Drinking Better 

Sales of liquor are up in Idaho, but not because people are drinking more

When Howard Wasserstein walks into the liquor store on Broadway Avenue and Beacon Street, he sees a "big jewelry store."

"You're thinking, 'What? How can a liquor store look like a jewelry store?' But you'll see. Designing liquor stores is one of my favorite things," he said.

As deputy director for Procurement, Distribution and Retail Operations for the Idaho State Liquor Division, Wasserstein's job begins as soon as the delivery truck stocks the warehouse. It continues as products head through retail stores around Idaho, right up to the moment when a customer takes a bottle off the shelf. Wasserstein said he's one of those people who's happy to go to work every day.

Stepping into the 9-month-old Broadway Avenue liquor store (which is in the same strip mall as an Albertsons and a Noodle Express), Wasserstein pointed out how his comparison makes sense. Faux hardwood covers the floors, the ceiling is painted a deep black and track lighting accents the room. Deep cherry wood shelves hold more than 1,000 glass bottles.

"You don't see the lights embedded on the shelving units, but they reflect down and create a waterfall effect," he said. "It shines on the bottles like it would light up the box in a jewelry store."

There is a stark difference between the Broadway store and how liquor stores around the state have always looked.

"They were a little bit more black-and-white, government-looking—what you'd expect from a state-run liquor store," Wasserstein said. "Everything would be kind of blah-blah carpeting, overhead florescent lighting, and you couldn't tell who worked there because there was no uniform code."

As liquor sales in Idaho continue a yearslong upward trend, Wasserstein works to transform more stores into glossy retail centers like the one on Broadway. It's an effort to create a friendlier customer environment that maximizes revenue from liquor sales.

So far, the investment is paying off.

A Better Taste

The night before Thanksgiving 2014, a mysterious fire started in the strip mall formerly housing the liquor store on Broadway Avenue. Five businesses were destroyed.

At the time, the Liquor Division had already secured a new storefront and scrambled to get the new location up and running. Wasserstein set up whatever shelves he could get his hands on and made signs out of printer paper. Three weeks to the day of the fire, the new store was open for business, though it looked nothing like it does now.

With so much new inventory flooding the liquor retail market, the store needed a change anyway. Idaho State Liquor Division Director Jeff Anderson called it a "phenomenon."

"There's been this explosion of Stock Keeping Units—different brands, sizes, flavors," he said. "In order to meet the market, a store could have been shelved with 600 items. Now, it's more like 1,300. That requires more shelf space and room."

click to enlarge The 17th and State Street store (left) hasn't been redesigned yet, while the Liquor Store on Grove Street (right) has an especially unique appearance. - JESSICA MURRI
  • Jessica Murri
  • The 17th and State Street store (left) hasn't been redesigned yet, while the Liquor Store on Grove Street (right) has an especially unique appearance.

The new store is substantially bigger and more open, with new products, cocktail ingredients and sale items throughout. Where there used to be a dozen varieties of bourbon, now there are almost 30. Where there used to be one type of vodka, now there are more than 50—some of the weirder vodka flavors include glazed donut, cotton candy and salted caramel.

The 2014 Annual Report released by ISLD shows the trend of liquor sales on a continual upswing. This year, liquor sales resulted in $63 million for the state. In 2013, the numbers were about $3 million less. In 2012, the numbers were higher, but only because of some ISLD efficiency measures. In reality, liquor sales for 2012 were closer to $55 million, according to Anderson.

Despite the rise in profits, Anderson said people aren't necessarily drinking more. Per-capita consumption remains low, while sales continue to climb.

"People aren't just boozing it up," he said. "Their tastes are evolving."

Anderson said 20 years ago, most people who shopped at liquor stores drank whiskey or scotch. Most young people would take a Budweiser over that.

Now, people have more spirits to choose from, so are moving away from beer and wine sales.

Liquor stores in Idaho are also making it easier to purchase spirits with more locations (there are 12 inside Boise city limits), longer hours (most stores don't close until 9 p.m. on Friday and Saturday nights) and better selections.

"People don't have to figure out where their cocktail menu book is," Anderson said. "They can take that orange vodka, and put some tonic water in there and have a nice, refreshing drink."

Anderson said a recovering economy also means Idaho consumers are willing to spend a little more for a bottle, contributing to the increase.

The same holds true for on-premise drinking—meaning alcoholic beverages ordered at bars and restaurants. While the recession was in full force, Anderson said people didn't want to spend $9 on a cocktail. Now, people have more disposable income, so are likely to spend a little more.

"It's a canary-in-the-coal-mine indicator that economists look at, actually," Anderson said. "People are treating themselves."

Distributing the Cash

Liquor sales for fiscal year 2014—July 1, 2014-June 30, 2015—brought more than $63 million to the state of Idaho. Every year, those revenues are distributed through a fixed formula: about 2 percent goes to public schools ($1.2 million), 3.3 percent goes to substance abuse treatment, 1 percent goes to the state's three community colleges ($200,000 each), some goes to court services and welfare, and the rest is dispersed to the state's general fund and then divvied up to counties and cities.

It gets complicated. The general fund and the city/county fund split the money 50/50. What the cities and counties get depends on how much liquor they sold. For example, Boise sold $32.8 million in liquor in 2013 and received $3.2 million in 2014.

Liquor Division CFO Tony Faraca said cities and counties are handed a check and allowed to do what they want with the extra cash.

