Cheap Beer in a Poor Metro Neighborhood

Walgreens, the out-of-state drugstore giant that has secured 168 new permits to sell alcohol throughout Indiana, is selling six-packs of canned beer for $2.99. The photo we captured here is in a very poor area of the city of Indianapolis and along a main corridor of the city with high crime rates. The Big Flats 1901 beer of 12-ounce cans was also prominent on the second page of an advertising insert found in the Sunday supplement of The Indianapolis Star (with pricing good through Jan. 15). It must be selling fast. When we stopped in this store to check it out, all supplies were gone. In 2002, when Project RAD was founded, we predicted that beer would become as accessible as a gallon of milk on retail shelves. On the last page of the same advertising insert, we found the ad for a gallon of milk at $2.49.

Indiana Impact from Walgreens Expansion

Exactly 54 out of 92 Indiana counties were targeted for alcohol sales expansion by Walgreens in 2010-2011 and some permits remain pending for hearings in Marion County.
 

For an overview on state and local actions on Walgreens permits, you can request a copy of the upcoming report to be published soon by Project RAD. To date, more than 2,600 pages in permit files have been examined in an unprecedented review of the agency's public records. The state took more than six months to fulfill a number of public records requests that began to be filed in May. Appointed and elected officials are quoted in the final report, along with community advocates and retailers. To secure your copy, please send an email to projectradeditor@gmail.com.
 

We will be taking advance requests for the report on this email only. Please list your name, organization, complete mailing address and email or phone in case we have questions about the information you provide.

Fiscal Impact on Sen. Boots' Sunday Sales Legislation: Minimal

Indiana's Legislative Services Agency (LSA) is responsible for analyzing the potential fiscal impact of bills filed by state lawmakers. The LSA narrative on SB 197, filed by convenience store owner Sen. Phil Boots to expand Sunday sales to all retailers including his industry, is now public.

Here's the important paragraph of note:

"While it is assumed that the majority of consumers are able to purchase all the alcoholic beverages they desire to consume within the hours dictated by current law, it is possible that the added convenience and availability of alcohol sales on Sundays may allow consumers to purchase more alcoholic beverages than they would otherwise. The extent to which consumers may make additional purchases above what would be purchased under current law is unknown. However, any impact will likely be minimal since there will be a shift in purchases from other days of the week. Any impact on Sales Tax revenue is expected to be minimal since any additional purchases of alcohol would likely reduce consumer spending on other sales taxable items."

For the complete two-page document, click here.

According to Inside Indiana Business, Indiana lawmakers could consider a bill this year that would allow beer and alcohol sales during the Indiana State Fair. Spokesman Andy Klotz says officials have received questions about the ban for years, and now the issue has evolved to a place where a change may occur, adding that it could be a revenue generator for the state agency. Klotz says a key issue in any implementation of beer and alcohol sales would be to maintain a family atmosphere during the event. He told Inside Indiana Business that beer and wine competitions are at the fairgrounds every year, so officials have experience with the issue. He also said that to his knowledge only two state fairs do not serve beer and alcohol: Indiana and Ohio.
 

Reaction to the proposal was fairly swift on the State Fair's Facebook page. Here is a sample post from Kenan Farrell: "Bad idea, State Fair. Instead of continuing to be a beacon of Hoosier values, you've decided to hand over the keys to alcohol lobbyists and the mighty $$$. I'll be rethinking my summer plans in 2011."
 

A woman who has been an exhibitor at the State Fair for the past 10 years also posted: "This could be a recipe for disaster."

According to a poll on the WRTV website, more than 60 percent of viewers are also opposed to the plan. The poll closed on Thursday evening.
 

To watch the online interview with Klotz, click here.
 

Points Worth Sharing in the Upcoming Alcohol Debate

Project RAD has put together this summary on issues related to the deregulation of alcohol sales as the debate now moves into the Indiana General Assembly. Some of the points made on this list were compiled and organized by Pam Erickson, a former executive director of the Oregon Liquor Control Commission and publisher of the Campaign for a Healthy Alcohol Marketplace. They are all points worth sharing as the debate continues and special interest groups take their official positions.

Our alcohol regulatory systems are starting to break down.

Opponents of alcohol regulation are using the poor economy as a reason to jump-start existing plans to deregulate alcohol and treat it as a "new" source of revenue for cash-strapped states, making it as accessible and as affordable as a gallon of milk. If these efforts are successful, the progress we have seen with underage drinking, drunk driving and other negative consequences of alcohol misuse will most likely be reversed.

The expansion of alcohol is not needed for economic development.

Regulatory systems are "business friendly" because states usually require fair and equal business dealings. For example, many states have a "uniform pricing" regulation that requires wholesalers to offer the same price to all retailers. This levels the playing field so no wholesaler or retailer is able to dominate the market. This prevents cut-throat competition which would foster heavy promotion, volume purchase and extremely cheap prices. While we all like low prices, so do youth. A fair pricing system allows a vibrant market where small wineries, craft brewers, independent grocers and small wine shops can be successful along with the large corporate chain retailers.

Alcohol should not be sold like any other "legal" product.

Governments, federal, state and local, regulate hundreds, if not thousands, of legal products. How about the automobile which can't be sold without a long list of specified equipment and product safety tests? How about food products and tainted food recalls on everything from baby food to pet food? All of these products must comply with safety rules and regulations. In fact, it's difficult to think of a legal product on the market that is completely unregulated in one form or another.

Retailers are insincere in their quest for "customer convenience."

There is no public majority demanding customer convenience because only a small percentage of Americans are frequent customers of alcohol products. According to a Centers for Disease Control survey, 39 percent of Americans do not drink at all, and 12 percent drink only 1 to 11 drinks per year. Another 29 percent drink 3 drinks or fewer per week. "Greater customer convenience" usually means greater convenience for heavy drinkers, a category that includes underage youth.

Expanding alcohol sales will have community consequences.

By adding a large number of new outlets, you risk potential increases in consumption and an additional burden on law enforcement. Research shows that social problems, including violence and underage drinking, are connected to the number of alcohol outlets in our communities. When dealing with alcohol, the lowest cost to the consumer is not necessarily the lowest cost to society.

Consider the consequences of deregulation, carefully.

Any effort to deregulate must first consider the impact on public safety. Our regulatory systems are designed to balance the strong market forces that would promote low prices, high volume consumption and heavy promotion ... especially to high drinking populations such as youth and alcoholics. Our systems also foster drinking products of lower alcohol content by making hard liquor, and often strong beer and wine, less available and more tightly controlled. Most states require these products to be sold in a limited number of liquor stores versus widespread availability in grocery stores.

The grocery store model relies on high volume, loss leader margins to make money.

According to the Food Marketing Institute: "To earn a dollar, supermarkets would rather sell a $1 item 100 times, making a penny on each sale, than 10 times with a dime markup. Low markup to stimulate high volume is the fundamental principle of mass merchandising ..." Using this business model is a recipe for disaster for alcohol problems as it will use low prices to promote high volume sales. With recent approvals of nearly 200 new alcohol permits in Indiana for the Walgreens chain, six-packs of beer are being sold for $2.99 in major metropolitan areas with high crime and high levels of poverty.