It used to be that small Washington State distillers had only one customer and that was the state itself. To make matters worse, that one customer controlled pricing and dictated both how and when new offerings could be sold. The state’s role in the liquor business was turned upside down last November (Nov 8, 2011) when Washington’s Initiative 1183 effectively fired the state as a distributor and retailer of spirits, wine and beer. Many believe this step is the first domino to fall (many states with similar monopolies will experience grass roots challenges) that finally closes the book on the Prohibition era in America. When Prohibition was repealed by the 21st amendment on December 5, 1933, the states (48 at the time) adopted their own local rules governing the sale of beer, wine and spirits. Almost two-thirds adopted some form of local option which enabled residents in certain politically sensitive areas to vote for or against local prohibition. For a time, 38% of Americans lived in areas with some form of prohibition adopted and administered locally. By 1966, all states had repealed their state-wide prohibition laws, with Mississippi the last to do so. The “hangover” that remained, however, was state control of liquor sales such as Washington’s arcane laws prior to I1183.
Many opponents of I1183 have predicted all manner of dire consequences but the facts are that Washington’s new law will free small businesses to create new markets for their products. Many are turning to the internet where small, high quality producers of spirits and wine can introduce their products to a global market.
Washington also increased the quantity of spirits that can be produced based upon a new law that was passed in 2008 that allows distillers to produce up to 60,000 gallons per year under the category of a craft distiller. That law spawned an explosion in new licenses that began with just two licensed distillers in 2007 to nearly wine hong kong 40 as of this writing with several dozen more in the wings awaiting approval by the state.
Washington craft distillers can act as a wholesale distributor of their own products. What this means is that wholesale distributors, bars, hotels and other resellers can buy directly from craft distilleries. As of June 1, 2012, the state will close its hundreds of liquor stores in favor of retailers such as Costco and grocery stores of 10,000 square feet or more. On the surface this would sound like good news for craft distillers as a whole.
The problem that most craft distillers face, however, is a lack of marketing clout that will translate into orders and shelf space from large retailers. For these small craft distilleries, their appeal lies in the fact that many produce superior products, made from the finest local ingredients. They are hidden jewels awaiting discovery because most are small businesses with limited resources. On the other hand, the large, global distillers produce millions of bottles of spirits and enjoy multi-million dollar ad budgets. For the small craft distiller to compete, they need the assistance of marketers with broad reach. The internet provides such a venue. Online marketers and retailers give a voice to undiscovered but superior new products. The internet represents the ideal awareness vehicle and internet marketers provide a 21st century solution to the age old problem of growing small businesses to prominence and long term success.