Stronger beer in Utah has weakened sales at the border

(Rick Egan | The Salt Lake Tribune) Cody Bateman, owner of Discount Liquor, rearranged the layout of his store because of the drop in sales of certain kinds of beer after the Nov. 1 change in the Utah liquor law, Tuesday, Jan. 14, 2020.

Liquor businesses in bordering communities — which for many years have profited from Utah’s strict alcohol laws — say they have been hit hard by the Beehive State’s new allowance for stronger beer.

Since Nov. 1 — when Utah began letting grocery and convenience stores sell brews with 5% alcohol by volume — beer sales have dropped anywhere from 20% to 30% at outlets in Evanston, Wyo.; Malad, Idaho; West Wendover, Nev.; and Dove Creek, Colo.

“We have seen quite a decrease in sales of our regular beers, like Budweiser and Coors," said Geoff Green, owner of the KJ Superstore in Malad. “We were expecting a drop but not as much as it has.”

Even the lure of an Idaho Lottery ticket has not been enough.

“A lot of people who would come up for the lottery would buy a 12-pack,” Green said. “But we’re not seeing as much of that either.”

He expects that may change, though, once the weather warms and people start heading out on vacation.

At Lee’s Discount Liquor in West Wendover, "Corona and other Mexican beers were affected most” by the Utah change, said manager Jose Correa. “We’re still trying to see what we can do to improve those numbers.”

Those sales are now staying in Utah because retail outlets are now allowed to sell stronger beer — putting the brew selection on par with other states. Beer that has a higher alcohol content than 5% ABV is sold in state liquor stores and subject to a 66.5% markup.

Previously, Utah grocery and convenience stores could sell beer that was 4% ABV (or 3.2% by weight) — a law that had endured since the demise of Prohibition some 86 years ago.

Not surprisingly, many Utahns who wanted higher-alcohol beer and didn’t want to pay the liquor store markup made special trips — or stopped when returning from vacation — to stock up on the lower-priced beer.

Under state law, of course, that is illegal.

With Utah stores now selling higher-alcohol beer, such subterfuge is no longer necessary, said Jim Olsen, president of the Utah Beer Wholesalers Association.

“There’s no reason to bootleg beer from convenience stores in Evanston, Malad, Mesquite and West Wendover,” Olsen said. “We are selling the same beer as stores in those border communities.”

Of course, Utahns still head to the borders for vodka, whiskey, gin and other hard liquors, which the Utah Department of Alcoholic Beverage Control marks up by 88%.

Cody Bateman, owner of Discount Liquor in Evanston, said that in advance of the Utah beer shift he changed the store’s layout, adding more sprits, craft beers — higher than 5% ABV — seltzers and other flavored malt beverages, which helped offset the loss of some domestic beer sales.

Bateman said most of his customers are Utahns. His store — 90 minutes and 80 miles from Salt Lake City just off Interstate 80 — is especially busy in the summer as “campers go to the Uinta Mountains and boaters head to Flaming Gorge and Bear Lake.”

Hunters — and the Thanksgiving and Christmas holidays — "keep the store busy in the fall,” he added. “January, February and March is our slow time.”

Correa said Lee’s Discount Liquor in West Wendover had a similar experience.

“Spirit sales are still pretty good, especially on the weekend when people come to the casinos.” He estimated that at least 80% of his customers on Saturday and Sunday are Utahns.

Frosty’s Market in Dove Creek reported beer sales are down about 20%, but owner Francie Gardner isn’t sure if its due to the new Utah law — a similar beer provision took effect in Colorado in January 2019 — or a combination.

“It’s hard to say. Colorado changed its law about the same time,” she said, “so I don’t know what to attribute it to."

In fact, Utah drinkers can thank Colorado — as well as Oklahoma and Kansas — for higher-alcohol beer in grocery stores. In recent years, those three states changed their laws to allow full-strength beer to be sold in retail outlets.

That left Utah — and, in a way, Minnesota — as the only places to have the 4% alcohol by volume beer requirement. (Most beer in the North Star State is sold in private liquor stores, not grocery stores.)

Large companies, such as Anheuser-Busch and MillerCoors, had warned that it was not worth brewing lighter beer for such a small market.

Gardner said allowing higher alcohol beer in Colorado’s grocery stores is hurting state liquor stores. She knows of several that have closed in the past year. In October, Denver’s 5280 magazine published a story with the headline: “Are grocery store beer sales killing Colorado’s liquor stores?"

While it’s too early to tell how Utah’s law will affect long-term profits at its state liquor stores — pre-Christmas beer sales at state-run outlets were down 43% from the same time the previous year — wine and spirits more than made up the difference, resulting in a 3.8% jump in overall sales during the holiday buildup.

About the same time the Colorado law changed, Frosty’s took down its old sign proclaiming “Last Stop for 6% Beer." Gardner said it has since been replaced with one that reads 'Last Liquor Store Before Utah."

While she doesn’t have an exact number, she said, "I do think we get quite a few customers from Utah.”

Monticello, about 25 miles away in Utah, has a state-run liquor store, Gardner said, "but customers say the prices are so high in the Beehive State, it’s cheaper to pay for gas and drive over.”