Some of the state’s 1,200 package store owners packed the Legislative Office Building Monday to testify against Gov. Dannel P. Malloy’s proposal to eliminate minimum pricing of alcohol.
Currently, the lowest price a package store can charge for a bottle of alcohol is a set price known as the “bottle price.” It’s established by wholesalers and posted monthly. This keeps alcohol prices at smaller liquor stores in line with the prices at larger stores, which could otherwise offer discounts.
Carroll Hughes, a lobbyist for the Connecticut Package Store Association, said package store owners begrudgingly agreed to keep their doors open on Sundays in 2012 because eliminating the minimum bottle price would have been more detrimental to their business.
He said they agreed to Sunday sales as a “noble experiment” in order to get rid of the other proposals, which posed an even greater threat to their survival.
The real problem, according to Hughes, is Connecticut’s tax structure.
“We don’t sell as much as we should because we have an excise and sales tax,” Hughes said.
Larry Cass of Glenro Spirit Shoppe in Monroe said Sunday sales didn’t bring any additional business to his store. He said sales are down and the amount he has to pay to keep his doors open has increased. He said if minimum pricing is eliminated he will have to cut the hours of some of his employees, which means his customers won’t be receiving the level of service they expect.
Cass also predicted that if stores are allowed to stay open longer there will be an increase in DUI’s and an increase in the number of stores getting robbed.
Earlier this year, Malloy renewed his push to eliminate minimum pricing. He also proposed allowing alcohol sales until 10 p.m. Monday through Saturday and 8 p.m. on Sunday and increasing the number of package stores that can be owned by one person from three to six.
And not everyone who testified Monday was against the elimination of minimum pricing.
Edward Cooper, vice president for public affairs and community relations for Total Wine & More, said they support the legislation because it’s good for the consumer.
He testified that the minimum pricing scheme in Connecticut “drives price differentials between Connecticut and our neighboring states of between $5.00 and $8.00 on 1.75L bottles of alcohol.”
Rep. Vincent Candelora, R-North Branford, asked Cooper if he would support a proposal to lower the taxes on alcohol, instead of eliminating minimum pricing.
Cooper said he didn’t think it was necessarily the taxes that makes Connecticut less competitive than its neighboring states. The small package store owners in the room let out a loud chuckle.
“The chuckles we heard in this room are folks who really don’t want to compete on price,” Cooper said.
Some lawmakers expressed concern about the small package store owners, who might not be able to compete if minimum pricing is eliminated.
“We can’t look at things in a vacuum or isolation and I’m certainly concerned about our smaller industries that create a lot of jobs in the state,” Candelora said.
Cooper said despite what package store owners may think, Total Wine & More is not the “boogie man.”
He said they opened their store in Norwalk in December 2013 and none of the local package stores have gone out of business. The chain, which plans to open a store in Manchester in two weeks, operates 100 stores in 15 states.
“We’re for the customer on this issue, on [minimum bottle pricing], and I think package stores are only interested in themselves,” Cooper said.
Doug Rankin, owner of Missing Link Wholesale and Imports in West Hartford, told the committee that minimum bottle pricing is not the reason for Connecticut’s price discrepancies.
“What the bottle pricing laws do is form a firewall that prevents large chains from clubbing small and mid-sized package stores out of business,” Rankin said. “Without these laws, well-financed chains have the power to maintain artificially low prices on certain key items long enough to beat a local competitor out of business,whereby of course prices will then increase.”
State budget director Ben Barnes said the administration estimated the extension of the hours will produce another $500,000 in excise taxes and there will be $2.8 million increase in revenue with the elimination of minimum pricing.
“There’s a lot of uncertainty about the economic impact,” Barnes said.
He said Sunday sales came at a time when there were significant changes in preferences and buying patterns in the industry. But the underlying revenue estimates in the new two-year budget are based on the assumption that sales will increase if minimum pricing is eliminated and stores are allowed to stay open longer.
Barnes said they believe minimum pricing contributes to a large number of Connecticut residents purchasing alcohol in other states.
But ultimately they did not make the proposal to increase revenue.
“The governor has proposed these changes because they are pro-consumer and they favor the residents of the state of Connecticut who purchase alcoholic beverages,” Barnes said.
The liquor proposal is part of Malloy’s bigger revenue package, which was up for a public hearing in the Finance, Revenue and Bonding Committee on Monday.