Jean Cronin, Executive Director, CT Package Stores Association
By Jean Cronin, Executive Director, CT Package Stores Association
Connecticut is one of the smallest states in the country. Because we are so small and located in an area that is surrounded by so many states, we tend to keep an eye on what our neighbors are doing. Recently, New York City began experiencing a phenomenon that is limiting the opening or relocation of liquor store permits throughout the city that is worth noting.
The State Liquor Authority that oversees and controls the permit process has started to limit the number of new retail liquor permits in New York City, according to a recent article in the New York Post. In the article, it states that the State Liquor Authority is rejecting up to 70% of new permit applications. The reason for these rejections is that the Authority is seeing the declining sales in alcohol and trying to help existing stores by not oversaturating an area.
Existing liquor store owners have been challenging these new permit applications on the grounds of vastly declining beverage alcohol sales caused by customer consumption changes based on health perceptions, higher prices on imported products due to tariffs and competition with marijuana products. Commissioners of the State Liquor Authority have highlighted these changes in the marketplace over the last few years in their rejection of these new permits.
Each state has different laws and requirements as to how liquor permits are issued, but to see a state licensing board recognize the downturn of the industry and attempt to bolster current retailers is unique. According to the New York Post article, some of the applicants are former permittee holders who had to close their stores in the past and are attempting to reopen.
While Connecticut law does not have a provision that prevents a liquor store from moving closer to an existing store, New York’s State Liquor Authority does have a say in the matter. In the article, numerous applicants of proposed and existing stores were seeking to move closer or across the street from existing stores. Again, the commissioners on the authority cite the lack of sales and downturn in the industry as reasons for the denial.
What is not unique is the dramatic decline in alcohol sales in the retail sector since the COVID pandemic closed restaurants and bars in 2020. But the retail sector is not the only one feeling the drop in sales. The decline in sales is being felt across the alcohol beverage industry. Over the past year alone, large alcohol beverage manufacturers have seen their stock prices decline by as much as 30%. While this decline is largely caused by a drop in consumer consumption, there is also another aspect at play–tariffs.
The U.S. placed tariffs on a number of imported products that American consumers purchase, such as foreign wines and liquors, which caused price increases of as much as 15% this summer when the European excise tax took effect. In response, some countries placed retaliatory tariffs on American products or have refused to purchase them altogether. Canada is certainly a country that comes to mind. Earlier this year, Canada banned the importation of American bourbon.
The American bourbon industry saw an 85% reduction in sales even after the ban was lifted, according to the Distilled Spirits Council of the United States. While Canada has since lifted the ban on bourbon imports, there are still provinces within the country that have banned American bourbon from their shelves. While this consumption reduction is due to international trade policies, it is one more hit to the alcohol beverage industry.
The booming alcohol sales of the COVID era are long gone. The alcohol beverage industry is experiencing a sales decline, the likes of which we have not seen before. Changing drinking habits, tariffs and competition from the marijuana industry have created the perfect storm and the alcohol beverage industry needs a life jacket. Perhaps we could take a lesson from our neighbors in New York and work on keeping our Connecticut package store retailers afloat.
Jean Cronin is the President of Hughes & Cronin Public Affairs Strategies, where she is responsible for developing and implementing legislative initiatives for the firm’s clients, and directing a variety of trade and professional associations managed by the firm. Cronin joined the firm in 1986 after serving as a communications strategist for the Connecticut Senate Majority Office, where she became well-versed in the politics and insight of the State Capitol. She is the Executive Director of the Connecticut Package Stores Association, following the passing of longtime director, Carroll J. Hughes.
