"You would think that in a tough economy people would cut back drinking but it doesn't look that way," said Kathy Bailey, city administrator of Blue Earth.

Compared to the previous January, last month's sales were up $12,253, and December's sales were $8,530 higher than a year before. The liquor store made a profit of about $84,000 in 2008, Bailey said, though that figure has not been audited.

The state auditor's 2007 report of Minnesota's 244 municipal liquor stores was released recently. Sales were generally up during that pre-recession year, and cities are reporting the situation hasn't changed drastically since then.

Every municipal liquor store in the nine-county area made a profit in 2007, according to the auditor's report.

"I just don't think the bad economy has probably hit this area yet as much," said Don Adams, manager of Blue Earth Wine & Spirits for more than 25 years. "From my experience we're usually probably one of the last places to feel the pinch." But he thinks people tend to cut back in alcohol during a recession, so he's expecting a drop in sales eventually.

In Mapleton, the liquor store is about even, with 2008 sales about $3,000 higher than 2007, when it made $661,693 in sales and $48,457 in profits, City Administrator Patty Woodruff said. But she's noticed a downward trend in sales since last August, though auditors have not yet issued their 2008 report.

Likewise, Madelia's liquor store is doing well, but City Administrator Dan Madsen said it's taking steps to prepare the store for tough times.  "One of the things we're looking at is how to increase sales," he said, possibly by cutting prices.

 

In 2007, the store had a net profit of $51,127 on sales of $304,591. The profit margin, 16.8 percent, is the highest in the nine-county Mankato area, which could signal that a drop in prices could help.

"It's all a careful balancing task," Madsen said.
Profits are good, but if the liquor is priced too expensive, it may be driving customers to nearby cities.

He said the primary purpose of the liquor store is to regulate the sale of alcohol from a health and welfare perspective.
It helps that the general fund received a boost of $35,000 last year. Estimates for this year's contribution from the liquor store have been reduced to $25,000, Madsen said.

St. James' liquor store had an increase in sales of about 11 percent from 2007 to 2008, but City Manager Joe McCabe said profits might go down a bit this year.

Liquor store profits typically subsidize the city's pool for $40,000 and theater for $25,000, but due to state aid cuts, the city is using half of those transfers for general operations. Pool hours might be cut and the city might "do a Gov. Pawlenty and increase our fees" for the theater.

The governor has been blamed by some for disguising tax increases as fees.

In Le Center, liquor store co-manager Jan Nelson said the economy might actually be giving the off-sale side of their business a boost.

"I think people are drinking more at home than at the bar, so we're doing pretty good all and all."