Spirits industry splits on ballot

Liquor privatization vote: Oft-united interests have financial face-off on initiatives

September 5, 2010 

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A Washington state liquor store sales clerk stocks shelves at a Lacey store in this file photo. (The Olympian file)

STEVE BLOOM — The Olympian

Ballot measures asking voters to privatize liquor in Washington are turning parts of the alcohol industry against one another.

Retailers that sell booze are financing Initiative 1100. Distributors of hard liquor are bankrolling Initiative 1105. And over the past few weeks, beer and wine interests have anted up millions to defeat both measures.

Close ties between the beer, wine and liquor industries has made following the money confusing and bred conspiracy theories. Consider these strange occurrences in campaign disclosures: Money from a spirits distributor ends up in the accounts of a group fighting the distributor’s own initiative. A single Northwest company owned by two other companies shovels money into opposing sides.

What’s clear is that while the coalition fighting the two measures presents public servants as its public face, at least 85 percent of its contributions so far come from the beer and wine industries.

Supporters of privatization have pounced. “This whole idea that the ‘no’ campaign is about public safety is just a smokescreen to fool voters about their real motives,” I-1100 spokesman Ashley Bach said.

Bach said beer and wine interests are worried about liquor competing with their products for shelf space, and in particular about distributors being cut out of the supply chain if I-1100 passes. I-1100, the more sweeping of the two measures, would totally overhaul the way Washington regulates alcohol.

The Washington Beer and Wine Wholesalers Association acknowledges that its members don’t want to see deregulation, but maintains it’s fighting against the dangers of easier access to alcohol, not to guard profits. Both initiatives would close the 315 state and contract liquor stores and send their wares to private stores that could sell hard liquor practically anywhere and until late in the night.

Regardless of the industry’s motives, it has real allies from the ranks of police and advocates for health and safety.

“I think they have their interests, and public safety’s got theirs,” said Greg Hopkins, a Tacoma police officer who retired this year after a three-decade career in which he helped ban high-alcohol beer and wine in parts of the city. “This just happens to be an issue we have a common interest on.”

Hopkins was asked to help the campaign by wholesalers director John Guadnola, whom he credits with being a sympathetic ear in the alcohol industry to Tacoma’s Alcohol Impact Area. Hopkins has cut a television commercial being prepared by the coalition fighting I-1100 and I-1105.

MONEY POURS IN

Support from the beer and wine groups will be invaluable in getting the opposition group’s message out, since organized labor that opposes both initiatives as disastrous for hundreds of state workers will be spread thin on six initiatives and hundreds of candidates.

“They do have resources,” Hopkins said of beer and wine groups. “Costco is throwing a lot of money at this thing. They’ve got money to be able to do TV spots.”

The Issaquah-based retail warehouse chain would like to put liquor on its shelves next to beer and wine, and has contributed nearly all of the $1.2 million raised by I-1100. Alcohol distributors Odom Southern Holdings and Young’s Market Co. are the only donors to I-1105, which spent $2.2 million to get on the Nov. 2 ballot.

The campaign against the two measures has raised $4.7 million, including $4 million from state and national beer and wine wholesalers groups and the Beer Institute, a lobbying group for big companies, such as Anheuser-Busch InBev and MillerCoors, and smaller breweries, which also are lining up against privatization in Washington.

Craft breweries and independent wineries are mostly worried about I-1100, Guadnola said. He said it would eliminate rules against volume discounts and other special deals between sellers and buyers of liquor, deals that would give advantage to large beer and wine sellers over small operations.

“We would be the least-regulated state in the country by a huge margin,” Guadnola said.

DIVIDES INDUSTRY

Costco and other outlets would be able to buy directly from alcohol producers, cutting out the distributors. Bach says I-1100 would end the “monopoly” distributors of alcohol have enjoyed in Washington and across the country since the end of Prohibition, and distributors might be worried about the idea spreading.

The liquor distributors paying for I-1105, which would keep regulations in place while privatizing spirits, don’t like I-1100 for the same reasons: They could lose their place in the supply chain.

That has led to speculation that I-1105 backers are really more interested in defeating I-1100 than advancing their own privatization initiative. A blog put up by an anonymous supporter of I-1100 makes that claim.

Not even close, I-1105 spokeswoman Charla Neuman says. If people are doubtful or confused, she said, they should vote for both measures to make sure privatization happens. “The worst thing to happen is for neither to pass,” she said. (If both measures pass, the issue would likely end up in court.)

As evidence of duplicity, a blogger at yes1100no1105.blogspot.com points to some strange donations made by companies tied to Odom Southern and Young’s Markets, the distributors bankrolling I-1105.

The beer and wine wholesalers’ political committee helping to fight the initiatives received contributions from the Odom Corp., part of the Odom Southern partnership, and Young’s Columbia, a partnership between Young’s and another company, Columbia Distributing.

Guadnola said those contributions come every campaign season from all members and are intended to support favored candidates. Odom and Young’s Columbia were the lone members who didn’t want the group to oppose I-1105, he said, so the trade group has promised them it won’t spend their money on the anti-privatization campaign.

The way the initiatives have divided the industry is evident in the torn loyalties of Young’s Columbia, which sells wine in Washington and Oregon. One parent, Young’s, has spent more than anyone backing I-1105. The other, Columbia, is the biggest contributor to the beer and wine wholesalers who oppose both measures.

“The two partners are diametrically opposed in their views on this issue,” Neuman said, explaining why a company with ties to Young’s would fund the opposition.

The difference of opinions might change how the partners spend money on politics, Neuman says.

It has, she said, “created rather a new and awkward business dynamic that they haven’t encountered before.”

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