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New liquor laws applauded by customers, cause small businesses financial troubles

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liquor laws

The liquor aisle at Sprouts in Norman on Sept. 30, 2018. Oklahoma's new liquor laws went into effect Oct. 1, allowing grocery stores to sell certain alcoholic beverages, among other things. 

On the morning of Oct. 1, the wine aisle at Homeland at the corner of 12th Avenue and Alameda Street was decorated with a wide arch of balloons shaped like grapes, almost like the grocery store was in the middle of a celebration.

Only a few customers trickled through the aisle, and most were just browsing instead of making a purchase. But, since alcohol sales had become legal just hours before, it was the busiest the Homeland wine department had ever been.

Oklahoma’s new liquor laws, which came into effect at the beginning of October, have dramatically reshaped most aspects of buying alcohol in the state. Both customers and businesses are waiting to see what kind of economic impact the new legislation will have on Oklahomans.

Under the new legislation, liquor stores can now refrigerate beverages and sell merchandise beyond alcohol, like cigars, corkscrews and drinking games. The updated law also increases liquor stores’ hours — they can now stay open from 8 a.m. to midnight, expanded from their previous hours of 10 a.m. to 9 p.m. The stores will remain closed on Sundays.

The greater change, though, affects grocery stores and gas stations. These stores can now sell beer up to 8.99 percent alcohol by volume (ABV) and wine up to 14.99 percent ABV. Previously, they could only sell low-point beer up to 3.2 percent ABV, while only liquor stores could sell spirits, wine and high-point beer.

At Homeland, one of the few customers who stopped by the beer and wine aisle the morning of Oct. 1 was Cheryl Hughes, who works at the store but was shopping on her day off. She said both staff and shoppers have been enthusiastic about the new products for sale.

“It’s fantastic,” she said. “Today’s the big day. We’re excited about it, a lot of customers are excited about it. We’ve all been waiting.” 

At Walmart on 12th Avenue that same morning, Scott White wasn’t shopping for wine specifically, but he stopped by to check out the retail giant’s selection. He was most impressed by the prices he saw. 

“I think it’s going to create competitive pricing, that’s the big upside,” he said. “Other stores are going to have to be more competitive … if you buy (alcohol) by the case through Amazon or through here, you’ll save some money.”

Another Walmart customer, Patti Marshall, was also impressed with the store’s prices. She didn’t grow up in Oklahoma, so she said she was happy to see the state’s alcohol laws adjusted to more closely resemble those found across the country.

“I grew up in New York, so I was used to being able to buy things where you have to,” Marshall said. “I mean, you tend to wonder about (the quality of) wine at a Walmart store, but I’m seeing everything I could possibly want from a liquor store at a cheaper price.”

The new liquor laws passed as the result of a 2016 ballot measure known as State Question 792, which amended the state’s constitution. Oklahoma’s new laws place it well within the spectrum of neighboring states’ regulations.

Since the new law took effect, Oklahoma’s laws are more similar to those in Texas and Arkansas, both of which allow beer and wine to be sold at grocery stores but limit the sale of spirits to liquor stores. Like Oklahoma, both states generally prohibit the sale of hard alcohol on Sundays, although in Arkansas, exceptions can be found in specific counties and cities.

Much like Oklahoma’s previous requirements, Colorado and Kansas allow wine and spirits to be sold only at state-licensed liquor stores, and permit only low-point beer to be sold at grocery and convenience stores. By contrast, beer, wine and liquor may be sold at any grocery or convenience store in New Mexico and Missouri.

Oklahoma’s previous ban on refrigerated alcohol was relatively unique in the U.S. The only comparable legislation is in Indiana, which requires grocery stores to sell alcohol at room temperature but allows liquor stores to keep its merchandise refrigerated.

The new law’s advantages are clear for not only customers but also grocery and convenience stores — customers benefit from lower prices as a result of competition, while the stores have more product to sell.

The advantages aren’t as clear for liquor stores. Even though they can now chill their drinks and sell a wider range of nonalcoholic products, increased financial pressure from larger grocery stores or chains may hurt their business.

