By Adam Pagnucco.
Last week, MCGEO President Gino Renne, leader of the local union that represents most Montgomery County employees, responded to my post on the county’s Department of Liquor Control (DLC). President Renne has led MCGEO for more than twenty years and is an aggressive advocate for his members. I appreciate his taking the time to talk about DLC on Seventh State.
A few of his statements deserve examination. Let’s start with the one that is arguably most important to county consumers.
- The union claims DLC, an extra middle-man with an extra mark-up, actually has lower prices than our neighbors.
MCGEO: “Across all categories except special order beer, costs are 2-10 percent cheaper than neighboring jurisdictions.”
David Lublin put this argument to shame through his price comparison of DLC and Total Wine, which refuses to open a store in MoCo. Now let’s be fair: Total Wine not only blows away DLC, they beat almost everyone on price. How do they do it? The company explains:
We are committed to having the best wine selection with an emphasis on fine wines. This differentiates us from many retailers in the United States who specialize in one geographic area or price category. Our typical store carries more than 8,000 different wines from every wine-producing region in the world.
In addition to a world-class selection of fine wines, the typical Total Wine & More also carries more than 2,500 beers, from America‘s most popular beers to hard-to-find microbrews and imports, and more than 3,000 different spirits from every price range and category.
Total Wine & More is committed to having the lowest prices on wine, spirits and beer every day. Our tremendous buying power and special relationships with producers, importers, and wholesalers offers us considerable savings, which we pass on to our customers.
This business model is very difficult to implement with an extra middle-man interfering with the supply chain, especially one like DLC that is notorious for botching orders of specialty beer and wine. And so Total Wine will not open a store here even though its headquarters is in MoCo and its founders live here. MoCo customers are forced to drive long distances to access the company’s selection and low prices, and they do. Total Wine estimates that MoCo residents account for more than 20% of sales at its McLean, Virginia store and almost 25% of sales at its Laurel store.
But let’s set aside Total Wine for a moment and examine MCGEO’s assertion further. If DLC offers lower prices as they contend, that would be great news. Non-residents would be flocking into MoCo to get deals. We might even expect a proliferation of MoCo stores close to the county’s borders ready to lure non-residents in.
In fact, the opposite is true. There at least seven D.C. liquor stores within four blocks of the MoCo border. See the map below. The one DLC store near the border is in Friendship Heights and it is the only DLC store that is losing money. How is it possible for DLC to lose hundreds of thousands of dollars a year by selling alcohol to rich people? Perhaps one reason is that the District’s Paul’s Wine and Spirits is just three blocks away.
Alcohol sales data collected by the Maryland Comptroller’s office suggests substantial flight of customers away from MoCo. Both the U.S. Department of Health and Human Services and Gallup find positive correlations between alcohol consumption and education level, while Gallup finds an additional correlation with high incomes. Since MoCo is one of the highest-income and most-educated counties in the state, it should be a mecca for alcohol sales. But that is far from the truth. In terms of per capita sales deliveries to retail licensees inside each county, MoCo ranks 13th of 24 jurisdictions in wine, tied for 23rd in spirits and dead last (by far) in beer. Among the counties out-ranking MoCo in per capita wine sales are Calvert, Carroll, Cecil, Garrett, Harford and Kent, all mostly rural jurisdictions with far less disposable income than MoCo. Comptroller Peter Franchot, the principal enforcer of state alcohol laws and himself a MoCo resident, says of DLC, “Most people in Montgomery County go to Prince George’s, the District or Virginia to buy their alcohol because it’s such a disgrace.”
I will have more tomorrow.