Want Costco on the Coast? Mississippi needs to change one thing before that happens

The state liquor distribution center near Madison is operating at capacity and the Mississippi Legislature hasn’t allocated money to expand or improve it.

A notice dated Oct. 9 popped up on the Mississippi Department of Revenue website requesting information from companies interested in taking on the warehousing and distribution of alcohol for the state. The idea is to reduce Mississippi’s cost of operating the warehouse and possibly eliminate the need for state funds to make improvements. The RFIs, or requests for information, must be submitted to the Office of Alcohol Beverage Control by Dec. 31.

“If an acceptable agreement can be reached with one or more parties interested in operating the inbound and outbound operations of the state Liquor Distribution Center, the state would privatize the operations of the warehousing and distribution for the ABC,” the notice says.

Small steps

This proposal is only for receiving, stocking and delivering wine and alcohol. ABC will continue to issue permits, take orders, purchase the product from the supplier and enforce the state’s liquor laws, the notice says.

It’s another baby step in updating the state’s liquor laws, which recently changed to allow people to carry alcohol outdoors in designated entertainment districts, such as downtown Gulfport, and last year allowed craft beers with higher alcohol content to be sold in Mississippi.

It’s also a proposal that liquor store owners, who have complained about delivery and special orders, can get behind.

“I think it’s definitely worth investigating,” said Shawn Guider, owner of Shawn’s Petit Bois Liquors in Biloxi.

Guider, who has been in liquor business for 25 years, has visited the warehouse operated by the state, just to see how it works. “It’s a huge operation,” she said.

From that one center flowed all 3.2 million cases of wine and alcohol sold at stores, restaurants and casinos in Mississippi last year. The center, with its 1.5 mile conveyor system, was built in 1983. Only 25,000 square feet of the 211,000-square-foot facility is climate controlled, and that is the fine wine room.

“I don’t understand why we don’t have multiple warehouses,” said Rep. Scott DeLano, R-Biloxi, who envisions a bonded warehouse on the Coast and others where needed around the state. Mississippi could still collect, track and preserve the tax revenues the state is collecting today, he said.

Mississippi took in $84 million in taxes on liquor and wine in fiscal year 2016 and $30 million on beer. On top of that, the state takes a 27.5 percent markup — an amount set by state law — on products shipped from the warehouse. That brings in $58 million to the state’s general fund annually.

The next steps

DeLano said he and other state legislators were made aware of problems with the computer system and space at the warehouse six years ago.

“I went out and started studying what other states have done,” he said. He asked whether Mississippi should get wine out of ABC control and distribute it similar to how beer is now.

“That’s how the discussion of wine in grocery stores really started,” he said.

Herb Frierson was a state legislator at that time and now is commissioner of the Department of Revenue, which oversees the ABC. Without the legislature providing him with money to do a study on privatizing liquor distribution, DeLano said he was left to go directly to the companies with an RFI.

“He’s doing his job,” DeLano said.

Attracting Costco and Whole Foods

Previous attempts to allow wine sales in grocery stores didn’t get much traction at the state capitol, but the idea has benefits for consumers and businesses, said Ashley Edwards, president of the Gulf Coast Business Council and a level 1 sommelier.

“We still have very archaic laws in Mississippi that govern wine and liquor,” he said. He’s talked to people who find a wine they like while on vacation. “They come back to Mississippi and discover they can’t get it locally,” he said.

Today most grocery stores are regional and many neighboring states permit wine sales in grocery stores.

“In other markets, large retailers like Costco, for example, have great wine selections, which is an important part of their business. Mississippi’s restrictive wine laws certainly don’t help us attract those type of retailers,” Edwards said.

DeLano also is a real estate developer and he said it’s very difficult for Mississippi to compete for Costco, Publix, Whole Foods, Kroger and the other major stores people in South Mississippi are clamoring for when wine can’t be sold in grocery stores.

Time for a change?

There will be legislation filed again in the next legislative session to update the state’s laws and make them work better for the consumers, said DeLano.

“We need to be out of the ABC business, period,” DeLano said, but he sees privatization coming in increments in Mississippi rather than all at once.

“I don’t know of any business more protected by government than liquor stores,” he said. In other states that allow wine sales in grocery stores they still have liquor stores, too, he said.

Owners of small liquor stores tell him, “Liquor laws have not changed for 50 years and we don’t want them to change for another 50 years,” he said.

“I completely understand their dilemma,” he said. “It would be detrimental to a lot of small businesses and we need to be very mindful to that.” But he said there are ways to counter the effects by allowing liquor stores to sell other products or by limiting the number of liquor licenses, as is done in Florida.

Opponents of allowing higher alcohol content in beer envisioned people stumbling about the streets like zombies, he said. “That hasn’t happened,” he said. “We can’t be fearful of change.”

ABC by the numbers

  • 3.0 million cases of wine and liquor were sold in 2014, 3.1 million in 2015 and 3.2 million for 2016
  • That is 3 percent annual growth
  • ABC has 2,200 licensed retailers, including package stores and restaurants
  • ABC has 4,300 SKUs (stock keeping unit identification code) at distribution center
  • The capacity of the warehouse is 450,000 cases

Mississippi Department of Revenue