'Worse than expected': Liquor stores adjust to new normal with wine on grocery shelves
On a recent Wednesday afternoon, Robyn Miller pushed her shopping cart out of Fort Collins' Trader Joe's and hoisted her grocery bags onto her shoulder.
As she walked across the Midtown store's parking lot, the tops of a handful of wine bottles — a cabernet sauvignon and vinho verde among them — stood out among her groceries.
When asked how she feels about being able to shop for wine in grocery stores — a change made possible when Colorado voters narrowly passed Proposition 125 back in November — Miller didn't mince words.
"I love it," she said, as she placed the bags in the trunk of her car.
After moving to Windsor from Texas two years ago, Miller missed being able to buy wine in grocery stores. She didn't have to miss it for long.
Following Proposition 125's 2022 passage, Colorado grocery and convenience stores licensed to sell beer — including 48 in Fort Collins — were allowed to add wine to their shelves starting March 1.
Grocery stores pushed for the change in the name of customer convenience. It's that convenience, as well as low prices, that draws Miller to Trader Joe's wine section, she said that Wednesday as she finished loading her groceries and pulled out of the parking lot — driving past Square Beverage on her way out of the Midtown shopping center.
Like other independent liquor stores in Colorado, Square Beverage didn't have a crystal ball back in November, when Colorado voters were faced with a trio of propositions that threatened the turn the industry on its head.
But now, after more than seven months of grocery store wine sales, the outlook for stores like it is taking shape — and it's not the future they were hoping for.
The road to wine in Colorado grocery stores
Square Beverage, a tidy, family-run liquor store in Midtown's Square Shopping Center, opened in 2016. Back then, Trader Joe's had anchored the redeveloped retail strip since the previous year and being next to the popular grocery chain "just made sense," said John Hoxmeier, who works at Square Beverage alongside his sons and store owners, Alex and Joe Hoxmeier.
For years, John said, being neighbors with Trader Joe's felt like "a partnership, a collaboration." Then Colorado's liquor sale landscape began to change.
In 2016, with grocers angling for a ballot initiative allowing full-strength beer and wine sales in their stores, liquor and grocery store stakeholders sat down for "the great compromise" — a joint effort to create a roadmap for grocery stores to start selling beer, wine and liquor while also giving liquor store owners time to plan for the future.
These conversations ultimately resulted in Senate Bill 16-197, a "compromise" bill allowing for the 2019 introduction of full-strength beer in grocery and convenience stores, the gradual procurement of multiple retail liquor licenses by a single entity and a 20-year roadmap for Colorado grocers to get into the wine and spirits business with some buyout provisions for grocery stores that were within 1,500 feet of an existing liquor store.
Grocery and convenience stores were previously capped at selling 3.2% alcohol beers in Colorado.
After the introduction of full-strength beer to grocery shelves, Hoxmeier said it felt like grocers and convenience stores jumped the line with Proposition 125, which ultimately "grandfathered" wine into grocery and convenience stores' existing liquor licenses.
Grocery and convenience stores are able to sell wine under a fermented malt beverage and wine license. As of Oct. 4, there were 1,925 of these licenses issued in Colorado and 56 in Fort Collins, according to the Colorado Department of Revenue. Among these licensees were roughly 340 7-Eleven stores; 106 Safeways and Albertsons; 129 King Soopers, Krogers and City Markets; 89 Walmarts; 39 Targets; 36 Natural Grocers; 13 Whole Foods Markets and six Trader Joe's stores.
In Fort Collins, there were 11 Loaf and Jugs, 10 7-Elevens, five Safeways, five King Soopers, two Walmarts, two Targets, one Trader Joe's, one Lucky's Market, one Fresh Foods Market, one Whole Foods Market, one Natural Grocers and 16 other gas stations, convenience stores and retailers operating with this kind of license as of Oct. 4.
Starting in March, Square Beverage experienced an immediate drop in foot traffic and a "significant hit" to the store's wine sales, according to John, who declined to say exactly how far the store's sales had fallen since this spring.
Since the shift, Square Beverage is leaning even more into liquor, canned cocktails and its focus on organic, natural wines and wines sourced from small vineyards.
"We try to have specialized things you're not going to be able to find other places," he said.
John also pointed to the wine tastings and wine club as offerings that set Square Beverage apart. Now 80 members strong, the wine club has offered curated wine lineups to its members since Square Beverage opened.
"That's going to be our savior going forward," John said.
But Square Beverage soon might not be alone in offering wine tastings in its slice of Midtown. Trader Joe's successfully got a permit to host wine tastings from the city's liquor licensing authority last month, becoming the first Fort Collins grocery to do so, the city confirmed Tuesday.
There is currently no timeline for when tastings will be introduced in Fort Collins, according to a Trader Joe's spokesperson, and the grocery chain declined the Coloradoan's interview requests for this story.
Safeway told the Coloradoan it was looking into wine tasting opportunities in Fort Collins but didn't have any tastings planned yet.
When asked about the switch to wine sales in Colorado Safeway stores, the store sent the following statement: "Customers appreciate the convenience of picking up a bottle of wine when shopping for groceries." Further questions from the Coloradoan went unanswered as of Tuesday morning.
King Soopers did not respond to the Coloradoan's requests for comment for this story.
The liquor store pivot
When Proposition 125 got on the ballot last year, Josh Beard — who has an ownership stake in both Mulberry MAX and Bullfrog Wine and Spirits — crunched the numbers.
