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Originally published May 26, 2010 at 5:00 PM | Page modified May 26, 2010 at 7:27 PM

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Large grocers support measure to open liquor sales, downsize state liquor board

Small grocers oppose Initiative 1100, saying it would be difficult for them to compete against big chains offering low liquor prices.

Seattle Times business reporter

The Northwest Grocery Association, which represents major chains including QFC and Safeway, has joined one of its largest members — Costco Wholesale — in supporting a voter petition to put Washington state out of the liquor-store business.

In lending its support to Initiative 1100, the association cited a recent report by the state auditor that found that privatizing liquor distribution and sales in Washington would increase revenue by $86.8 million between 2012 and 2016, including one-time gains, such as $25.6 million from the sale of the state's liquor-distribution center.

More than 930 Liquor Control Board employees would lose their jobs, the report found. The board employs about 1,200 people, 877 of them working in or overseeing liquor stores.

The report assumed higher taxation of liquor and a boost of up to 15 percent in volume sales as the number of outlets selling liquor grows from about 315 to as many as 3,357 locations, including grocery and convenience stores.

"If you dramatically increase the amount of outlets and the amount of alcohol you sell, you can generate more money," said liquor- board spokesman Brian Smith. "Washington state, the Legislature and the governor for a long time have made a policy decision to not open liquor sales wide open, and that's what's happening here."

Issaquah-based Costco said Monday it plans to start collecting voter signatures inside 26 Washington warehouses in hopes of putting Initiative 1100 on the November ballot.

The measure would give Costco everything it lost in a years-long legal battle to take the state out of the liquor-store business, eliminate price controls and allow volume discounts. The state would be forced to sell its distribution warehouse, and retailers could buy beer and liquor directly from manufacturers. Some direct wine sales are allowed already.

Costco said the result for its customers would be cheaper spirits, in line with prices in other states.

In Stockton, Calif., for example, Costco customers pay $22.99 for a 1.75-liter bottle of Absolut Vodka. That same bottle at a state liquor store in Issaquah costs $42.95.

Small grocers oppose the measure, saying it would be difficult for them to compete against big chains offering low liquor prices. With other products, they can offer customers local or higher quality alternatives, but "a bottle of vodka is a bottle of vodka," said Jan Gee, president and chief executive of the Washington Food Industry Association, which represents independent grocers.

Like other opponents, they worry about the consequences of removing so many controls, Gee said. "This initiative doesn't just privatize liquor; it deregulates it beyond what any other state has done."

Joe Gilliam, president of the Northwest Grocery Association, said the group supports a more efficient liquor-distribution model with lower overhead.

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"When the state is taxing water and candy to pay for schools and prisons, it is imperative that Washington businesses and citizens support efforts to cut costs and improve efficiency in the delivery of government services," Gilliam said in a news release.

He said Initiative 1100 would eliminate conflicts of interest that the state has by both selling liquor and regulating liquor sales. He also made a case for a greener system if businesses are able to take over liquor distribution; they already distribute beer and wine.

"Eliminating the duplication of trucks alone will reduce the impact on our roads and the environment," Gilliam said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

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