Opinion: Don’t mess with Michigan's liquor system

Auday P. Arabo

Across the state, members of the Midwest Independent Retailers Association are feeling the pinch of liquor delivery delays and failure to receive full orders as a result of problems faced by one the state’s three authorized distributors of liquor.

State liquor stores are experiencing dwindling supplies due to distribution problems.

But we are strongly opposed to suggestions that the current problems require the state to destroy a system that benefits small family-owned retailers, bars and restaurants around the state, and replace it with one that, based on the experiences of other states, will result in closure of many family owned small businesses — particularly in rural areas of Michigan.

Republic National Distributing Company’s (RNDC) move to a highly automated warehouse, while well-intentioned and probably necessary, has been a mess. Since the transition started in June, our members have suffered from delays in delivery and incomplete orders, creating significant hardships on retailers of all size, but particularly on small businesses.

MIRA members have talked with officials at RNDC and the Michigan Liquor Control Commission, and we understand the problems the company is trying to fix. We are pleased to see deliveries improving, but will withhold judgment until we see a restoration of service levels we have come to expect from the company over the past 20 years.

Uninformed suggestions to move away from the state’s current distribution system to a so-called “free market” is a huge mistake.

The liquor system in place in Michigan today is one of the best in the nation for family-owned, small- and medium-sized liquor retailers, bars and restaurants in Michigan — and their customers. It is highly supported by the vast majority of the 13,000 or so liquor licensees in the state.

In Michigan, liquor distributors are required to treat all retailers the same. Each licensee can get a delivery a week. Under other systems, a small retailer might be deemed worth a delivery every other week or less, particularly if it is far from other liquor sales outlets.

In Michigan, a small-town tavern can get a split case of liquor delivered to its door with three bottles of one whiskey, three bottle of a gin and three bottles of a vodka and three bottles of tequila. Under other systems, distributors often set case minimums, a price that is too high for a small company that doesn’t need to carry large inventory.

In Michigan, liquor prices are generally the same everywhere you go. A small corner store has the same opportunity to sell you a bottle of your favorite bourbon as the largest big box retailer. Under other systems, small family-owned stores are charged much more than large stores for the same product.

Michigan has seen what happens when a more “free market” system is allowed to rule. Small town Michigan today often has no local grocery with a robust set of products. Instead, we have chains with limited options for customers. Locally owned hardware stores are a rarity, put out of business by big box stores often miles away. Urban communities are retail deserts, and without transportation, people end up with poor options.

MIRA strongly supports the MLCC’s  plan to hold a public workgroup to look at our state’s distribution system, learn lessons from the RNDC’s current problems, and seek ways to make improvements. We intend to participate alongside RNDC, Great Lakes Wine & Spirits and Imperial Beverage.

What we and other groups who represent small business in the state do not support is a large-scale change in the state’s current system. 

We can learn from the State of Washington, which went from a control state to an open state. The "free market" theories have led in reality to consumers in the State of Washington paying more for liquor, having less selection and ending up with fewer outlets to buy spirits from. This has also cost Washington major tax dollars.

Michigan has one of the largest selection of spirits in the nation, more than 10,400 spirits items to choose from. We have more licensees (mostly small businesses) than any control state and more than any open state with our population. 

The facts, not the rhetoric, should guide future discussion on Michigan’s liquor system.

Auday P. Arabo, Esq. is the President and CEO Midwest Independent Retailers Association.