From the mouths of monopolists

From an op/ed by an Oregon liquor store agent on why we shouldn’t privatize liquor sales:

A net revenue of $163.5 million (fiscal 2008-2009) just from liquor sales was returned to the citizens of Oregon. What retail business can generate net profit revenues of 40 percent of sales? I’d sure like to invest in such a company. Even a wildly successful company like Apple posted only a 19.9 percent net profit margin for 2009, which is far less than what OLCC liquor revenue generated for Oregonians.

And in the same article:

If the citizens of Oregon think that getting the state out of liquor distribution and retailing will reduce the price of alcohol at the checkout counter, think again. I’ve compared retail prices in California and Arizona to ours in Oregon, and except for the best-sellers (less than 10 percent of the inventory) the prices are the same or higher in those states.

So his arguments are that 1) monopoly liquor distribution yields enormous excess profits for the state and 2) introducing competition will increase prices for consumers. If this is the best the anti-privatization side can come up with, I think it’s safe to say the pro-privatization side wins the economic argument.

Comments

  1. Jake B. says:

    What? I don’t know what “California” he was visiting to assert his claim but he’s dead wrong to say that the prices aren’t lower. For example, my vodka of choice is Monopolowa ($$$ and taste- I know, I know its vodka) and it runs about $15 a fifth in Oregon compared to $8-9 in California. Almost everything is at least 30% cheaper and, of course, there is a greater selection of products.

  2. Jacob Grier says:

    @Jake B.: I also love that his defense is that not all the products are cheaper, only the “best-sellers.” Aren’t those the ones we should care about?

  3. Marc says:

    I guess I am the odd man out on this, it is a controlled substance and I think the points are right. Having lived in California for a good bit of my life, I would contest Jake B. on his claim. I worked for a large liquor distributor and know for a fact that pricing in California does not favor the consumer like he indicates.

    If you are in favor of controlled sale of a food or beverage, you (the consumer) are always better served by state-run systems. But, that is really the issue to talk about… should there be restricted access to booze and I just can’t get my head around doing it any other way.

    Just my two cents.

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