Why liquor from the ABC store costs so much

Plus: Dole execs setting up HQ?; WeWork is watching you; CLT to Orlando this weekend for $96 round-trip

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Good morning! Today is Wednesday, March 20, 2019. Here are today’s big stories in Charlotte-area business news:

Spotlight: Liquor law changes ahead?

North Carolina retailers are pushing the General Assembly to overhaul the way the state distributes liquor.

It’s a contentious debate that could have big effects on public health, state and local tax revenues and businesses — not to mention on the price of that bottle of Captain Morgan.

The existing system — in which local ABC boards operate liquor stores under heavy state regulation — has been in place since 1937, and it is the only kind like it in the country. Legislators are considering changes, which are mostly opposed by the local ABC boards, who are reluctant to give up their monopoly status.

A report last month by the General Assembly unearthed some important facts:

  • High tax: Of states in the Southeast, North Carolina collects the most tax money per gallon of liquor sold. Because of all the taxes and fees, ABC stores sell a typical bottle for about double what they paid to buy it (see graphic below). Nationally, NC liquor taxes clock in at #4, behind Utah, Washington and Vermont.

  • Low consumption: North Carolina has the second-lowest liquor consumption per capita in the Southeast and third-lowest nationally — despite the best efforts of those craft cocktail bars opening up in South End and NoDa.

  • Few stores: NC has the fewest liquor stores per capita than any state in the Southeast.

  • The people speak: Polling shows North Carolinians favor closing ABC stores and replacing them with privately run retail stores. A poll by Elon University showed residents favored that option 52-32. The NC license plates outside Frugal MacDoogal also indicate popularity of the idea.

Point: “If I can go into a restaurant and they are able to pour me a gin and tonic, there’s really no reason why I can’t go into a grocery store and buy the same product to take to my house. … We are the ninth-largest state in the country now. People who come here see the system we have and say, ‘This doesn’t make any sense.’” — Andy Ellen, president, N.C. Retail Merchants Association, in an interview.

Counterpoint: “Our citizens enjoy the public health benefits as well as the recurring public revenue that are both hallmarks of our current control system. … This finding validates North Carolina’s current system and would prompt me to have concerns about making significant changes to a model that has worked so well for eight decades.” — A.D. “Zander” Guy, chairman of state ABC commission, in a letter to the General Assembly.

The big question: Is there a way to reform the system in a way that keeps the $406M in annual taxes flowing to state and local governments? It might be possible to replace ABC stores with private retailers, raise liquor taxes to keep the government budgets from suffering and still have bottles of liquor that sell for less than current prices. But that would come at a cost (or benefit?) of more liquor stores in operation and more drinking, and there would be concerns about the fate of the estimated 2,900 employees of local ABC boards.

Meanwhile, as legislators debate policies that date back to FDR’s presidency, the new economy is moving ahead on the latest frontier: alcohol delivery to your home.

The grocery delivery service Instacart announced last week that it now allows home alcohol delivery in 14 states, including North Carolina. It joins a small number of companies including Drizly and Shipt that will relieve you of the burden of going out and buying your own beer and wine (for a small fee, naturally).

The demand for alcohol delivery is small — so far. But never underestimate the laziness potential of your fellow Americans. The trade publication Grocery Dive reports:

Less than 1% of alcohol sales occur online, the CEO of delivery service Thirstie told trade journal Shanken News Daily. But he expects that number to grow to 10% over the next year as online grocery sales increase and availability of alcohol delivery expands. With its existing infrastructure and incredible penetration across the country, Instacart is well-positioned to become a go-to provider for alcohol delivery. 

E-commerce penetration in grocery is still low, but being able to get six packs and bottles of spirits delivered to their doorsteps in as little as an hour promises to get more shoppers buying online.

Some day, maybe these trends converge and we’ll have liquor delivery in North Carolina. Give it another 80 years.


The pineapple city?

It’s hard to know what to make of the news this week that fruit and vegetable conglomerate Dole Food is moving some executives to town. It could be nothing, just a chance for a few Dole execs to work away from the company’s California HQ and play golf.

Or it could be a new corporate headquarters in the making for Charlotte. The Observer and Biz Journal reported that a construction permit for Dole office space at 200 South Tryon listed “Dole Headquarters” as the name of the project. But a Dole spokesman downplayed that idea, replying in a way that is possibly accurate yet cryptically skirts the main question: “Nothing is currently planned.”

The Chiquita banana’s uptown presence was short-lived. Maybe a Dole pineapple would be better.


Cash is king

Barron’s is out with its annual listing of the country’s top wealth managers, and 10 are from Charlotte, Business North Carolina reports. The Merrill Lynch broker in Charlotte with the most assets under management has a name well-suited to the role: Gregory Cash.


Carolinas & Beyond

  • WeWork, TheyWatch? Here’s a creepy read from Bloomberg: “Every move you make, WeWork will be watching you.”

  • Facebook redlining: Facebook said yesterday it will stop allowing advertising for housing, employment and credit offers to target users based on age, gender and ZIP code. The company was sued over the practices, which plaintiffs said violate civil rights laws.

  • Important read: “Death by 1,000 Clicks: Where Electronic Health Records Went Wrong,” by Kaiser Health News and Fortune. Electronic medical records were envisioned as a smart way to modernize medicine. But errors plague the systems, and doctors hate them. Worth your time.


Off the Clock

Low-key ideas for the weekend

Big-time sports on TV:

Thursday

  • NCAA Tournament, 12pm - midnight (approx.)

  • 7pm Timberwolves @ Hornets

Friday

  • NCAA Tournament, 12pm - midnight (approx.)

  • 7:10pm, Duke vs. NC Central/North Dakota, CBS

  • 9:00pm (est), North Carolina vs. Iona, TNT

Saturday

  • NCAA Tournament, 12pm - midnight (approx.)

  • 6pm, Celtics @ Hornets

Sunday

  • NCAA Tournament, 12pm - midnight (approx.)

  • 6pm, Hornets @ Raptors

Movies opening in Charlotte this weekend:
  • Us (R) (Rotten Tomatoes: 97%): Horror movie with doppelgangers

Highly rated movies now playing:
  • Captain Marvel (PG-13) (79% on Rotten Tomatoes)

  • How to Train Your Dragon: The Hidden World (PG) (91%)

  • The LEGO Movie 2: The Second Part (PG) (86%)

  • Nancy Drew and the Hidden Staircase (PG) (72%)

Cheap getaways from CLT:
  • This weekend: Charlotte to Orlando, $96 round-trip on Frontier (nonstop), March 22-25

  • Charlotte to Tampa, $106 round-trip on Frontier (nonstop), March 28-31

  • Charlotte to Boston, $136 round-trip on American (nonstop), April 6-8

  • Ski weekend? Charlotte to Denver, $170 round-trip on American (nonstop), April 5-8

  • Farther out: Charlotte to Reykjavik, $443 on United (one-stop), Aug. 26-Sept. 3

  • Farther out: Charlotte to Shanghai, from $583 round-trip on Air Canada (one-stop, overnight in Toronto each way), lots of options in October/November

Source: Google Flights. Fares retrieved Wednesday morning. They might have changed by the time you read this.


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The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.