Finley: Booze market needs more competition

Nolan Finley
The Detroit News

Few things make me more thankful than a fine bottle of bourbon on the table. But the chances of it landing there this holiday are diminished by a liquor shortage that's plagued Michigan throughout the fall.

The problem isn't that distillers are producing too little hooch. There's still as much corn liquor flowing out of Kentucky as ever.

The liquor shelves are adequately stocked at Detroit’s Meijer store Friday, but state liquor stores are experiencing dwindling supplies due to a problem with a distributor.

But getting it into shot glasses here has been tougher, largely because of Michigan's monopolistic system of distributing whiskey, gin, vodka, tequila and other spirits.

Just three companies are licensed to distribute liquor to stores, bars and restaurants in the state. But in reality, most of the market is controlled by one operator — Republic National Distributing Co., which handles two-thirds of booze deliveries.

Republic moved into a new warehouse earlier this year and has had extreme difficulties making it work. Many retailers and bars report their supplies at times have been down a third or more, and they aren't as well-stocked as they'd like to be going into the Christmas season.

Attorney General Dana Nessel hit Republic with an 88-count complaint this week for failing to meet its delivery commitments. Each count carries a $300 fine, putting Republic on the hook for up to $26,000.

Much deserved for getting between a man and his head bust.

But the fines aren't the big picture answer. The state needs is to inject more competition into the liquor market.  

Michigan is among the 17 alcohol control states, meaning the state is the wholesaler of liquor. The Michigan Liquor Control Commission purchases spirits from vendors, adds three taxes of 4% each to the bottles, and then marks up the price 65%, establishing the minimum consumer cost. 

It then contracts with Republic and two smaller distributors to get the stock to retail outlets.

If those distributors fail to make their deliveries, bars and restaurants are out of luck. State law limits them to purchasing just one case of liquor a month from a retailer. And since many of the big-name distillers deal exclusively with just one distributor, when problems occur like they have with Republic, popular brands disappear from many shelves.

At the least, the state should encourage more licensed distributors. State law doesn't limit the number to three. With beer and wine, the state has dozens of distributors, making those markets less susceptible to delivery disruptions.

But the best solution is for Michigan to get out of the liquor business and join the states that have allowed the private market to handle alcohol sales.

It might cost the state some money — it currently collects about $160 million annually in liquor related taxes.

But it should lead to more competitive pricing of booze, which is good for consumers, along with a wider selection of available brands. Rather than the state deciding which brands and types of alcohol to stock, those decisions would be driven by the market.

The state should also loosen its grip on liquor licenses, making them cheaper and easier to obtain.

Considering the world we live in today, one thing there should never be a shortage of is alcohol.   

Don't mess with my Blanton's.

Catch Nolan Finley on "One Detroit" at 7:30 p.m. Thursdays on Detroit Public Television.