By WILLIAM PETROSKI • email@example.com • July 1, 2009
Iowans are buying more liquor, beer and wine, bucking an economic trend that has seen sales of many retail products plunge over the past year.
The Iowa Alcoholic Beverages Division generated a record $104 million in revenue for state government operations over the past 12 months, the first time it has exceeded the $100 million mark.
Liquor sales rose 8.2 percent in terms of dollars, although total gallons of liquor sold were up 6.2 percent. Beer sales were up 1.4 percent, and wine sales increased 1.8 percent between July 1, 2008, and June 30, 2009, state records show.
It shouldn't be any surprise to see increased sales of alcoholic beverages, considering the troubling times faced by many Iowans, said John Garringer, executive director of the Area Substance Abuse Council in Cedar Rapids, which serves five eastern Iowa counties.
"When people are under stress, they tend to turn more to alcohol and drugs. Unfortunately, it is a bad choice, because it just adds to their problems," Garringer said.
Many people seeking help at his nonprofit treatment agency have been laid off or were hurt by last year's floods, Garringer said. The council is so busy it now has waiting lists for treatment.
Lynn Walding, administrator of the Iowa Alcoholic Beverages Division, said his experience is that Iowans "are going to drink in hard times and good times."
He emphasized that state officials do not actively promote the sale of alcoholic beverages, although the state is the monopoly wholesaler of liquor to private businesses. Some of the state revenue generated by alcohol sales is targeted for substance abuse treatment.
One factor behind the jump in liquor sales, Walding added, is that Iowans age 21 to 29 with lots of disposable income are drinking liquor - known as distilled spirits - instead of beer.
"Iowa is historically a beer-drinking state, and any movement away from that is a golden opportunity for the spirits industry," Walding said.
Alcohol sales were also bolstered last summer when many retailers in flood-stricken areas were forced to completely restock their store shelves, Walding said.
The $104.6 million in state revenue from alcohol sales is up 18.4 percent from a year ago, when revenue totaled $88.3 million. This year's total includes $73.6 million from wholesale liquor profits; $14.6 million from beer taxes; $6.3 million from wine taxes; $10 million from license fees; and $65,000 from civil penalties.
The total was pushed over the $100 million mark by the shift of $6 million from the division's capital improvement budget to the state government's general fund.
At Hessen Haus, a German-style beer hall in downtown Des Moines, both food and beverage sales are up nicely compared with a year ago, said co-owner Dan Massoth.
"This is just a pretty low-cost way of going out. It's more the 'staycation' type of thing," meaning staying home instead of traveling on vacation, Massoth said. "With gas prices and the economy, I think people are staying closer to home."
Lower-priced beers and vodkas are selling well and business is steady, although profit margins are tight because of tough competition from chain stores, said Jim Swacker, owner of Last Chance Beverage Stop, 2839 E. University Ave., Des Moines.
Customers "are not drinking less. They are drinking cheaper. They are drinking Keystone Light, Milwaukee's Best, Natural Light. ... All your bottom ends," Swacker said.
At Metro Wine, Spirits and Tobacco in Council Bluffs, alcohol sales were down the first three months of 2009, but they have rebounded in recent months, said owner Tim Nelson. The recently concluded College World Series in Omaha was a boon to his business, he added.
"With the economy, people can only feel bad about themselves for so long. I think people are starting to have fun again," Nelson said.
You know, even with the taxes they did make, they could make so much more. And alcohol is taxed so much less than other vices. Ugh.