Amy Campbell, Executive Director KABR
(March 24, 2005) Mr. Chairman and members of the committee, my name is Amy Campbell and I appear before you as an opponent to this legislation on behalf of the Kansas Association of Beverage Retailers. For those of you who were not members of the Legislature in 2001 and 2002, this request to raise the alcohol content of cereal malt beverages was raised during that session. It was also rejected by the Legislature during the 1993-94 session. In 1989, the same idea was rejected by the Senate Federal and State Affairs Committee. Kansas business owners of retail liquor stores are disappointed, but not surprised, to be addressing the same issue again.
The same basic arguments are being made by both sides.
Mr. Chairman, I have attempted to compile the comments of many of our members as I know that time is precious. However, we believe it is important too appear and state our case as succinctly as possible so this committee would not, in any manner, underestimate the depth of the opposition to this legislation felt by retail liquor owners.
This is not about only a six pack of beer. The products involved include malt based coolers, which look like wine coolers, fruit flavored malt beverages that mimic liquor based products, mini-kegs, and kegs. The proliferation of flavored malt based products on the market has exploded in the past ten years and this law would encourage further expansion. But this isn't about the product at all.
National statistics indicate that cereal malt beverage is a small and insignificant portion of most grocery and convenience stores total sales. Testimony in 2002 indicated that CMB made up less than 5% of total sales for the average convenience store – and that the percentage was not expected to increase with the passage of Strong Beer legislation. These products are often used as a loss leader or promotional item to sell other merchandise. The sale of liquor store beer in all existing cereal malt beverage outlets would only move those sales from Kansas liquor store to a multitude of other business. Liquor store beer constitutes anywhere from 40% to 60% of most liquor store sales.
And yet, statistics indicate that more than 20% of the product sold in
Kansas by beer wholesalers is cereal malt beverage. This product does
have a consumer base in Kansas. To replace cereal malt beverage with
stronger beer is to remove that product with less alcohol content from
the market altogether. (In cities and counties which adopt this Act.)
*
SB 299 creates a fourth level of taxation for beer by adding sales tax
to the enforcement tax, drink tax, and gallonage tax already paid on
the product.
* The bill does not bring the Cereal Malt Beverage Retailers under the
regulation of the State – although it appears to put the product
under the regulation of the State.
* SB 299 appears to create a new Act which is non-uniform in its application
to counties. If so, counties could simply opt out of this Act to change
the law.
*
The new Act (Cereal Malt Beverage Retailers Act) would permit cities
and counties to choose whether to be regulated by the CMB Act or the
new CMBR Act. If the CMBR Act is adopted by the local government, the
city or county would now be regulated by pieces of the Liquor Control
Act and the CMB Act. Other cities and counties would continue to be regulated
by the current Liquor Control Act and the CMB Act. For instance, an agent
would have to enforce the new section 41-102 and 41-104 from the CMBR
Act and the old 41-101, 41-103 from the Liquor Control Act.
*
SB 299 makes policy changes to the law regarding wholesaler sales to
temporary permit holders. What is the purpose of this change to be applied
differently from city to city?
Single store ownership minimizes the commercial pressures placed on wholesalers
for special deals or bending the rules. If large grocery chains control
the beer market in Kansas, rather than the smaller percentage they have
now, imagine the increased pricing pressures on the wholesalers who supply
the product. This could become a case of “the tail wagging the
dog”.
If the Committee wishes to change how alcohol is sold in Kansas, KABR would respectfully request this Committee consider an amendment to SB 299 that would require all alcohol beverages and cereal malt beverages be sold by licensed retail liquor stores.
We can not emphasize enough the negative impact this legislation will have upon the retail liquor stores’ business throughout the state. Many may have the harsh opinion the number of retailers lost is an immaterial factor. However, I would submit that this is extremely important, as this Legislature established the business practices and structure under which approximately 720 retail liquor store owners must now operate. Therefore, we assert you should feel a type of fiduciary duty towards these individuals to protect their business from unfair competitive advantages enjoyed by the cereal malt beverage retailers.
In summary, I would respectfully ask this Committee keep two things in mind as you hear testimony today and reflect on the test8imony previously received. Ask yourself, what is the public policy being advanced by this legislation? I submit there is non. In addition, ask whether you are giving an unfair competitive advantage to large corporate entities at the expense of small businesses and, if so, what public policy is being advanced? If our projections are correct, and retail liquor store businesses are crippled by this legislation, will the same proponents be back in three years or in five years to ask this Legislature to all them to sell other alcoholic liquor products because the retail liquor stores are so few and far between they can not serve the Kansas consumer? I submit we are headed down a road of vertical integration of the liquor industry through ownership of large corporations should you continue to erode the public policies upon which the liquor laws are now based.
Last, but not least, Mr. Chairman, is the situation we place those
18-21 year old clerks who are treated as adults under the Kansas
Criminal Code
but as underage for purposes of purchasing alcohol. Please consider
the importance of not increasing availability to those individuals.
Thank you, Mr. Chairman, and members of the Committee for your kind
attention.
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