We witnessed a bit of power politics last week. After more than four hours of testimony, the state Alcoholic Beverage Control Commission did as expected. Led by a couple of the Rev. Gov. Huckabee’s chief money men — J. J. Vigneault and Ron Fuller — the Commission approved a retail liquor store for a proposed Sam’s Club in Fayetteville.
Sam’s brought big guns from the Bentonville world headquarters of Wal-Mart, which owns the warehouse chain. They’d also enlisted Fayetteville bigwig support. The opposition of Springdale politicians caused Sam’s to lose an earlier permit application in that city. In Fayetteville, they’ll do anything — build a freeway ramp, grant tax breaks, sell a first-born child — to land a grocery store.
The permit is a transparent violation of the intent of state law. Back in the 1970s, the legislature banned chain liquor stores and also banned the sale of alcohol as part of grocery stores and other retail establishments. Competitors feared then that Walgreen would take over the state retail liquor business.
How, you ask, can Sam’s legally open a liquor outlet in a Sam’s? Simple. They just won’t put a doorway between the liquor store and the Sam’s. The entrances are side by side, just a few feet apart. But you’ll have to exit one store, under a canopy, to enter the other. The money all ends up the same place — Walton pockets.
Many were skeptical, with good reason, about Wal-Mart’s testimony that a single liquor store — the limit under current state law — was the only objective of this massive lobbying effort. Wayne Britt, a former Tyson Foods CEO who once sold a lot of chicken to Wal-Mart and whose son runs a Fayetteville liquor store, testified that a high Wal-Mart official had told him the company saw great profit potential in liquor sales and would change laws as needed to facilitate expansion. That’s not necessarily a bad thing.
Elsewhere in the country, Wal-Mart has joined Costco, the higher-end warehouse chain, in seeking to overturn the three-tier marketing schemes required in states like Arkansas. Under this scheme, wholesalers enjoy brand monopolies. Retailers may buy only from the wholesalers and only those beverages permitted for sale in the state. They may not sell goods below the wholesale price, which must be the same for all retailers. Wal-Mart, to put it mildly, generally doesn’t allow suppliers to dictate such terms.
It’s good for consumers if Wal-Mart and Costco succeed. Prices are lower and choices greater in states where retailers may buy direct from beverage producers, rather than going through a wholesaler. You’ll hear otherwise, but we don’t believe the noise that this practice contributes to teen drinking and other alcohol abuse.
We prefer the convenience of grocery store sale of wine and spirits, along with the price competition. We believe the better retail liquor outlets would continue to thrive with deeper selection, sophistication about wines and customer service, just as Kraftco, our neighborhood hardware store, has survived Home Depot. Wholesalers would continue to exist and prosper as useful one-stop suppliers with good storage facilities.
We don’t, however, much cotton to the notion that a family named Walton is allowed to sell flashlight batteries, frozen pizza, tires and gin under the same roof in Arkansas, but my friends at Heights Fine Wines, Grapevine, Colonial, etc., are not.