It’s no secret the holiday season is a time permeated with consumerism.
In fact, CNBC reported in 2022 that 86% of millennials overspend during the holiday season.
On the flip side, it’s also the only way some small businesses stay afloat.
In April, Durango business officials speculated that the influx of new businesses coming to town were a result of other businesses having poor holiday sales.
However, there may not be another business hurting more than locally owned liquor stores.
Colorado voters passed Proposition 125 last November, which officially allowed grocery stores to sell wine. This led to a dispute between small liquor store owners and the state of Colorado’s Liquor Licensing Commission over grocery stores selling wine at a loss.
Liquor stores have accused grocery stores of doing this by administering loyalty program discounts.
According to BevInsights, an alcohol market research agency, data from the 2022 holiday season saw higher average unit prices across all three major categories on Drizly. Liquor saw a 14% increase (from $28.91 to $32.99), wine an 18% increase (from $19.16 to $22.65), and beer a 3.7% increase (from $15.33 to $15.90).
Star Liquors General Manager Mike Vermette said the drop in sales have been consistent with his 2022 prediction.
“We’re down 25% total sales right now,” he said.
To say budget wine sales in Colorado are a big deal in the state would be an understatement. Colorado ranks No. 1 in the U.S. for boxed wine sales.
However, Vermette said alcohol sales have been down across the board in the U.S. compared with previous years.
He speculates it may be a result of people having less spending power coming out of the COVID-19 pandemic and that younger generations aren’t drinking as much.
When asked if he thought access to COVID-19 relief checks inflated alcohol sales, he said there was an increase in people buying premium-brand alcohol.
“But also, they buy less quantity,” he said. “I think a lot of it has to do with social media and all sorts of stuff. Like, if you’re posting, you don’t want to be seen with dirt-cheap vodka; you want to be seen with Grey Goose or something.”
However, Vermette said the grocery stores haven’t beaten Star Liquors in terms of price, but rather in terms of convenience.
“Customers come in and ask us to price match,” Vermette said. “And the majority of them that asked us to price match didn’t realize that with our discounting, we’re actually cheaper than the grocery store.”
Wagon Wheel Liquor owner James Dempsey agreed with Vermette that liquor sales are down across the board.
“We had several record years during COVID, and as we have seen with many other industries, there has been a reset after,” he said. “I believe that started in 2022 and has bled over into 2023. As far as holiday sales for this year, we have seen a drop in sales for sure. I think some of that was weather the week of Thanksgiving and for sure the convenience of wine in the grocery stores.”
Dempsey hopes the Christmas and New Year’s holidays will provide a better turnout, but said it will depend on weather. Although snow creates an incentive for visitors to travel to Durango, he said it’s often slow at Wagon Wheel when inclement weather hits.
He estimates sales in Durango and Colorado as a whole are likely down at least 5% to 10%.
W.J. Doyle Wine and Spirits co-owner Chris Hamilton said sales “this holiday season have not been good.”
Liquor store owners continue to struggle with the disadvantages presented by Colorado’s three-tier system.
“You look at like their (grocery stores) Ska six-pack prices. They want $12 for them and that’s just stupid,” Hamilton said.
He said grocery stores bank on creating the perception of value rather than truly selling at a discount. And because grocery stores mark up their price on other products, they don’t have to worry about turning a profit on certain wines.
Hamilton says this creates a massive disadvantage because Colorado law sets a certain limit on nonalcoholic products that liquor retailers can sell.
W.J. Doyle managing owner Molly Hamilton said sales are down about 10% to 15% on a weekly basis, but says the business held its own during Thanksgiving.
She also said it fluctuates based on the day, and she’s thankful for her location near Fort Lewis College, indicating that W.J. Doyle’s a popular spot for the students to buy their weekend spirits.
W.J. Doyle has emphasized selling more unique brands.
She said she often tells customers, “Yes, I have this big brand name. However, this is way better than that is, and it’s cheaper.”
This reflects the liquor store’s slogan of “helping you drink better for less.” Often, the business will conduct blind taste testings with customers in order to show them different alcohols they may not have tried.
Molly Hamilton said customers often purchase liquor based brand rather than actual taste.
Sixty-six percent of consumers pick a craft beer based on its packaging or label, according to a survey conducted by Beverage Daily. However, Fireball Cinnamon Whiskey tends to be Molly Hamilton’s top-selling product.
“There are definitely some places in town, I had heard rumors that they stopped buying beer. And they were just focused on liquor, because that’s the only thing grocery stores didn’t have,” she said, adding it makes sense because she makes her lowest profit margin on beer.
At Wagon Wheel, Dempsey primarily sells craft beer.
“If you come in here of our 12 or 14 doors of cooler space, probably 11 of those are craft. So really the low margin, name brand stuff, we still are buying it and selling it,” he said. “I think we’ve slowed down a little bit, but it’s not anything that’s going to go away for us.”
Both Dempsey and Vermette have emphasized their knowledgeable staff members and loyalty programs. Vermette said Star Liquors invested a tremendous amount of money and time to train employees so they can be as knowledgeable as possible.
Dempsey said the Wagon Wheel staff has “over 100 years” of combined experience working in the industry.
Vermette has stayed optimistic since the passing of Prop. 125 and maintains that Star Liquor’s situation is not “doom and gloom.”
“We have a lot of punches left to throw, too,” he said.
tbrown@durangoherald.com
