David Dishman: Pour one out for liquor stores and Sooners fans alike
Most economists use pie, and the size of slices within, to illustrate a market. But this is the alcohol industry, so let’s use a more liquid asset to craft a sudsy metaphor.
Let’s say Oklahoma’s alcohol market and everything it includes — beer, wine, spirits — is represented by a pitcher of beer to be consumed by a group of thirsty friends watching the Sooners lose yet another college football playoff game.
Furthermore, let’s say this is a particularly large pitcher, one that no single person is capable of consuming on their own.
No, this pitcher is large enough to split among at least a dozen friends, who now live across the state. The bartender provides 12 glasses, and the friends start to drink.
If the pitcher is the industry’s market, and the friends are representative of Oklahoma consumers, the glasses represent the retailers across Oklahoma who sell alcoholic beverages.
This could be your local liquor store, which sold strong beer, wine and spirits before and after October 2018, when alcohol laws underwent drastic changes as a result of State Question 792.
Or maybe it’s a gas station or grocery store where you bought a case of your favorite 3.2-alcohol-by-weight beer.
Before October 2018 the market was at a general state of equilibrium with regard to retailers. In our example this makes sense — 12 drinkers need 12 glasses and everyone watches the game with beer in hand.
After October 2018, the ways consumers could access alcohol changed dramatically.
Gas stations, grocery stores and other businesses began to apply for licenses to sell strong beer and wine. You’ve probably noticed this — grocery stores and gas stations now have wine racks. And liquor stores, which previously couldn’t chill the strong beer, began installing coolers to better serve customers.
Oklahoma issued nearly 3,600 new beer and 1,700 new wine licenses to retail businesses from the end of 2017 through today. There has never been more options of where to buy strong beer or wine in Oklahoma in the state's history.
So what does this mean for our thirsty friends in the bar?
Well, instead of the bartender issuing a dozen glasses — the solid, sturdy and traditional bar type of glasses — our fictional group of friends starts to receive many more. Tall glasses that can hold much more; frosted mugs that work well to serve products extra cold; glasses placed strategically in reach of the pub food, so if you’re caught reaching for the peanuts, you might as well grab some beer from that glass, even if it’s not the best option around.
With all these glasses on the table, and our group of friends reeling while watching their Sooner defense give up seven first-half touchdowns, it would stand to reason these fans, like consumers across the state, would consume more than they ever have before.
But that’s not what Oklahoma is seeing. The thirst of the sad Sooner fans didn’t increase, meaning the state’s consumption of alcohol didn’t either. Oklahomans are set in their ways, just like the Sooners seem to be set in theirs when it comes to playoff football.
The State of Oklahoma collected an average of nearly $12.3 million per month from taxes on the alcohol industry in 2019. June saw the most, with $13.8 million, and February the least, with $10.6 million.
But most months fall in the $11 million-$12 million range. This amount is the product of continued growth over time, but is not much more than the $10 million-$12 million the state regularly collected in 2018. The demand hasn’t spiked despite more places to purchase products, or more glasses at the figurative bar from which to drink.
Instead, smaller amounts from this proverbial pitcher are poured into the growing number of glasses on the table. The product is split more and more, and some of the friends stop using the old glasses altogether, and they start collecting dust. The bartender comes over and asks, “Are you finished with these?”
So too are some consumers finished with their old liquor stores. For years, liquor stores thrived on wine sales, which carried the largest profit margins. Now, unable to compete with the convenience grocery stores and convenience stores can offer consumers, plus the sheer purchasing power of many large retail chains, liquor stores across Oklahoma are struggling to stay open.
At the end of 2017, Oklahoma had 680 liquor store licenses that were active. By the end of 2019, that number has dropped to 617. It’s possible more will close in 2020.
Looking beyond the numbers, it’s important to remember these are small businesses owned and operated by Oklahomans. These business men and women are adversely affected by the march of progress in a state that took a long time to operate in similar fashion to the rest of the country.
But while it’s impossible to ignore the negative outcomes, the consumers seem to enjoy the added convenience.
If you’re watching your favorite football team take its licks yet again on a national stage, the extra glasses, cups and mugs available to transport the pitcher’s precious product to one’s lips are always appreciated.
Another equilibrium will be reached someday in the future, just like OU will probably finally break through in the playoff. Will it be 2020? Or years from now? It’s hard to speculate, and outside factors can speed up or slow down that timeline for both. Until then, it’s probably just best to raise a glass of your favorite product, both literally and metaphorically, until that time comes.
Oh, and before you call for my head on a spike for railing on your beloved Sooners, just know I would have done the same thing for my beloved Missouri Tigers, but alas I’m just a journalist and not a writer of fan fiction.