Spokane Journal of Business

Liquor sales rise in Idaho after I-1183

New store opens quietly in State Line after surge in activity at Post Falls

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Liquor sales rise in Idaho after I-1183
-—Staff photo by Mike McLean
The new liquor store on the Idaho side of the Washington-Idaho state line is the first new one to open in the Gem State in three years.

The Idaho State Liquor Division quietly opened a liquor store last week in State Line, citing overwhelming sales at one of its Post Falls stores since Washington state enacted new liquor taxes and fees in June.

The store, at 7209 W. Seltice Way, is Idaho's first new state-operated liquor store in three years, says Jeff Anderson, director of the state liquor division.

The store, in which the state began selling liquor on Oct. 17, is in a free-standing, 3,500-square-foot building barely 100 yards from the Washington-Idaho border, next door to Lew's Smoke Shop, on the north side of Seltice Way.

Anderson says the state first put an additional Post Falls-area outlet on its drawing board more than five years ago but tabled the plan during the economic downturn.

"Market conditions at the border with Washington have changed," he says, referring to Initiative 1183, the voter-approved measure that privatized liquor stores in Washington state while tacking on new taxes and fees.

The new system has driven Washington buyers across the border in search of cheaper spirits, especially at its Post Falls stores, which are a short hop from Interstate 90, Anderson says.

"We've decided to add a third location in the Post Falls area to better serve our customers," he says.

Idaho has operated two stores in the Post Falls area for a number of years. One is at 202 E. Seltice Way, in central Post Falls, nearly five miles from the border. The other is at 4010 E. Seltice Way, in east Post Falls, nearly eight miles from the border.

"One store is overwhelmed," Anderson says. The central Post Falls store had the highest sales volume in Idaho even before I-1183 went into effect in Washington, and since then, sales have increased 50 to 60 percent each month compared with the year-earlier month, he says.

In the fiscal year ending June 30, the store tallied sales of $6.5 million, Anderson says.

"It's on pace to do over $10 million in sales this fiscal year," he says.

Typical Idaho liquor stores, which range from 2,500 to 3,500 square feet of floor space, are designed to handle $1.5 million to $3 million in sales annually, Anderson says, adding, "We need to adjust to market conditions."

The Idaho State Liquor Division operates 67 liquor stores. It also has contracts with 89 private operators, most of whom do business in small rural communities, although few communities are smaller than the village of State Line, which has a population of 38, according to the 2010 U.S. Census.

Idaho last opened a state-run store in 2009 in the town of Kuna, about 20 miles southeast of Boise.

Washington law allows residents to transport up to two liters of spirits a month into the state for personal use free of taxes and fees. Idaho, however, doesn't limit purchases by nonresidents, Anderson says.

"We don't discriminate by where you live," he says.

Idaho also doesn't track officially how much of its liquor business comes from Washington.

Few Washington residents had discovered the State Line store as of last week. However, at the central Post Falls store on early Friday afternoon, Oct. 19, six out of nine vehicles parked outside displayed Washington license plates.

Liquor sales also have bumped up, but to a lesser degree, in Coeur d'Alene, Oldtown, Moscow, and Lewiston, all of which are near Idaho's border with Washington, Anderson says.

"We always had a price advantage," he says. "Washington, I believe, had the highest prices in the nation. Since 1183 was enacted, that price advantage has extended into all categories of products."

On Oct. 19, the price for a 0.75 liter bottle of Jack Daniels Old No. 7 whiskey, for example, was $23.27 in Idaho, including 6 percent sales tax.

A few miles west of the Idaho-Washington border, at the Safeway supermarket in Liberty Lake, Jack Daniels was on sale that Friday for $18.99, a Safeway Club discount of $5 from the listed regular price. With 20.5 percent sales tax and a $3.77-per-liter fee, the total price of that bottle came to $25.71, still $2.42 more than the Idaho price, despite the club discount.

Managers at the Liberty Lake Safeway and the nearby Albertson's supermarkets decline to comment about sales of spirits.

Before the turnover to private sales, the Washington state-mandated price for a 0.75 liter bottle of Jack Daniels was $24.95, according to data published by the Seattle Times.

The Costco Wholesale Corp. store in Spokane Valley didn't carry a 0.75 liter bottle of Jack Daniels as of last week. However, a 1.75 liter bottle there was priced at $46.95, including the spirit fee and the sales tax, which beat the Idaho price of $49.77 with sales tax and the pre-1183 price of $50.95 in Washington state.

Don Poffenroth, co-owner of Dry Fly Distilling Inc., says the company's products are stocked in a lot more stores in Washington since I-1183 went into effect, although he's not sure that's translating into more sales here.

"We went from 300 to 1,500 locations overnight," he says. "The real question is whether anything's happening with volume sales or consumption. I think sales are kind of flat."

In border cities in Idaho and Oregon, though, sales of Dry Fly products are up, Poffenroth says.

"People will cut across the border to save a few bucks," he says. "For our products, it can be $4 or $5 a bottle."

Mike Gowrylow, an Olympia-based spokesman for the Washington state Department of Revenue, says he's hearing anecdotally that border hopping is hurting sales for some Washington state retailers near state lines.

"Some retailers in border counties aren't doing as well as retailers in the Puget Sound area," Gowrylow says.

Statewide, however, the sales volume was up nearly 12 percent during the first three months of the system changeover, compared with the year-earlier period.

"Sales are following the theory that if you make it more available, people will buy more," Gowrylow says.

Mike McLean
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Reporter Mike McLean covers real estate and construction at the Journal of Business. A multipurpose fisherman and vintage record album aficionado, Mike has worked for the Journal since 2006.

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