A big alcohol distributor here is pouring money into a November referendum that would break up Washington state’s monopoly on hard liquor sales.
Young’s Market Co. of Tustin has given $1.1 million to Washington Citizens for Liquor Reform, a group that wants to end state sales of hard liquor and place them in the hands of the private sector.
Young’s and Odom Corp., a Bellevue, Wash.-based distributor, are the sole financial backers of the campaign, which has raised $2.2 million so far, according to Washington’s Public Disclosure Commis-sion.
If voters decide to end Washington’s rare post-Prohibition system of selling booze, it stands to open up business for Young’s, one of the country’s largest distributors of beer, wine and hard liquor.
“We would make higher margins,” Young’s Chief Executive Chris Underwood said.
Young’s generates more than $2 billion in annual sales.
Liquor producers such as Britain’s Diageo PLC and Belgium’s Anheuser-Busch InBev SA NV hire Young’s to get their products into stores, restaurants and bars.
Young’s runs warehouses and trucks, and handles marketing for products. It services about 26,000 accounts in California, Oregon, Alaska, Hawaii, Arizona, Idaho, Utah, Wyoming and Montana.
In Washington, Young’s now distributes beer and wine, which are sold privately at grocery and other stores as well as at bars and restaurants.
Hard liquor is sold only at 315 state stores staffed by union workers.
Effects of Referendum
If the referendum passes, it would make liquor distributors the middle men between alcohol makers and retailers, ending state sales.
The initiative would expand the number of products Young’s could supply to stores in the state, said Charla Neuman, spokeswoman for Seattle-based Washington Citizens for Liquor Reform.
Protect Our Communities, a group made up of healthcare providers, religious groups, teachers and union workers, has raised $6 million to fight the measure.
A group of beer and wine wholesalers also is against the initiative. They would face more competition from hard liquor sales.
The initiative is “terrible public policy” and “bad for business,” said John C. Guadnola, executive director of the Washington Beer & Wine Wholesalers Association.
He and others argue small sellers of beer and wine would be hurt by expanded hard liquor sales.
Young’s and Odom also are members of the Washington Beer & Wine Wholesalers Association.
Washington Gov. Christine Gregoire opposes the initiative and has cited sizeable state revenue losses and increased problems with drunken driving and domestic violence if the measure passes.
Backers contend the measure will boost state revenue by at least $100 million in the next five years through liquor licenses, annual fees and business, operating and sales taxes, as well as from the sale of the state’s warehouses, stores and inventory.
Washington voters also are set to decide on a separate, related initiative that would privatize liquor sales and allow any business to become a distributor.
Costco Wholesale Corp., which is based in the Seattle area, spent more than $1.2 million to get that referendum on the ballot.
‘Control State’
Washington is one of eighteen states that directly control liquor distribution, including Oregon, Utah and Wyoming. Liquor sales also are controlled in Virginia, where Gov. Bob McDonnell has introduced a plan to privatize the industry through a bidding and auction process.
A so-called “control state” never has opened up distribution to the open market, but a shift is underway as states deal with budget shortfalls and look for ways to generate revenue.
“This is kind of groundbreaking,” Underwood said.
Underwood is a relative of the company’s founder, John Young, who started the business in 1888 with a small food store in downtown Los Angeles.
In 1910, the company opened its first factory to produce salad dressings, mayonnaise, corned beef and sausages. It also opened a building for receiving seafood.
After prohibition ended in 1933, the Young family turned their attention to liquor and became a wholesaler. The company is credited with introducing José Cuervo tequila to the U.S. and is the primary distributor of Jack Daniel’s.
In 1994, the company moved to Orange County, where it has about 500 workers.
Young’s employs more than 3,000 workers across the country. About 2,000 are based in California, where the company dominates the market.
Its major rival is Miami-based Southern Wine & Spirits of America Inc.
Young’s runs two major warehouses in California, in Chino and Morgan Hill south of San Jose. n
