SC: ‘Increased consumption’: Why SC alcohol revenues continue to rise
By Warren L. Wise
October 13, 2018
Beyond the out-of-season blooming Bradford pears and behind the boardwalk overlooking a pond with a not-so-shy turtle waiting for a treat, Kim Dannelly sits with family members sipping a mimosa on an unusually steamy October morning.
The Conway resident had just finished attending a nearby 5K race to support breast cancer research with her 10-year-old daughter and her mother and decided to dart over for a leisurely breakfast and a cool drink at Blueberry’s Grill in North Myrtle Beach.
“It’s relaxing,” Dannelly said of her fluted cocktail while she waited for her omelette to arrive.
“She’s a mother of two. That’s why she needs a drink,” her mother, Patricia Price, chimed in with a chuckle.
Across South Carolina, customers such as Dannelly help to bring in new revenue for the state’s coffers. New venues don’t hurt either.
In the state capital, Trae Judy called the permit to sell alcohol at his recently opened Columbia music venue White Mule another cog in the wheel of doing business.
In Charleston, Jena Favors said a two-limit offering of beer and wine is an option for parents watching their children as they slide and crawl around the new OutSlide In indoor playground at Citadel Mall.
And at the state’s No. 1 tourist destination up the coast, Evi Spaho said customers sometimes want a Bloody Mary or a blushing mimosa with their village burrito or smoked salmon croissant at his second Blueberry’s Grill.
They represent three of the new businesses across South Carolina that recently tacked up licenses to sell alcoholic beverages.
Across the state, revenue from liquor, beer and wine permits, licenses and taxes has been on the rise over the past five years, a reflection of new restaurants, retail outlets and other vendors in the economic upswing, according to a Post and Courier review of records from the state Revenue and Fiscal Affairs Office and the Department of Revenue.
From 2012 to 2017, revenue from liquor licenses and taxes went up nearly 20 percent, to $76.7 million. During the same period, state income from beer and wine permits and taxes rose 9.1 percent, to $109.6 million. In all, the collection represents about 2 percent of the state’s general fund income of roughly $8.7 billion during the past budget year.
‘Increased consumption’
Rising revenues are not the result of increases in the state’s alcohol tax, license costs or filing fees, but reflect the overall upsurge in the economy over the past five years, according to Frank Rainwater, executive director of the state’s Revenue and Fiscal Affairs Office.
“It has been over a decade since the tax rates on alcoholic liquors were changed and several decades since the tax rates on beer and wine were changed,” Rainwater said. “The growth in these revenues is primarily from increased consumption.”
He pointed to the state’s growing population and rise in tourism as the main drivers. More venues opening in the post-recession years also help to boost sales.
The state’s population swelled by 400,000, or 8.6 percent, from 2010 to 2017 to more than 5 million, according to U.S. Census estimates.
Tourism is a $21.2 billion industry in South Carolina, a sector of the economy that has witnessed surge-after-surge spikes in growth in the post-recession years, according to the state Department of Parks, Recreation and Tourism.
As for the difference between the percentage growth in liquor revenue and beer and wine income for the state, Rainwater said liquor taxes include an inflationary factor which causes its growth rate to be a little higher than beer and wine taxes.
The tax rates on liquor includes both volume consumed and a price component. The price aspect is a 5 percent excise tax on the value of a drink for on-premises consumption. So as the price of a drink goes up, so does the value of the 5 percent, leading to higher income for the state, he said.
At the bar
On-premise permits for beer and wine sales account for the biggest chunk of establishments offering libations.
In Charleston County, that number stood at 906 as of Oct. 1. In Richland County, where the state capital of Columbia is located, there are 507 places to buy beer and wine and drink it on site.
In Greenville County, 593 businesses offer on-premise beer and wine consumption, while Horry County, where tourist-heavy, oceanside-getaway Myrtle Beach is the attraction, such sales can be found at 829 bars and restaurants.
Permits to consume beer and wine off-premises are not as numerous, especially in metro areas with more restaurants and bars, but they still account for a hefty part of the alcohol industry in South Carolina. Such permits mainly include convenience and grocery stores.
Charleston County, for instance, offers 378 places to buy beer and wine to go while Greenville has 409 licensed operations, Horry has 403 and Richland has 408.
On the hard liquor side of permitting for retailers, Horry County holds the distinction of having the most licenses — currently at 104, according to the state Revenue Department. Charleston, Greenville and Richland, the state’s largest metro areas, register less than 100 each.
For those establishments offering liquor by the drink, Horry just edges out Charleston for the most with 605 bars and restaurants offering cocktails as of Oct. 1.
The state’s filing fee for wholesalers, manufacturers and retailers of alcoholic liquors ranges between $200 and $300. For breweries, wineries, wholesale distributors, and retailers of beer and wine, the filing fee is $300.
Filing fees are on top of licensing fees, which are higher and generally renewed every two years, according to the Revenue Department.
For instance, a liquor manufacturer in South Carolina must pay a license fee of $50,200 every two years. A liquor store pays $1,400 every other year to keep its license while bars and restaurants offering liquor by the drink must write a check for $1,700 every two years.
For a bar, restaurant or retailer selling beer and wine for either on-premise or off-premise consumption, a permit costs $600 every two years.
For a bar, restaurant or retailer selling beer and wine for either on-premise or off-premise consumption, a permit costs $600 every two years.
Mimosa’s are a popular breakfast drink, such as this one at Blueberry’s Grill in North Myrtle Beach. Warren L. Wise/Staff
Judy, who owned The Music Farm in Charleston until earlier this year, called the ability to sell beer in his new music venue White Mule in Columbia’s Five Points part of doing business in the entertainment industry.
“It’s as important as anything,” he said. “It’s one of the five or six cogs in the wheel,” such as securing a place to do business, offering entertainment, hiring staff, and providing food and drinks.
Spaho, a chef who founded Blueberry’s Grill on the Grand Strand, said his clientele of mainly locals desires the option of having an alcoholic beverage.
“It’s very important,” he said. “When people have a day off, they want a drink with their breakfast or brunch.”
At Charleston’s new indoor playground OutSlide In, Favors called the option of selling limited amounts of beer and wine an amenity.
“It’s not a deal-breaker,” she said, if the venue hadn’t secured the alcohol permit from the state. “People can just have a beer and relax and watch their kids having fun. We limit sales to two drinks. It’s just an option, but one people can enjoy if they want.”