Small liquor retailers fret about future
By BRETT CIHON
Port Orchard Independent Staff Writer
March 16, 2012 · Updated 11:30 AM
Not far off Mile Hill Drive sits a large, independent pharmacy that harkens to the past.
The Paskett family has owned the South Park Rexall Pharmacy 8,400-square-foot pharmacy since 1968. Ken Paskett, 71, said unlike chain pharmacies and drugstores that one would find in a big-box grocery store, South Park Rexall maintains an old-time, neighborhood feel long gone from the area.
“There are very few – if any – independent drugstores left like this,” Ken Paskett said. “I still have the very first customer that came in here in 1968.”
Along with being one of the last independent drugstores, Rexall Pharmacy is also one of a lonely breed of contract liquor stores; stores that are independently licensed by the state to sell booze on a consignment basis.
Out of the State of Washington’s 328 liquor stores, about 170 of those stores are contract run.
“Contract stores are typically in smaller towns that wouldn’t support a full, state-run store,” Ken Paskett said. “A lot of small towns in Eastern Washington have them.”
Out of the eight liquor stores in Kitsap County, only two, including Rexall, are run on contract. But though the South Park Rexall Pharmacy has sold booze for more than three decades, it might disappear.
The mom-and-pop pharmacy that serves as a contract liquor store is worried their back corner shelves, stocked with everything from Old Crow to Drambuie, might go dry.
“The last two customers I’ve helped have asked us if we’re going to still sell spirits,” said Jeff Paskett, the 44-year-old son of Ken Paskett, the owner of the store. “What choice do you have? You either have to give up or give it a go.”
But Rexall’s small, independent seller existence was threatened in November when voters passed Initiative 1183, allowing private stores measuring at least 10,000 square feet to sell liquor. Stores such as Costco, which donated $22.5 million to the campaign for I-1183, Safeway and Fred Meyer will start selling sprits on June 1.
And though the smaller Rexall Pharmacy will be grandfathered in and still be allowed to sell booze, the question remains: will they be able to compete?
Both Ken and Jeff attended a business symposium put on by a group of managers from contract liquor stores in Ellensburg on March 9. There, representatives from state liquor agencies and other contract groups helped managers of contract stores wade through the paperwork and bevy of questions the small-town store owners have about switching over to sell privately. Though the organizers of the meeting promised that about 90 percent of contract stores would stay in business, Jeff Paskett said, not everyone at the meeting was in high spirits.
“I can’t imagine that many contract stores are going to make a go of it,” he said.
One of the Paskett’s biggest concerns is competitive pricing. Jeff Paskett said many big-box chains have established connections with beer and wine distributors that will easily transfer to liquor distributor connections, bringing the base cost for stores such as Costco down.
“They have buying power,” he said.
And it’s not just South Park Rexall who will pay the higher costs. Ken Paskett said a 21 percent tax will be added to liquor bottles. He doesn’t know what the tax is now, he said, but everything he has read about I-1183 suggests that it brings in close to $200 million in revenue for the state. This leads him to believe any cost benefit from competition will be negated by higher taxes.
“It’s not going to be like California,” he said. “I don’t see a selling bonanza.”
Others might disagree. Axel Strakeljahn, Port of Bremerton Commissioner and the store manager of Sedgwick Fred Meyer, said the store is currently re-merchandising the isles to fit the liquor come June 1. Because a lot of vendors work with Fred Meyer, he said, the cost will be low.
“Pricing is going to be competitive,” he said.
The Pasketts aren’t sure. Along with the wade of paperwork they’re encountering, they also haven’t been able to find what their costs from distributors — whoever they may be — will amount to.
“If we’re talking about costs,” Jeff Pasket said. “I’m not positive, but I surely don’t see how it would be lower across the board. In our store or others.”
Last call and beyond
Still, with all the confusion and unanswered questions, South Park Rexall will make the switch to sell privately. They’ve received a lot of support from the community and plan to serve their customers with a wider, niche selection of liquor that might be hard to find at other stores in the area.
“We’re going to have to approach it from a broad selection,” Jeff Paskett said. “Other stores won’t desire to carry a wide, varied selection. We’ll have to shoot for carrying things others can’t find.”
Fred Meyer should have a wide selection, said Strakeljahn. From his point of view, the addition of private liquor stores to the state means one greatly positive notion to the consumer.
“It puts the idea of one -stop shopping back in one -stop shopping,” he said. “It’s going to be good for everyone.”
Strakeljahn said that along with re-merchandising the shelves, Fred Meyer employees are undergoing additional training for liquor control. The addition of private sellers who aren’t necessarily as well trained scared many individuals when people were voting on the initiative in November. Brian Smith, a spokesman for the Liquor Control Board, said compliance checks have shown a 94 percent compliance rate in state run stores, while the private sector is at 77 percent. Though Smith said increased training will help, they’ll have to wait and see if private stores will able to mitigate sales to minors at the same rate.
“We’ll continue to check compliance and focus on areas having the most problems,” he said.
Ken Paskett said South Park Rexall has undergone many compliance checks over the years. He said the Liquor Control Board is a competent organization and he has faith that they will get maximum compliance with their limited resources.
“The state and liquor, they do a great job,” he said.
In all aspects, compliance, cost, and for his business, he is trying to stay positive, the certain realities make it tough. Handing a small bottle of Whiskey across the desk to a customer, Ken Paskett approaches June 1 with a smile and a shrug.
“You never know. It could turn out to be beneficial for everyone,” he said. You just never know. All you can do is try.”
Contact Port Orchard Independent Staff Writer Brett Cihon at email@example.com or 360-876-4414.