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Utah’s liquor markup among highest of any government-controlled agency

February 12, 2017 | Kathy Stephenson | The Salt Lake Tribune

Discovering a $13 bottle of wine at the liquor store may sound like a deal, until Utahns realize more than $6 of the cost goes to the state.

The extra 88 percent — a combination of markup and freight— that Utah consumers pay on a single bottle of wine is the highest among all liquor-control jurisdictions in the country, according to numbers from California's Alcohol Research Group.

And Utah's drinkers could be paying a few cents more if the Legislature approves a bill being drafted by House Majority Leader Brad Wilson, R-Kaysville, and Sen. Jerry Stevenson, R-Layton.

The bill is expected to include numerous reforms to Utah's alcohol laws, but the most significant change would be the elimination of the state's "Zion Curtain" requirement, which mandates new restaurants have 7-foot-tall barriers to keep the mixing and pouring of alcoholic drinks out of the view of children. In return for tearing down the walls, the state would increase its markup 1 percent to 2 percent, with the additional money going for alcohol enforcement and prevention programs.

Consumers may not appreciate a higher markup, but Utah restaurants support the potential trade-off. "It's just a few cents more, but the money will go toward something that could actually help drop alcohol consumption, something that the Zion Curtain doesn't do," said Michele Corigliano, executive director of the Salt Lake Area Restaurant Association. "We absolutely support it."

Tight control

The ARG data compared the differences in retail prices from the 16 U.S. states — and one county — that still have government-controlled liquor operations, said William Kerr, a senior scientist and director of the group's Alcohol Research Center, which is funded by the U.S. National Institute on Alcohol Abuse and Alcoholism.

He said each liquor control entity has its own formula for earning revenues, often a confusing mix of taxes, handling fees, markups and multipliers. While all 17 reviewed have markups on spirits, only six, including Utah, control wine.

The Utah Department of Alcoholic Beverage Control formula is straightforward: an 86 percent markup, plus about 2 percent in freight costs, the ARG data show. For Utah consumers, that means a bottle of wine that costs $7.03 to produce will cost $13.22 retail.

The state gives a break to small producers — those who produce under 20,000 gallons per year — marking up their bottles only 47 percent.

Consumers in Pennsylvania pay the second-highest markup on wine at 76 percent, while New Hampshire is third with additional costs totaling 63.5 percent, data show.

In states where liquor sales are privatized, the average markup is 58 percent, said Kerr.

Utah consumers also pay an 88 percent markup on whiskey, vodka and other spirits, the sixth highest among the 17 liquor-control entities, ARC said. A spirit that costs $12.73 to produce, for example, will cost Utah consumers $23.95.

Oregon has the highest markup on spirits at 119 percent, followed by Alabama at 105 percent and Virginia at 100 percent, the research group data show.

The ARG statistics revealed one more unique Utah fact: It is the only state that still maintains full retail control of all wine and heavy beer.

Continue reading the full article.