He was no stranger to this concept, having done the same thing before the 2019 introduction of full-strength beer on Colorado grocery and convenience store shelves.
This time, however, "I was way off," Beard said.
This spring's shift to grocery and convenience store wine sales hit Mulberry MAX and Bullfrog Wine and Spirits twice as hard as Beard expected, he said. He declined to name specific sales figures.
While Mulberry MAX, 460 S. College Ave., is located next to a Target, Beard said the retailer does not sell beer or wine, per an agreement between the two stores. Bullfrog Wine & Spirits, 1820 N. College Ave., however, is located next to North College Avenue's sprawling King Soopers Marketplace, which has a large wine selection to match.
Like at Square Beverage, Beard said Mulberry MAX and Bullfrog are trying to set themselves apart with what kinds of wines they offer.
"We can't just not carry the same brands as King Soopers and Safeway," Beard said, noting that his stores have lowered prices on such brands to stay competitive with grocers.
At the same time, "we're looking at brands that are not carried in grocery stores," he added, noting that wine distributors have recognized that shift and now offer independent liquor stores more unique wines.
"It's part of their sales pitches now," he said.
Still, Beard said the beer, wine and spirits industry is struggling to keep up with the ripple effects of Proposition 125.
"I don't know anybody in this industry — and I've been in this (industry) for 20 years — that has benefited from this. Not the store owners. Not the employees. Not the distributors in the system."
Colorado-based alcohol distributor High Country Beverage declined an interview request for this story. Calls and messages to distributors Breakthru Beverage Group and Republic National Distributing Company went unanswered as of Monday afternoon.
Despite Proposition 125's narrow passage, it was unsupported by Larimer County voters — largely scraping by with the approval from voters in the Denver Metro area and El Paso County. In a recent Coloradoan poll, 80% of its 522 respondents said they purchase wine at liquor stores instead of grocery or convenient stores.
"We have a ton of customers that are still very supportive," Beard said. "I don't know if that's going to save us."
"I don't blame the public for trying to find the best deal or the most convenient thing," Beard added.
"I just want to underscore that all that extra money (in grocery wine sales) is going to Cincinnati," he said as a nod to Kroger's Cincinnati headquarters. "It's not (going to the) workers. It's not (going to) the citizens of Fort Collins."
"Supporting local business has more value than just the dollar you're saving on a product."
The outlook for liquor, grocery stores in Colorado
It's a bit of a trek from her south Fort Collins home, but when she needs some wine or a bottle of vodka for weekend cocktails, Connie Hanrahan said Wilbur's Total Beverage is always her first pick.
Once, after getting back from Costa Rica, Hanrahan said the Midtown liquor store was able to find and order a brand of Argentinian wine she had fallen in love with on her trip.
When in doubt about what wine to bring to her book club, Wilbur's employees will walk her through the shop's sprawling aisles and give her options based on her friends' favorites.
And five years ago, when her daughter was battling cancer, Hanrahan was sitting in the hospital when she flipped her newspaper to a blurb about Wilbur's Total Beverage donating a percentage of its sales to UCHealth's south Fort Collins cancer center.
"I like to support the community that supports me and that supported my daughter five years ago," Hanrahan said.
"I will drive to Wilbur's for that," she said, adding that she's so resolute in this decision that she won't even go down the wine aisle while grocery shopping.
The massive Midtown liquor store, which is sandwiched between a Whole Foods Market and King Soopers, is counting on people like Hanrahan to value its selection and customer service amid the switch to wine in grocery and convenience stores.
"Overall, it's worse than expected," Wilbur's owner Mat Dinsmore said about the change's effect on his business.
Since March, the store has seen a double-digit tumble in sales and has noticed a marked decrease foot traffic, Dinsmore said, declining to give specific numbers for Wilbur's sales drop.
"(The grocery industry) is big and it's hard to move that ship, but we cannot compete with the convenience factor," Dinsmore said. "Every person I know has to eat. Not everybody I know drinks."
With wine now in grocery and convenience stores, the Colorado Licensed Beverage Association estimates that one-quarter to one-third of Colorado's roughly 1,600 independent liquor stores could close as a result — possibly equaling 400 to 600 shuttered stores, according to the association's Executive Director Chris Fine.
As of Oct. 4, there were 1,594 retail liquor stores licensed with the state of Colorado. Of those, 38 retail liquor stores are currently licensed in Fort Collins, according to the city.
In the fiscal year 2022, 1,603 retail liquor stores were licensed with the state, according to the Colorado Department of Revenue's annual report.
"A lot of shops are doubling down on Colorado-made spirits and beers," Fine said, noting that he's heard of some Colorado liquor stores adding food items to their offerings, including one shop in Summit County that is now selling seafood and meats.
"They have to find (alternative revenue streams)," Fine said.
Dinsmore said while Wilbur's had beefed up different offerings like gift cards, barware and gift items, there are just some items that don't make sense for the business.
"We looked at doing deli meats, but we're next to a Whole Foods. We'd get our a-- kicked."
"We can win on service, selection and we're really competitive on price. We just lose out on convenience," Dinsmore said.
"For some people, convenience wins, and I totally understand that," he added. "But I also tell people our business feeds three generations of our family. We have long-term, 20-plus year employees that are our family.
"... We may have lost at the election box, but you can vote every day with your wallet, and you can choose where want to spend your money."
This article originally appeared on Fort Collins Coloradoan: Fort Collins liquor stores keep pivoting as grocery stores sell wine
