Michael Langley, partner at barber law firm specialized in ABC matters within the wine & spirits industry, shares his vision and perspective on the year to come. His position as former head of ABC for eight years and his legal involvement in various liquor store projects gives him a unique perspective of the market dynamics and evolution.
There are multiple forces in the marketplace that will affect the alcohol industry in the coming months.
DISTRIBUTION: Southern, the largest liquor wholesaler in the nation has entered into an agreement to take over Glazer’s. No matter what you hear, any change in ownership or corporate leadership leads to change. New policies and procedures will undoubtedly arise. Some for the better and some for the worse.
REGULATION: The new rules of ABC, based on legislative changes, are now in effect. Microbreweries now have a broader base to operate. Their ability as small businesses to compete has been improved. Their growth in number and case count will continue. The other big change is measuring distance from a school or church for a liquor store now starts at the property line, not the building. This limits greatly a store’s ability to relocate but also gives them full use and enjoyment of their property.
Also a move is underway to allow dry counties to vote for ON-PREMISE consumption at hotels and restaurants. The key is the signature threshold is much lower than a full wet/dry vote. Dry counties or First Class Cities in Dry Counties that adopt this measure will create an atmosphere restaurant chains appreciate. This will lead to a bigger employment base. Also, the tax structure for these outlets is different than private clubs, allowing cities or counties to offset enforcement costs more easily.
MARKET SIZING: Walmart and Kroger failed in their attempt to bring wine to grocery stores in the last legislative session. It will not be their only attempt. I expect a similar move to come in 2017. In the meantime, Walmart is working behind the scenes to help Crawford and Johnson Counties collect signatures to place the issue on the 2016 ballot. Expect similar activities in Farmington, AR, Independence County and Randolph County if local efforts organize to be out front on the issue.
Medical Marijuana in some form will make the ballot in 2016. In the short term this should not affect the alcohol industry. Over the next 5-10 years this could become a new competitor as recreational use may follow across the country.
The drop in gas prices should continue through 2016. As a result disposable income will go up. People will go out to eat more and the average ticket at retail liquor stores should go up. This was the case in the last quarter of 2015.
COMPETITION: Saline county is in full swing as a wet county. There have been no issues. Stores are already on the move though. I doubt all stores stay open for 3 years. The competition is tough and locations are limited.
All in all, the alcohol industry is on the upswing in Arkansas..