"I think Boise's goes into their general fund," he said. "Some communities send it to the police department, others give it to parks and recreation."

According to the most recent report, 2014 liquor sales contributed $24.2 million to the state's general fund. While it's a helpful boost here and there, it makes up only a small portion of the fund.

"We generated $5.2 billion for our general fund from sales tax, property tax and income tax," said Keith Bybee, principal budget and policy analyst for the Joint Finance-Appropriations Committee. "So $63 million out of $5.2 billion—I think that could be defined as a drop in the bucket."

Still, Anderson projects the Liquor Division will earn three-quarters of a billion dollars for the state, counties and cities over the next decade. He and Faraca both take it as a point of pride that the money from liquor sales stays in Idaho.

That's different for states that have privatized their liquor sales, opening the market to private sellers of hard alcohol under more relaxed regulations.

Idaho is one of 21 states and municipalities that still control liquor sales—along with Alabama, Maine, Montana, North Carolina, Utah, Vermont and Wyoming. Since Idaho is still a so-called "control state," liquor can only be purchased at state stores and never at retailers like Albertsons or Wal-Mart.

"Everything we earn and make stays in Idaho," Faraca said. "If you compare it to Washington [which privatized liquor sales in 2012], its retailers like Wal-Mart have headquarters in Arkansas. That money doesn't stay in the state, it goes back to wherever those companies are headquartered at, then to the shareholders and dividends. Most of those are out of state."

One of those states benefiting from Washington liquor purchases is Idaho.

Before the policy change in 2012, the price of liquor was about the same on both sides of the border. After Washington privatized sales, it added a 20.5 percent tax at checkout, whereas in the Gem State it's still only 6 percent.

Patron Tequila is a good example. In both Washington and Idaho, the bottle's shelf price is around $50. In Idaho, it costs about $53 after tax. In Washington, it's closer to $65.

"The real beneficiary is the little, tiny town of State Line," Faraca said.

State Line, Idaho sits right on the Idaho/Washington border near Interstate 90, between Post Falls, Idaho and Spokane, Wash. After Washington privatized liquor sales, the three stores in Post Falls were quickly overwhelmed by border business and the Liquor Division added its first new liquor store in several years to the town of State Line.

Though it boasts a population of about 40 people, State Line has the largest liquor store in the state with sales 50 percent higher than any single store in Boise—nearly $6 million in 2014 alone.

"I don't know what they'll do with their distribution," Faraca said. "Maybe they'll pave their streets with gold."

Keep the Liquor Pouring

The Liquor Division doesn't go out of its way to promote its product. It doesn't do any advertising or marketing. While some consumers may find the control-state regulations irritating, Faraca calls it a win-win.

click to enlarge IDAHO STATE LIQUOR DIVISION
  • Idaho State Liquor Division

"I lived in California for awhile, which is an open state," he said. "I moved back to Idaho and I thought it was so much easier when I could buy a bottle at Albertsons or WinCo. Now I realize the benefit of what we do. We see all the statistics about life and death, spousal abuse, car accidents and mortality rates, and control states have lower instances of those types of social ills compared to open states."

Anderson agreed.

"What's the value of not being able to pick up a half-pint of cheap vodka at 1:15 in the morning, after you've already been at happy hour for five hours?" he said. "We will not do things to stimulate the demand of a temperate consumer. Giving back is a result of what we do, it's not why we exist."

The people at the helm—Anderson, Faraca, Wasserstein—are more interested in running the Liquor Division like a business than a government agency.

For proof, visit the liquor stores on Grove Street in downtown Boise.

Wasserstein designed it during the 2014 FIFA World Cup in Brazil, picking bright, tropical colors for the walls and designing a stadium-like ceiling.

The checkout counter is made of barn wood and decorated with sheets of copper. Einstein lightbulbs hang above it. The concrete floor is coated in an espresso stain.

It's a stark difference from the stores that haven't been redone yet, like the location on State and 17th streets, which is cramped and brightly lit with florescent lights. The dark green carpet is speckled with old stains.

Anderson said changing the face of liquor stores will help attract more customers—namely women.

"The environments we're creating are potentially more inviting for a female consumer," he said. "If your store is in a lousy location with a poorly lit parking lot, some women would rather go pick up a bottle of wine."

Faraca added that more women have come into the industry since the 1990s with the proliferation of lower-proof alcohols and more flavors.

"We have suppliers that literally credit Sex and the City for bringing women into cocktails—cosmos and that sort of thing," Faraca said.

Before this massive facelift, Wasserstein said 70 percent of his customers were male. It's his goal to change that paradigm, but he hasn't seen much change yet.

Still, the Liquor Division is innovating. It launched a new website and campaign called Mix, Blend, Enjoy Responsibly. As with the redesigned stores and retail-focused business mindset, the website looks nothing like a government agency's homepage. It features cocktail recipes, product promotions, pictures of women holding colorful drinks and a banner photo of a couple toasting in front of a mountain range.

"We're putting our best foot forward," Wasserstein said. "We're trying to be as good at retailing as Whole Foods or an Apple Store. That's the target, and there's no reason why we can't do that here in Idaho."

click to enlarge mixblendenjoy.com offers cocktail recipes, product info and colorful photos. It looks nothing like a government website. - MIXBLENDENJOY.COM
  • mixblendenjoy.com
  • mixblendenjoy.com offers cocktail recipes, product info and colorful photos. It looks nothing like a government website.
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