Liquor News
10:39 am
Wed June 13, 2012

Bars warn: Your drink will cost more due to liquor privatization

“Chaos is building in the transition.”

From state-run to the now-privatized sale of liquor, poor communication between local watering holes and their distributors is creating a headache for bar owners ... and soon, a jump in costs will likely have you paying more for a drink.

Many bar owners around Washington foresaw the impact that the privatization of liquor would have on their establishments, and to delay the tax and price increases on booze, owners stocked up before the privatization.

Whether it’s a dive bar like The Haven, family-owned restaurant like Farrelli’s Pizza or specialty cocktail lounge like 1022 South in Tacoma — as well as bars in Seattle such as Belltown’s Cyclops — establishments acted early to temporarily delay the inevitable.

But, they say an increase in drink prices is sure to come.

“We stocked up before the privatization of liquor so we can keep our prices low as long as we can,” says Celinie Muir general manager of Parkland’s Farrelli’s Pizza.

The increased cost

According to the Department of Revenue, restaurants, bars and taverns are now required to pay a 13.7 spirits sales tax and spirits liter tax equating to $2.44 per liter, on top of the base price and mark-up margin. Toping off the taxes and fees, all spirits retailer licensees are also required to pay the state's Liquor Board 17 percent of gross annual spirits sales each year.

Gina Kaukola and John Hawkley, owners of Belltown’s Cyclops, explained that they stocked up on liquor to last their bar until mid-July, but after that they will have to raise their prices in order cover the increased cost of booze.

Other establishments are looking for alternative ways to absorb the costs.

The management at Seattle's El Gaucho is currently devising multiple options to balance the restaurant's bottom line. One idea is to distill their own Grid Iron vodka in partnership with SODO’s Glass Distillery so their customers aren’t hit with an increase in drink prices.

“At some point we can’t keep passing the cost down to our customers,” says Cooper Mills, general manager of El Gaucho.

Mills explained that “chaos is building in the transition” of the privatization of liquor. For now restaurants and bars carry the burden in what they say is poor communication and unclear pricing from distributors. KPLU left messages with three major distributors to talk about the problems, but our calls were not returned.

Sticker shock

Once the chaos has settled and the surpluses are exhausted, consumers will likely face higher prices not only at grocery stores but also at their favorite restaurants and bars.

June 1 marked the first day of privatized liquor sales, and more surprising than purchasing a bottle of vodka around the corner at your neighborhood grocer was the price of that bottle after taxes.

"Now, we start to compare prices," Greg Kramer told The Seattle Times, studying the price tag on a 750-milliliter bottle of Jack Daniel's whiskey. Safeway listed it for $22.99, or $18.99 with a loyalty-club card. After taxes, the lower price comes to about $25.70, almost a dollar more than he would have paid under the old system.