Today is March 1st, the day liquor wholesalers may commence distributing spirits directly to restaurant licensees. Restaurants no longer have to purchase and pick up their orders at state stores or warehouses. And chain restaurants can have their supplies delivered to a central warehouse. This is the first phase in the Washington State liquor privatization process. Several wine and beer wholesalers have obtained spirits distribution licenses. Odom (now largely owned by Southern Wine and Spirits) and Young's Market are the biggest players. Several smaller distributors have come in to supply the specialty market, especially for craft distillers which is a growing industry segment.

The next phase is the shift from state store sales to privately owned liquor retailers, which is to go into effect June 1st. The Washington State Liquor Control Board has negotiated Buy Back agreements which allow the Board to sell back inventories to its suppliers. In the meantime, applications for new spirits retailers are being processed. As of June 1st, state liquor stores will cease business and will be auctioned off to investors. Contract stores (ones, mostly in small communities, that sell on commission) will be on their own as retailers who will have to buy their own inventories.

Initiative 1183 limits the sale of spirits to stores with a space or 10,000 or more square feet, which consists mainly of supermarkets and big box stores. Costco, of course, will be a major player. Liquor store chains are gearing up to move into Washington State. Total Beverage and Beverages & More ("BevMo") have plans to open stores in major state markets. Two large Seattle wine retailers, Wine World Warehouse (owned by David LeClaire) and Esquin Wine Merchants (owned by Chuck LeFevre) plan to expand into spirits. The latter had less than 10,000 square feet of space, but plans to expand into an adjacent vacant space. Chuck LeFevre stated to me:

"We are expanding the store to meet the minimum size requirements necessary to get into the liquor business. We will carry a broader and much more interesting selection than the state liquor stores carry. We will carry a much greater selection of Single Malt Scotches and Tequilas than they carry as well as spirits from several local distillers. We are still finalizing plans but are targeting June 1st as the date we begin selling spirits."

Some wineries worry that privatization may have some negative impacts on them. As I have written before (see my postings of 16 November and 30 December), I think that although Initiative 1183 is a game changer, the changes have more to do with mass market wines than with boutique wineries. The new environment will call for more creative marketing, but wineries that are dedicated to making quality wines will continue to do well.