Prohibition's Hold on Liquor Sales in 18 States May Relax in Boon for Beam

By Peter Robison and Duane D. Stanford
Bloomberg
Nov. 08, 2011

U.S. states that have kept a tight rein on alcohol sales since the Prohibition era may be loosening their grip.

Lawmakers in Utah, where even high-alcohol beer is sold through state liquor stores, were urged by an advisory panel this year to put the business in private hands. Pennsylvania, Virginia and North Carolina have considered privatizing state liquor outlets. Tomorrow in Washington, votes will be counted on a ballot measure backed by Costco Wholesale Corp. (COST) that would end state control of liquor retailing.

Budget deficits forecast to reach $103 billion this fiscal year are making states more willing to open the taps, to the dismay of some public-health advocates who warn it may exacerbate social ills. Companies including Costco, bourbon maker Beam Inc. and Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), which owns food and alcohol distributor McLane Co., may gain a larger share of the $8.5 billion in gross sales last year in the 18 states where liquor is still controlled.

“If privatization does indeed occur in Washington, this could provide additional momentum to similar movements in other states,” said Jared Koerten, an analyst in Chicago for Euromonitor International Plc.

Many of the proposals involve making alcohol more widely available, increasing licensing fees and tax revenue. Any gains may be wiped out by other costs, from car accidents to domestic violence, said Michael Scippa, a spokesman for Alcohol Justice, an industry monitor based in San Rafael, California.

“Increased availability increases overconsumption, which increases alcohol-related harm,” he said.

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