, liquor, and for independent retailers to be gone, just like they’ve done with butchers.”
Dinsmore suggests that independent beverage alcohol retailers nationwide become involved and get ready to defend their turf. “I encourage retailers to engage with their state or national organization because they are coming for you next to change whatever laws they don’t like,” he says. “If you are not at the table, you are on the menu.”