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I'm a liquor agent (NOT A STATE EMPLOYEE) operating a retail outlet for distilled spirits. Perhaps I can shed some light on how the system works and how much revenue is generated for the state by the sale of distilled spirits. The OLCC sets the retail price, supplies the inventory and pays the agent a percentage based on sales.  The agent is responsible for all costs of running the liquor store, including the store's lease, payroll, insurance and other expenses generally incurred in running a typical small business.

For the fiscal year 2008 to 2009, here's the revenue distribution:

Liquor sales: $413.7 million

OLCC retail operating expenses: $12.4 million

Store operating expenses, including agents' commission: $36.8 million

Liquor inventory cost: $201.0 million

Total cost of retail operation: $250.2 million

Net revenue from liquor sales: $163.5 million

A net revenue of $163.5 million (fiscal 2008-2009) just from liquor sales was returned to the citizens of Oregon.

In addition to profit, however, one should also look at the retailing models. Do we want alcohol to be available on all major street intersections, which is where you find 7-11, AM/PM, Plaid Pantry and any number of gas stations and grocery stores? The easy availability of distilled spirits will result in higher incidents of teenage drinking.

If we decide to privatize the retailing of distilled spirits, how are we going to make up the loss of $163.5 million of revenue that directly goes to cities, counties and the state general fund? Let's say that the state adds that amount as a tax on alcohol. What's that going to do to the retail price? The state pays liquor agents 8.88 percent for retailing the product. All the associated costs of retailing that product are paid for by the liquor agent. For every $1 of gross revenue the state

pays the agent, we (agents and the commission) generate $ 4.44 of net profit for the state.

Are there inefficiencies in the system? Yes. What we need to do rather than throw out the entire system is to modernize the retailing model, allow liquor agents more flexibility in meeting local market conditions and demands and share in the profits more equitably.

Saleem S Noorani – Liquor Agent – Corvallis & Springfield

posted 2 years, 8 months ago
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