AR: Arkansas liquor stores see drop in sales following grocery wine expansion
Consumers wanted a larger and more varied assortment of wine at the same place they shop for groceries. But that success has a flip side, a decline in wine sales at independent wine and liquor stores.
Author: Lance Turner, Arkansas Business
July 9, 2018
LITTLE ROCK, Ark. (KTHV) – Grocery stores like Kroger said they’re seeing strong results now that they can sell an expanded selection of wine in Arkansas.
This came after the state Legislature last year approved Act 508, which allows grocery stores including Walmart, Kroger, and Harps in wet counties to sell wines from any winery.
Arkansas Business reported this has left independent wine and spirits stores seeing sales declines. Before the new law, stores like Walmart and Kroger could only sell wine from small wineries. Those that produce less than 250,000 gallons per year. But Act 508, which went into effect in October, dramatically expanded how much wine grocery stores could sell.
And now all manner of big grocers including big drugstore chains like Walgreens and CVS are getting in on the act. And as of July 3, the Arkansas Alcoholic Beverage Control Division had awarded 334 permits for grocery store wine. The big grocery chains won’t share specific numbers.
But Tim McCormack, the adult beverage manager for Kroger’s Delta Division in Memphis, told Arkansas Business that the chain is very pleased by the success of adding more wine to its stores. He said the percentage growth in sales of its expanded wine selection versus the limited amount previously offered has been, “Significant.”
He said the results are proof that consumers wanted a larger and more varied assortment of wine at the same place they shop for groceries. But that success has a flip side, a decline in wine sales at independent wine and liquor stores. A study out on Monday paid for by the United Beverage Retailers of Arkansas shows liquor stores throughout the state have seen total sales fall an average of 5.5 percent since October.
The decline was bigger at stores whose wine sales represent more than 40 percent of total sales. The report said those businesses saw an average decrease of 15 percent to 28 percent. As expected wines priced at between $10 and $15 per bottle took the greatest hit. Boxed wines sales were down by 30 percent. Still, the report showed that while the greatest decline in wine sales happened in December, down 20 points sales and store traffic have since stabilized.
And liquor sales have actually increased which at some stores has helped mitigate the decline in wine sales. So, what does the future look like for independent wine and liquor stores? Monday’s report notes that about 10 percent of liquor stores in the state are up for sale.
The report estimates that up to 30 percent of the industry will close doors or change hands over the next 12 to 18 months. The report also predicted increasing consolidation in the industry.
John Akins, President of the United Beverage Retailers of Arkansas, told Arkansas Business last week that some of the stores that are going out of business were probably already struggling as it was. “Act 508 was just the nail in the coffin,” he said.