There are four counties in Maryland which are controlled jurisdictions. This basically means that all liquor, wine and beer is controlled by the county. This control allows for some positive things such as the department generating enough revenue that it can donate $32.4 million in 2011 or $240 million over the past 10 years to the counties general fund. But it also means another middle man in the chain. And it provides two additional times for the consumer to get hit where it hurts, in their pockets. There are a few different scenarios beer gets to market. The first two below are standard, the third is Montgomery County:
- Self Distribution - In some states, self distribution is allowed and provides the opportunity for the brewer to distributes its products directly to retailers (bars, bottle shops, liquor stores, and/or individuals)
- Required Distributor - That state requires breweries to work with a distributor; a company which specializes in selling your beer.
- Montgomery County - The county buys and sells all products from distributors.
There are varied rationale's on whether self distribution or a distributor is better for the brewery as far as opportunity costs and actual costs go. Either way, the third option results in another mark up to the consumer. The county controls which products can be sold and for what price. Bottle shops are forced to take a drastic hit in profit or offer beers at a higher price than other counties in Maryland, but most of all higher than bordering state of Virginia... a craft beer oasis in comparison.
Now we know the cause, but lets look at the effect. I have visited a few different bottle shops in my area, and I was actually really impressed with the selection. The problem was the price. I was finding six packs of California based breweries for $15-$18. These sixers were sitting at room temperature and had some visible dust. Green Flash and Firestone Walker make some great beers, but I just don't want to take a chance on their freshness, especially when I would be forking over $3 a bottle. Depending on the shop you could have to pay $9-$10 for a six pack that would be $7-$8 in Virginia.
However, the price gouging doesn't stop a the sticker. About a year ago, Montgomery County increased the sales tax on alcohol to 9%. So not only would I potentially be paying 20%-30% more for my beer, I would then have to pay and addition 9% in sales tax. Disappointed to say the least. I am glad my hobby allows me to make flavor beer on the cheap at home.
To end this discussion on a positive note, I will say that thankfully there were 4 grocery stores in the county which were grandfathered in. These locations, of which I only am aware of one, somehow have reasonable prices and decent selection. Maybe they get a volume discount, or maybe it is because they are the only grocery stores allowed to sell booze, but they do have reasonable prices. All I know is I go to buy craft beer in the county, I will be willing forking over way to much cash, or going the Shoppers Food Warehouse in Germantown.