Last Call As Twin Cities Suburb Privatizes Liquor Sales
The number of Metro Area cities still in the liquor business continues to decline, the result of stiffer than ever competition. Many “munis” find it difficult to compete on a level playing field, under the price pressure from private sector superstores like Total Wine.
Despite cutting costs and prices, suburbs like Edina have seen their profits plunge by hundreds of thousands of dollars a year. The latest state audit of 2015 Minnesota Municipal Liquor Store Operations puts it bluntly.
The overall decline in net profits between 2014 and 2015 appears to primarily be the result of increased competition from private liquor stores resulting in lower sales volume among Metro Area off-sale operations.
The latest shoe to drop comes in Spring Lake Park, not because of Total Wine but another recent entrant to the marketplace. The Sun Focus reports the suburb’s off-sale store will be bulldozed to make room for a Hy-Vee grocery and convenience store. The decision came after a last-ditch appeal from the municipal liquor industry’s top official.
Spring Lake Park resident and Minnesota Municipal Beverage Association Executive Director Paul Kaspszak voiced his strong opposition to the end of municipal liquor in the city during the public hearing.
“We are strongly opposed to the city discontinuing our municipal liquor operation and consequently issuing a full liquor license to Hy-Vee,” he said. “We believe the Central Park Liquor operations is extremely important to the viability of our community.”
While the store has been “financially underperforming” in recent years, profits have improved under new management, Kaspszak said.
But the suburb got a deal that was too good for the city’s taxpayers to turn down, according to City Administrator Dan Buchholtz.
…If Hy-Vee comes to Spring Lake Park, taxes collected from the business will bring in approximately $90,000, and investment of the $1.15 million collected through the sale of Central Park Liquor will generate between $40,000 and $50,000 in interest, Buchholtz said. “There’s no risk in those revenues.”
The deal will leave the Twin Cities with 18 remaining municipal liquor monopolies. The number of cities with municipal liquor operations statewide stood at 193 in 2015 compared to 226 in 2005.