Liquor Makers Fight for Equal Footing on Military Bases
Pentagon’s decision to exclude spirits but allow sales of beer and wine is seen as another blow to the liquor industry’s reputation
By Saabira Chaudhuri
September 15, 2018
Spirits companies have fought for decades to convince consumers and regulators that liquor should be treated the same as beer and wine. Now they’re taking on the U.S. military.
The Defense Department this summer began allowing military commissaries—the equivalent of grocery stores on bases—to sell beer and wine for the first time but not vodka, whiskey and other types of liquor. The ruling sparked an outcry among spirits makers who have since lobbied lawmakers to ensure their products can be sold in commissaries, too.
At stake isn’t so much revenue but reputation.
Military bases account for a small slice of liquor sales and spirits are available on bases at exchanges, akin to department stores. But liquor makers bristle at what they see as the stigma tied to being excluded.
“If your product is discriminated against, that sends a very negative image,” said Frank Coleman, a senior vice president at the Distilled Spirits Council, a trade body that counts Johnnie Walker owner Diageo DEO 0.80% PLC and Absolut owner Pernod Ricard SA among its ranks.
Members of the House Armed Services Committee asked the defense secretary for a study on adding liquor to commissary shelves. The findings are due this month.
The Pentagon’s ruling is seen as a setback for spirits makers, who have made progress in reducing liquor’s association—going back to Prohibition—with inebriation and bad behavior. In recent years distillers have won the right to sell liquor on Sundays and offer in-store tastings in many states. Liquor also is increasingly available in grocery stores, helping the industry take market share from beer.
Spirits reached a 35% share of U.S. alcohol servings last year, up from 27.7% in 2000, according to the Beer Institute, the trade body for big brewers. Beer’s share over this time dropped to 49.7% from 59.5%.
The Defense Department’s reasons for banning liquor sales are multifold: It doesn’t want to dislodge essentials like diapers and fresh vegetables from shelves; spirits aren’t sold in all grocery stores; and the move is in line with its strategy to make alcohol less glamorous. A 2015 study from Western Washington University shows that military service appears to encourage young men to consume more alcohol.
The spirits trade body argues the decision was misguided because liquor is available in grocery stores across 28 states in some form and that if the government wants to deglamorize alcohol it also shouldn’t allow sales of beer or wine.
The Beer Institute said the decision was justified because the alcohol content of cocktails varies, and is often much higher than in a standard drink.
Brewers have been particularly eager to defend their position at a time when spirits are attracting new drinkers, boosted by a return to TV advertising in the mid-1990s and the liquor industry’s increased efforts to woo women.
Spirits makers have complained for years that beer gets preferential treatment stemming from its reputation as the alcoholic beverage of moderation, which they argue is undeserved.
After Prohibition ended in 1933, beer regained its legal status months before other alcoholic beverages. Alcohol-control measures in many states included stores designated specifically to sell distilled liquor and wine, often not selling food or cigarettes. Beer, however, was made more widely available at some grocery stores and small markets.
Today, vestiges of those times still hamper the spirits industry, liquor makers say. Big spirits companies have to pay higher taxes than beer or winemakers on alcohol sold. Grocery-store liquor sales are legal in far fewer states than beer.
“Unfortunately there was this perception that beer was soft alcohol and spirits was hard,” said David Culver, chief lobbyist for Distilled Spirits Council on the commissary sales issue. “Modern science tells us alcohol is alcohol. It’s not what you drink, it’s how much you drink.”
Negative perceptions about spirits in particular still exist.
Earlier this month, the North American Interfraternity Conference, a trade body for male fraternities, voted to ban what it described as “hard alcohol” at chapter facilities and events, saying the move would make campuses safer and prevent alcohol abuse.
“While well-intentioned, implementing a policy that bans distilled spirits products while continuing to permit beer and wine is misguided and not supported by the science,” Mr. Coleman said.
On military bases, alcohol can be bought through 122 exchanges and 500 convenience stores. A small handful of commissaries began selling beer and wine in July on a trial basis. The Defense Department plans to gradually roll out beer and wine sales to most of its 237 commissaries in 13 countries.
A spokeswoman for the department said selling some beer and wine at commissaries makes its convenient for “shoppers to pick up a bottle of wine for dinner or a case of beer for a weekend cookout with the rest of their groceries.”