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Beer permit battle brews: Convenience stores scurry to sell alcohol, worrying liquor shops

May 29, 2006

Gas station and convenience store owners are seeking permits to sell alcohol at an unprecedented clip this year, alarming operators of traditional liquor stores.

The Indiana Association of Beverage Retailers, which represents liquor stores, counts 102 permit applications in the state so far this year, d o u b l e t h e n u m b e r f o r all of 2005.

Speedway gas stations alone have filed 40 permit applications, including 19 in Marion County, according to the Indiana Alcohol and Tobacco Commission.

"We're going to end up with an alcohol permit on every corner," lamented John Livengood, president of the Indiana Association of Beverage Retailers.

Livengood said the deluge of applications threatens the livelihood of package liquor store owners, and also may lead to additional sales of alcohol to underage buyers. Minors are free to enter convenience stores but not liquor stores.

Others say Livengood's assessment of the impact of the additional competition is overblown. And they're confident convenience stores will handle alcohol sales responsibly, as they do in other states where such sales are more common.

Gas station and convenience store operators are racing to apply for applications in part because they fear the General Assembly might pass legislation that will restrict or eliminate future permits. Restrictive legislation passed one chamber this spring and likely will return next session.

In addition, liquor store operators say the ATC appears to have become more receptive to granting permits to gas stations and convenience stores, sometimes overturning denial recommendations by county alcoholic beverage boards.

Anyone who tries to decipher Indiana's regulations for alcohol sales might welcome a stiff drink.

The state offers 38 permit types. To request a permit, an applicant applies to the ATC, then appears before a hearing of a county alcoholic beverage board.

That board passes a recommendation back to the commission, which makes the final call.

Liquor store permits allow the sale of wine, sprits and cold beer. But package stores are permitted to sell only a handful of items beyond alcohol.

The state set up this system in the 1930s to make the stores dependent on alcohol sales and therefore more apt to stay in line with regulations, Livengood said.

Convenience stores and gas stations that sell a certain amount of groceries can apply for a grocery permit to sell alcohol. But they can sell only warm beer and wine. No spirits. No cold beer.

The state now has about 1,000 liquor stores. In contrast, about 450 gas stations and convenience stores have permits to sell alcohol. But Livengood fears that number will skyrocket.

The state is more restrictive with liquor store permits than with grocery permits. It allows a liquor permit for every 8,000 people, but a grocery permit for every 1,500 people.

"There's thousands of those permits just laying out there," Livengood said, adding that he doesn't see enough business to go around "for the guy who has to depend on these alcohol sales."

Livengood has watched drugstores and big-box retailers nibble away at liquor store business in recent years. He worries convenience stores eventually will tap the right to sell cold beer.

"If that would happen, the package liquor industry would be put out of business," he said.

He said concerns reach beyond market share. He believes the public doesn't want increasing sales of alcohol in stores that allow minors.

Plus, selling gasoline at the same place as beer and wine sends the wrong message about drinking and driving, said Cathy Burton of the Marion County Alliance of Neighborhood Associations.

Her alliance stands "extremely opposed" to those sales and appears at most county alcohol board meetings to oppose the permits.

"Common sense tells you there needs to be a wider separation in the direct sales of beer and wine and gasoline," she said.

Nonsense, convenience store lobbyists say. People drive to liquor stores just as they drive to gas stations, noted Scot Imus, executive director of the Indiana Petroleum Marketers and Convenience Store Association.

"I haven't seen a package liquor store yet that doesn't have a parking lot," he said.

His industry has plenty of experience selling age-restricted products like tobacco and lottery tickets, he said, and shows no tolerance for employees who make underage sales.

"I don't see how they can make the connection, just because you sell gasoline you're not responsible to sell warm beer or wine," he said.

The ATC doesn't see the connection, either. Chairman Dave Heath said when his commission overturns a county board's denial recommendation, it's generally because the board objected to the gas-beer combination.

"If the community says we don't want this service, we don't need this service, then that's something to consider," Heath said. "But not just that they sell gasoline."

The General Assembly jumped into the debate last session. It considered-but did not pass-measures that would have restricted alcohol sales at gas stations and convenience stores and revamped the definition of grocery store.

Burton's association wants a definition that would rule out most convenience stores because they don't have a high enough grocery volume.

"We believe that we are making some significant progress with some key legislators," she said.

Representatives of Speedway and other gas and convenience stores could not be reached for comment about their applications.

But the Indiana Petroleum Marketers and Convenience Store Association and lawyers representing some chains in permit applications say the prospect of future legislation probably is the primary reason for the increase in applications.

The stores are betting that any restrictive change in the law would grandfather in outlets that already have permits.

The stakes are high, said Imus of the convenience store trade group. Nationwide, about 74 percent of convenience stores sell at least beer. In Indiana, less than 20 percent do.

Convenience stores need strong inside sales because fuel islands yield thin margins, he said.

"It's made it challenging for Indiana convenience stores to try to compete," he said.
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