I have been perplexed at so many states and their public officials who seem eager to loosen alcohol regulations. Now I think I know why. They are hoping to gain economic benefits for their local communities and small businesses. While that may be a worthy goal, several things could go wrong. It could result in increased alcohol-related harm as well as helping national chains versus local, small businesses.

Let us look at the alcohol business landscape as many legislators are reacting to changes in the alcohol marketplace and hope to gain the economic benefit of more local beer, wine, and spirits manufacturers in their community:

It used to be that most alcohol products were owned and sold by foreign companies such as Diageo (based in the UK) or Pernod-Ricard (based in Paris). Even Anheuser-Busch was sold to a Belgian/Brazilian company and is now headquartered in Belgium. But that has changed with the “craft alcohol” movement and the increase in local/state suppliers. The US based alcohol business is a huge economic development prospect. Everyone wants to get in the game. And, that includes very large soda companies.

The Four Loko company has produced a colorful chart to illustrate this phenomenon. Here is what they say about the alcohol market:

Alcohol plays an enormous role in our economy. In the U.S. alone, the alcohol beverage industry is responsible for sustaining more than 4 million jobs and generating almost $70 billion in annual tax revenue. And that doesn’t scratch the surface of the economic benefits the alcohol industry provides to late night restaurants and pizza shops.

Just look at what has happened to vodka sales, the most popular spirit product. For many years, the Diageo-owned brand named Smirnoff was the top selling brand. But, in 2019, it was overtaken by Tito’s Handmade Vodka. And, today Tito’s has enjoyed three years at the top.

No wonder public officials covet such a business. Tito’s company has several hundred employees and operates in the Austin, Texas area on land where he developed his product. In 2021, his company made $28 million in revenue. Plus, Tito’s emphasizes giving to charities. I have heard Bert “Tito” Beveridge speak at least twice and he always talks about the non-profits he gives to and his website echoes that ethic.

There’s a new liquor king, and it’s not owned by any of the alcohol giants. Tito’s Handmade Vodka, a pioneer of the so-called craft spirits movement, has surged past Smirnoff and Jack Daniel’s to become the top-selling spirits brand in the U.S., according to publication Wine & Spirits Daily.

Tito’s Takes Top Sales Spot Among All Liquor Brands, Ad Age

But not everyone has the gumption and persistence of a guy like Tito. It took a very long time and many different jobs before he saw success. (His story can be viewed on the Tito’s website.) And, the alcohol business relies on balancing business and public health needs. Once the balance is disrupted, alcohol harm can increase.

My home state of Oregon is a cautionary tale where the alcohol business of small operators is huge. It started with the wine business. By 2021, Oregon ranked fourth in the nation with 917 wineries. All are small and often you see Oregon wine wining prizes in international competition. This pattern was repeated for beer and spirits. In 2021, the “zippia” company ranked Oregon 5^th in the nation in terms of total and per capita number of breweries with 311. By 2018, Oregon had added to its stock of distilleries with 64. Today, it likely has many more.

But, as Oregon grew its alcohol businesses, citizens started changing their drinking habits. In looking at consumption data, Oregonians changed around 2002 by consuming more spirits and then more beer around 2006-7. Oregon has always drunk more wine than the general population in the US. As Oregon’s alcohol businesses grew, so did the drinking. Now Oregon shows up in statistics in terms of harm. According to the Oregon Recovers website, alcohol harm costs $6.7 billion annually and Oregon ranks 50^th among states in terms of access to treatment. To illustrate the harm, Oregon Recovers notes there are 6 deaths per day due to alcohol versus 1-2 per day for drug overdoses.   The Oregon Health Authority has initiated a program called “Rethink the Drink.”

In conclusion, public officials should recognize that the economic value of more alcohol businesses may be a mixed blessing. It could be the cause of more alcohol harm, so go slow! There are enough examples of states with a flourishing alcohol business to estimate whether an increase in businesses will result in increased harm.

Sources:

Alcohol Beverage Industry Economic Impact, Four Loko

Tito’s Takes Top Sales Spot Among All Liquor Brands, Ad Age

The States With the Most Wineries in 2021, Vinepair

The State with the Most Breweries, Zippia

US Distilleries 2006 to 2022, American Distilling Institute

Apparent Per Capita Alcohol Consumption, National Institute on Alcohol Abuse and Alcoholism