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Economist predicts wine prices will drop in Colorado amid grocery store competition

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Posted at 7:25 PM, Mar 01, 2023
and last updated 2023-03-01 21:26:23-05

DENVER — Colorado grocery stores officially began selling wine Wednesday.

While liquor stores brace for a possible negative impact of additional competition, MSU Distinguished Professor of Economics Kishore Kulkarni says consumers are the real winners.

"With more number of sellers, the price should come down a little bit because the competition will help to bring the prices down," he said.

Kulkarni says larger grocery chains may sell their bottles for a slightly lower price than liquor stores because of the large quantities purchased.

"I would expect King Soopers and Safeway will charge a little bit less for the wine for the same wine," Kulkarni said.

Denver7 wanted to see what prices looked like on the first day, so we looked at the cost of a bottle of Kim Crawford sauvignon blanc at Safeway, King Soopers and a local liquor store.

At Safeway it was priced at $13.99 for members. At King Soopers, the bottle was $12.99. It was also $12.99 at Argonaut Wine and Liquor.

While all three prices were nearly the same, Josh Robinson, president of Argonaut Wine and Liquor, told Denver7 price is no longer the main factor they consider when trying to attract customers amid the change.

"We've been a family business for over 60 years... we never though that it would get to this level where we'd have to compete against grocery in this way," Robinson said as he showed Denver7 an entire aisle food and various products typically found at grocery stores. "This is an effort to make Argonaut as much of a one stop shop as a grocery store is, so trying to make it where instead of needing to make your stop at a King's or an Albertsons, you can make it here and get, you know, beer, wine, spirits, food, just like you would there."

A recent Colorado State University study looked at the impact to liquor stores after grocery stores were allowed to sell full-strength beer.

Using cell phone tracking data to analyze liquor store traffic, researchers found a 5% decrease in foot traffic in liquor stores, “which all things considered, wasn’t gigantic,” according to Marco Costanigro, a professor of agricultural and resource economics at CSU and one of the study’s co-authors.

The study didn’t track sales data because those figures were hard to come by, but they find that craft beer sales in liquor stores declined by the equivalent of 5.6 million bottles of beer while grocery store beer sales jumped by more than 9.2 million bottles.

Those challenges made it easier for those smaller breweries to partner with smaller liquor stores that had fewer logistical challenges to get through in terms of distribution, according to study co-author Joe Cannon, a professor of marketing at CSU.

“I think the sale of wine in grocery stores will further erode the share of liquor store sales that happen in liquor stores,” Cannon said. “However, we’ve seen some smaller liquor stores respond by stocking a greater variety of craft beer, which in turn helps those small brewers.”

But Cannon and Costanigro agreed – in order to survive this expansion, mom-and-pop liquor stores will need to specialize in offering more niche products to consumers if they hope to remain competitive.