After the laws had been in effect for a few weeks, Jonathan Lapsley, general manager at Spiritz N’Wine on Interstate Drive, said he’d already noticed a sizable drop in the store’s business.

“Sales have gone down quite a bit because most of our wine and beer sales that we were used to getting have gone either to gas stations or grocery stores,” Lapsley said. “I would estimate it’s gone down maybe 25 percent, just from the gross sales I’ve noticed day to day.”

At Corkscrew on Lindsey Street, manager Jake Sheehy also said he’d noticed a drop in sales, but he was confident the store would bounce back because it has strengths larger retailers do not.

“What we have that they don’t, besides liquor, is really good customer service,” Sheehy said. “All our staff is very knowledgeable. We have more of a homey, neighborhood-type effect, whereas those big chain stores don’t have that. We’ll bend over backwards for customers.”

Matt Brechley, an employee at The Cellar liquor store on Main Street, said he hasn’t noticed much of a difference in revenue. He’s not especially worried about competition from larger stores because The Cellar serves a different client base. 

“If you want your Budweiser, if you want your popular domestics, people will probably go to Sprouts or Walmart,” Brechley said. “The majority of their cooler space is going to go to those. But you’re not going to find Squatters Tropical Double-Hop IPA at Walmart cold. You’ll find it here cold. We’re trying to compete by having a more comprehensive selection of beer and wine in our coolers.” 

However, The Cellar is one of Norman’s largest liquor stores, and it was able to invest in coolers and nonalcoholic products in order to be prepared for the Oct. 1 launch. Brechley said he can see how the new laws might have a different effect elsewhere. 

“I don’t think it’s hurt us nearly as bad as it’s going to hurt other liquor stores,” he said. “Liquor stores in Oklahoma can only be owned by one person, so there are no big corporations, no franchises, it’s one person. Because of that, it comes down to whether that one person has the capital to put money in their liquor store.”

Like all investments, installing coolers and purchasing new merchandise carries a certain amount of risk for the liquor store owners. However, in the new economic climate since the law came into effect, many feel like they have no choice.

“(At Corkscrew,) we installed coolers about three months ago, but you’re only just now seeing coolers coming into other liquor stores because it’s a big, big investment upfront,” Sheehy said. “It was a big investment, a big risk on our part, but we felt like we had to take it to compete early on.”

Even when stores are able to invest in coolers and nonalcoholic products, the process hasn’t always gone smoothly. For example, Spiritz N’Wine has coolers installed, but mechanical issues have kept them from operating properly, and the store has not been able to have them serviced because of wait times since there is a high demand for repairs from other liquor stores. Sheehy said Corkscrew is facing a similar issue in trying to stock Coca-Cola products — too many liquor stores are relying on too small a group of Coke suppliers.

At Midway Liquor on Flood Avenue, there are no refrigerated drinks or drinking games for sale. In fact, the store has still been able to sell only hard liquor since Oct. 1. Midway rents its space from 7-Eleven, and its lease includes a non-compete clause. Because the convenience store chain can now sell wine and high-point beer, the liquor store cannot.

“It’s definitely going to change the business,” said Midway employee Preston Alltizer. “It’s slowed down. We’re still exploring what direction, exactly, we want to take the business: Do we want to do cocktail stuff, catering to the higher-end clientele? Do we want to focus on pints, half-pints? It’s kind of up in the air as to what’s going to happen.”

Stores where the inventory is not so restricted have also had to reduce the volume or variety of product they stock.

“The beer’s probably going to take the biggest hit because it has to go in the fridge,” Lapsley said at Spiritz N’Wine. “We’re trimming down on some wines, too. A lot of wines, actually, that don’t sell as well.”

He paused.

“It’s kind of sad because we used to pride ourselves on having a really good selection. But this is what we have to do now.”

When Oklahoma voters approved State Question 792 two years ago, they knew what they were getting: more and colder alcohol at cheaper prices with greater availability throughout the state.

So far, that’s exactly what they’ve received. But for area businesses both large and small, the new laws will have far-reaching economic consequences, both positive and negative, that won’t be fully understood for months to come.  

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