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Washington border’s liquor market

whiskey

The voter-determined Washington state shift of liquor sales from a state-run to a (regulated) private system may have only marginal effects within that state. With some exceptions, prices likely (this is based largely on the California and Nevada experience) won’t change too drastically, and the often-ballyhooed social effects aren’t likely to amount to much.

Could be that the result of that vote impact Oregon and Idaho just as well as Washington.

Of Oregon, there’s already been plenty written, and will be more, if only on these grounds: Washington’s political environment is similar enough to Oregon’s that a comparable public-to-private shift isn’t hard to feature. Especially with private-sales states both to the north and south.

The Oregon Liquor Control Commission evidently takes the idea seriously enough to do some pushback.

You may have heard some say that liquor is cheaper in California. The facts are that only a handful of products are significantly lower, while most products are very competitive. In fact, after you’ve added in the California sales tax, many popular products in Oregon are actually less expensive.

Many retail stores in states like California use a sales tactic called “loss leaders.” This is the practice of drastically marking down a few popular, fast-moving products to entice customers into coming into the store and purchasing other products. But then other products are likely marked higher to make up the cost difference.

The OLCC does not use these techniques to entice people into liquor stores. For public safety reasons, the state does not try to encourage alcohol sales or try to entice people into the stores.

The most common size bottle sold in Oregon is 750 ml also known as “fifths.” Most people who purchase alcohol purchase this size – and this is the size where Oregon is the most competitive.

We took the advertised prices from a popular grocery chain and liquor store in California (including their sales tax) and compared them to Oregon. The price comparison showed that the final cost of a “fifth” of Smirnoff Vodka in Oregon was $12.95. In California, the final price (including sales tax) was $15.21. Another popular brand, Bailey’s Irish Cream, was $21.95 in Oregon – the average price, including tax, was $23.92 in California.

In a 2010 study, there were many brands in which the Oregon price was lower than California ’s: Bacardi, Jack Daniels, Seagrams, Jose Cuervo and Hennessy – just to name a few.

Our informal sense (in our household, there are periodic trips between northwest Oregon and northern California) is that, the OLCC notwithstanding, better liquor deals can be had in California. But not by enormous margins.

There’s been somewhat less talk about Oregonians heading north to buy liquor. But the talk of northern Idahoans heading west to buy in Washington state has been ramping up.

A Spokesman-Review article out today says that 13 (at least) Idaho liquor stores are within 15 miles of the border with Washington, and they account for about 23% of liquor sales in the state. They have been high producers because Idaho liquor prices have traditionally been lower than in Washington – a situation likely soon to change. Idaho could lose millions in sales profits in Northern Idaho next year. And Idaho doesn’t, at present anyway, seem to be making any moves toward sending its liquor sales into private hands.

A point not noted was this: What if Oregon (as seems probable) joins Washington in going private? The impact would likely be less, but Ontario could become as busy with liquor sales as it once was selling lottery tickets.

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