Dive Brief:
- Once the new year hits, Colorado grocers and convenience stores can sell full-strength beer from 8 a.m. to midnight every day rather than only "near beer," a holdover from Prohibition-era laws, The Colorado Sun reported. Brewers have already stopped producing the 3.2% alcohol by weight beer, while stores have rearranged layouts and added refrigerators to prepare for its first day of sales on January 1.
- Previously, Colorado consumers could only buy most craft brews at specialty liquor stores, which are expected to retain the most diverse inventory under the new law passed by the state legislature last spring and signed by the governor in June. Though the 1,600 currently licensed stores can switch to full-strength and can deliver, new stores must be at least 500 feet from existing liquor stores and schools to be considered for a license, according to The Denver Post.
- Lawmakers negotiated to please the 1,600 grocers who will gain licenses and the hundreds of existing liquor shops that worried about losing business. The latter can earn up to 20% of sales from food sales, while companies can now buy up to 20 licenses instead of just one. Consumers can now imbibe regular beer in state parks, too.
Dive Insight:
The Colorado Beer Distributors Association told The Denver Post that grocery and convenience stores will order 30% more beer next year. Nationwide, the two channels account for more than half of retail beer volume. Grocery chains started seriously fighting for this law in 2008 when Colorado reversed another Prohibition holdover: the ban on Sunday alcohol sales. Just in time for the craft beer boom, the repeal compelled grocery stores to finally push for full-strength sales — and their lobbying power proved too formidable to ignore.
Liquor stores will suffer reduced sales as a result, though on the upside they will continue to be the main source for wine, liquor and most craft beer. They can also stock food if it comprises less than 20% of total sales. Until now, liquor stores could only offer drink-related edibles such as cocktail cherries or olives.
Though low-ABV brands such as Michelob Ultra and popular “session” beers will remain, they can now be labeled as standard beer rather than 3.2 beer. Oklahoma and Kansas both recently voted to eliminate so-called "near beer," too, and retailers including Walmart are lobbying consumers to take their side in the holdout states of Utah and Minnesota. Safeway and King Soopers backed the first rendition of this movement, called Your Choice Colorado, that moved through the state legislature in 2016.
Perhaps the biggest change in Colorado isn’t the beer itself but the number of licenses one company can buy. Previous state law prohibited companies from owning more than one liquor license, benefiting small businesses. Now, not only can supermarkets (including Walmart, which was omitted from the original bill) sell beer, but they can also scoop up as many as five existing full liquor licenses. That cap grows gradually until ultimately disappearing in 2036.
It’s tempting to see this switch as a victory for craft brewers, too, but they probably won’t be able to compete with the major beer companies ready to scoop up supermarket real estate. Anheuser Busch and Coors will dominate, The Colorado Sun notes, followed by large craft breweries like Boston Beer Company, Sierra Nevada and Fort Collins-based New Belgium.
Grocers would be unwise, however, to ignore consumer demand for craft beer and the variety that comes with it. Colorado ranks third in the number of breweries nationwide with 348, according to the Brewers Association, behind California and Washington. But the industry’s economic impact in the Rocky Mountain state beats the other 49.
Though overall beer sales fell 1% in 2017, beer is a $111 billion business, nearly a quarter of which occurs in the craft segment. Grocers might not be able to make a lot of room for those small-batch brews in 2019, but they should: Craft selections grew 5% by volume last year and 8% in retail dollar sales, per the Brewers Association.
