I-1183 and the Alcohol Distribution Chain

Even as the various litigation questions get asked and answered to attract headlines, we are continuing to support many clients in each tier of the alcohol supply chain to deal with the changes brought by I-1183 and its implementation. The WSLCB and suppliers, distributors, and retailers are full-steam ahead on spirits privatization -- including ongoing evaluations and bidding on the privatizing state liquor store locations -- even as new rules and processes adopted or proposed by WSLCB are evolving. The logjam of spirits-related license applications is causing problems for the WSLCB, and now even causing problems for the federal TTB too concerning Washington retail applicants who are being told they must have certain federal permits at each of their locations. We are assisting clients to evaluate their business opportunities, pursue licenses and permits (or resist those that ought not to be required), and to comment on new rules and facilitate expedited approvals. Stay tuned...

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Cruz Turcott - April 18, 2012 5:04 PM

Speaking to members of the WA State Bartenders Guild, I've heard concerns that smaller establishments will have to stop carrying spirits from local craft distilleries because 1183 will keep them from ordering smaller quantities. I wonder if the recent exemption to 1183, allowing the sale of alcohol from "tasting rooms" directly to the public, will have any impact on those concerns. Just one question among dozens...

Jess Lyon - April 26, 2012 8:40 AM

I think that many local craft distilleries will have to become more marketing forward businesses than they were under a control state system. (One that I work with described the control system as "great at fostering mediocrity"). In my opinion this will likely need to include both direct sales efforts through tasting rooms and perhaps some self distribution -- but also coordination with effective distribution contracts and/or wholesale sales agents.

Pacific Northwest restaurants/bars and off-premise retailers know that their consumers prefer well-made local products (Seattle and Portland are by far the best craft beer markets in the country -- including in grocery channels), and they will find a way to continue showcasing craft spirits from producers who build a brand and offer reliable procurement and supply channel. The craft distillers that execute those functions well (in addition to making great products) could be hugely successful with more upside than ever before. --Jess

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