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Kroger renewing push to sell wine, liquor

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Kroger renewing push to sell wine, liquor

uncork_ks

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Published in Manhattan Mercury

Brady Bauman - bbauman@themercury.com 

In 1881 Kansas was the first state to ban alcohol and that ban lasted until 1948, making it the last state to move away from the prohibition era.

But, old habits die hard and Kansas' liquor policy is still tied to laws drafted decades ago. That policy is generating friction between liquor store owners and general retailers.

Uncork Kansas, a political organization chaired by retired Kroger Foods CEO David Dillon, is lobbying state legislators to allow grocery stores like Dillon's to sell “full-strength” beer, wine and spirits.

Right now, liquor stores and bars are the only entities permitted to sell those items. While grocery stores and gas stations can sell beer, they are limited to beer that is 3.2 percent alcohol by volume, as opposed to the normal offering of 3.6 percent or higher. 

There are 12 other states that do not allow wine or spirits to be sold in grocery stores including neighboring Oklahoma and Colorado. 

Dillon, who was in the Westloop Dillon's Thursday afternoon, said it's all a matter of fairness and that he wants to provide a product he said his customers ask for. 

Dillon also said Uncork Kansas has tried to find middle ground with liquor store owners by lobbying Topeka to freeze the current number of liquor licenses in the state so that a grocery store would have to buy an existing license, which, he contends, would fetch a high price because new ones wouldn't be available. The group's initial proposal didn't include that provision. 

There are currently 752 liquor licenses in Kansas. 

“I think we've arrived at the point where the Legislature can anytime now say, 'This is actually a good idea now, let's go with it,'” Dillon said. 

Uncork Kansas hopes to see legislation reach the House Standing Committee on Commerce, Labor and Economic Development this year. 

When Dillon was the CEO of Kroger, he said getting involved in public policy wasn't something he was ever that interested in. 

“Lots of companies take active positions on anything that's in their best interest with the Legislature. And that's fine. I don't have an objection with that,” he said. “I personally felt that was not a productive use of our time and our people.” 

Still, Dillon said he'd always set a rule of thumb that he would get involved if it was an issue that reflected his customers. 

“It's clear in my mind,” he said. “It's what our customers want from us.” 

Liquor store owners in Manhattan, however, have mixed feelings. 

Filby's Liquor Store owner Matt Smithhisler said he's interested in Uncork Kansas' approach. 

Smithhisler took over Filby's five years ago as a favor to his friend, Jeff Filby, who was in poor health. 

Smithhisler sees Uncork Kansas' approach as one that can help him retire with something in his pocket, rather than falling to a bigger competitor when, as he says, the type of legislation Dillon is trying to get passed inevitably does. 

“They're not going away,” Smithhisler said at his store, just east of the Four Points by Sheraton, Wednesday afternoon. “It's not if this happens, it's when this happens.” 

Smithhisler said that the cloud hanging over the future of the alcohol marketplace in Kansas has made a business like his hard to sell and even harder for anyone else to start – especially if they're looking for help from a bank, who Smithhisler said is also aware of the uncertainty concerning the future of Kansas liquor laws. 

“I'm 57 years old,” he said. “I'm rapidly approaching retirement and I am solely protecting my interest in this business. I can't sell this business. Nobody in their right mind would buy a liquor store in the state of Kansas right now with this uncertainty hanging over our heads.' 

Kevin Neitzel, who owns the The Fridge on Claflin Avenue, understands the position smaller stores like Smithhisler's are in, and doesn't fault them for supporting Dillon's efforts. He also shares the viewpoint that a future with Kansas grocery stores selling what he can sell is a certainty. But that doesn't mean he's very excited about that prospect. 

“Dealing with 21 year olds handling all this stuff opposed to 18 year olds or 15 year olds,” he said. “You have to be 21 to work here. Just different things like that. They don't want to change one rule when they do it, they want to change every rule. 

“If you can't buy the product, why would you let them handle it?” 

Dillon said he'd work with whatever requirements that the state mandates if his lobbying efforts pay off. And he also said liquor stores in other states where laws have changed have adapted to serve specialty markets with successful results. 

Still, Neitzel worries stores like his — and especially smaller ones – will suffer and lose their battle against bigger corporations like Kroger, Hyvee and Walmart, who have been kept out of their market. 

“They have enough money,” he said. “I'm sure they can get anything done they want to get done. I see their point on some things. I see why they want to. If someone came into our store and said, 'Man, I wish I could buy that here,' as an owner you want to do everything you can to provide that product. You want to deliver that as a business.” 

But Neitzel feels like his back would be against the wall if a large box store — with far more space to use — is able to sell what he sells. And he also doesn't expect any of them to try and buy out his liquor license when they can go to a smaller store for a cheaper price. 

“They'll come in and flex their muscles right away,” he said. 

For Smithhisler, though, a lot of his frustration stems to the prohibition era that shaped today's liquor laws in the state. 

“It's time Kansas gets in the 21st century,” he said.