Liquor sellers, buyers stock up before tax hike

Tax will more than double on wine, triple on six-packs of beer

Posted: Monday, September 30, 2002

ANCHORAGE - Alaska's liquor merchants and drinkers are buying booze in unprecedented volumes to sidestep - at least for a while - a spike in alcohol taxes coming on Tuesday.

"We've been building inventory to the highest levels we've ever had," said Bob Bailey, operations manager for Alaska Distributors, one of the largest and oldest liquor wholesalers in the state. "We've had to rent extra warehouse space. We've employed five additional people."

Bailey and others in the liquor industry have been trying to build enough stock to meet demand expected to rise dramatically in the days leading up to Tuesday, when Alaska becomes the state with the highest alcohol excise tax in the nation.

Bill Roach, chief enforcement officer for the state Alcoholic Beverage Control Board, said he had never seen the kind of rush for storage space that's been going on in recent weeks.

"Every major package store chain has got a significant amount of off-site storage" filled with liquor, Roach said.

Retailers are busy, selling to people who realized they face a major tax increase, though it won't be a big percentage hike in the overall price of booze.

The tax on a bottle of wine will go from 17 cents to 50 cents, on six-packs of beer from 20 cents to 60 cents, and on a bottle of hard liquor from $1.10 to $2.54, according to Roach.

Big retailers said they plan to keep selling at pre-Tuesday prices as long as they can. The idea is to move the inventory they bought before Tuesday without tacking on the extra cost. Distributors pay the tax based on the volume of product that passes through their hands. They pass the cost along to retailers.

Bars usually don't have the space or capital to stockpile, so drinkers can expect to see the tax show up sooner there than at liquor stores, several owners said.

While many liquor merchants are grumbling about the tax, one air freight company might be positioning itself for an opportunity.

Robert Klein, operations manager for retailer Brown Jug, said one carrier is offering its services to Alaskans who want to import liquor. The Postal Service doesn't carry liquor, but contract carriers such as FedEx and DHL do.

A niche market the company may tap is Alaskans seeking to buy cases of wine from the Lower 48. The tax increase may be high enough to offset the freight costs of getting it flown in, Roach said.

"We have hundreds of small wineries in California that love to do business by Internet sales," Roach said.

Few venture to say whether the higher tax will curb consumption or help ease the social problems alcohol abuse creates.

The $31 million in state revenue the alcohol tax is expected to raise a year isn't dedicated to alcoholism treatment. It will go into the general fund, which mostly pays for day-to-day operations of government.

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