Terry Presta, Governmental Affairs Chairman, PMCA of Kansas
(March 24, 2005)
Mr. Chairman and members of the Senate Federal and State Affairs Committee;
My name is Terry Presta, President of Presto Convenience Stores. I am
also the governmental affairs chairman of the Petroleum Marketers and
Convenience Store Association of Kansas (PMCA), a statewide trade association
that represents over 300 independent petroleum marketers, gasoline retailers
and convenience store owners throughout Kansas.
I appreciate the opportunity to appear before you today as a proponent
of SB 299.
Many people have the impression that convenience store beer, better known
as cereal malt beverages (CMB), is an inferior product to that of liquor
store beer. The reason: CMB has less alcohol (3.2% by weight) content
than the “strong” (5% by volume) liquor store beer. But actually
the alcohol content in both CMB and strong beer is very close when the
alcohol is measured in the same way. Attached to my testimony is a report
from the Kansas Bureau of Investigation (KBI) that compares the percentage
of alcohol content of both beers when measured by weight. I think you
will agree that the results prove that when comparing CMB to strong beer,
there is very little difference in alcohol content.
Passage of SB299 will put people our of business – You may hear
from the liquor industry that passage of SB299 will put liquor retailers
out of business because of the high percentage of beer sales in their
stores. The coalition we represent has proposed this legislation to recapture
some of the market that was lost when the drinking age changed from 18
to 21. We don’t know how much of an impact there will be if this
legislation is passed, but we do anticipate a shift in purchasing habits.
PMCA is well aware of the fear that liquor retailers may feel if this
legislation passes. We only have to look at our own industry to see what
may occur. For example, in convenience stores, gasoline sales account
for 65% of gross sales annually. Tobacco accounts for 23% of gross sales
annually. If you were to drive down Wanamaker Road today, you could purchase
gasoline and tobacco at any number of locations. Gasoline can be purchased
at grocery stores and discount retailers. Tobacco, on the other hand,
can be purchased over the Internet, Indian Casino’s and at stand
alone smoke shops. Convenience retailers compete in a very difficult
and highly competitive environment.
Unlike the gasoline industry, liquor stores are protected by the state
from any retailer that wants to undercut the competition by selling alcohol
under cost. They are also protected from having to compete with any other
type of business other than liquor stores. SB 299 is not changing any
of the protections that liquor retailers are enjoying now. I will grant
you that by changing the definition of CMB there will be some impact,
depending on location, on beer sales in liquor stores. However, this
bill does not prohibit what a liquor store currently sells.
Will the age requirement change for sale for CMB – Under current
statues the age requirements to sell alcohol are different when comparing
CMB statures to the liquor control act. The age requirements are: 18
to sell CMB, and 21 to work in a liquor store. When considering the age
requirement we must first consider what is being sold. Liquor retailers
sell ONLY alcohol liquor products containing as little as 3.8 percent
alcohol graduates up to products that are 100 proof.
CMB retailers sell a wide variety of grocery products and beer. We have
already established that there is little difference between CMB and strong
beer with regard to alcohol content. Thus, the disparity in these age
requirements does not create an inequity or inconsistence. However, if
the age level were established at 21 in all instances, it would have
a significant, adverse impact on many young people who are employed by
convenience stores and grocery stores, not to mention the impact on their
employers.
Finally, as previously noted, the change in the nature of the product
being sold does not dictate any increase in the age level of he person
selling it. The redefined product is NOT liquor, and even though there
will be some increase in the maximum alcoholic content of CMB, the increase
is very slight, thereby negating any concern to the welfare of the young
people selling and handling these products.
One of the main purposes of this bill is to highlight the misconception
people have about CMB and strong beer. Knowing that the two beers are
of like quality, we don’t see any rationale for having only 21
year-old employee working in convenience stores.
Hours of service – Currently, retailers may sell CMB between the
hours of 6:00 a.m. to 12 midnight, while liquor retailers are open for
9:00 a.m. to 11:00 p.m. New section 17 (page 14 line 25-30) equalizes
maximum business hours from 9:00 a.m. to 11:00 a.m., the same for both
CMB retailers and retail liquor stores.
Tax issues – In an effort to make sure that there is no price differential
with our proposal, the tax consequence needs to be addressed. Liquor
stores sales charge an 8% liquor enforcement excise tax, and CMB retailers
charge state and local sales tax. SB299 would include both the 8% liquor
enforcement tax and state sales tax on each sales. This allows the state,
cities, counties and beer retailers to be equal when pricing their product … no
one has an advantage.
In closing Mr. Chairman, when the federal government changed the drinking
age from 18-21, the CMB laws should have changed as well. If you look
as the reports from Kansas ABC there is a huge disparity between the
number of CMB sales compared to the number of liquor store beer sales.
The perception that CMB is inferior is quite evident when you see that
liquor stores sell approximately 78% of all beer sold in Kansas. SB299
provides the tool to bring parity back to our industry.
We urge your support of SB299.
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