Open Market Not Expected To Cripple County Liquor Dept.

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OCEAN CITY — As the Sunset Provision draws closer, alcoholic beverage license holders across Worcester County are preparing to buy directly from the wholesale market, something that has not been allowed until next month.

Experts in the industry, however, do not believe that the sun will be literally setting on the county-run Department of Liquor Control (DLC) just yet and that the agency will continue to fill an important role in both wholesale and retail liquor sales.

Come July 1 the Sunset Provision will kick in to full effect, opening the door for bars, restaurants and stores to buy their liquor directly from wholesalers instead of needing the DLC to act as a middle man, as is the current system under the county-run monopoly. The DLC is sure to lose some orders to the wider market but the hit should be relatively minor, according to Director Bobby Cowger.

“There’s no question that we’re going to lose some business, I’m positive that’s going to happen,” he said. “But being devastating to us, no it’s not. That’s not going to happen.”

While the market will be open for everyone, Cowger doesn’t expect very many beverage license holders in the county to jump ship. In fact, he doesn’t think that any business is going to completely cut out the DLC in favor of always purchasing directly from wholesalers.

Of the 200 license holders in Worcester, 128 establishments have sent a letter to the DLC indicating that they are planning to make some purchases wholesale. While the largest licensees will probably invest strongly into wholesale, Cowger was confident that the majority of businesses won’t experience much of a change after July 1.

“A lot of them, the smaller ones, they said that they have no intentions of not dealing with the DLC. Their intentions are staying 100 percent with us,” he said. “The big wholesalers, they’re not going to cater to these small guys. They want the eight or 10 big ones and that’s all they’re looking for.”

The DLC also offers a lot of services wholesalers don’t, added Cowger, such as one-stop-shopping, easy stocking, convenient delivers and superior customer service. While buying directly from the wholesale market comes with obvious cost savings, Cowger believes that the DLC will be able to aggressively compete with wholesale prices. Some of the bars and restaurants that buy the most liquor could see some big savings wholesale with their ability to execute large orders, but for smaller orders there shouldn’t be too much price fluctuation.

“We’re considerably cheaper on a majority of our products so really the only ones that we feel that we’re going to lose is a percentage of the top 10 [largest bars],” Cowger said. “As far as a great, big, all-of-a-sudden July 1, we lose 70 percent of our business, no, I’m 100-percent sure that’s not going to happen.”

So far Cowger is estimating a loss of about 25 percent or $2,642,500 in liquor wholesale revenue in his DLC budget for next fiscal year, though as of this week he believes a more realistic loss will only be in the neighborhood of 15 to 20 percent.

Cowger’s optimism got some independent support from Doug “Buxy” Buxbaum, owner of Buxy’s Salty Dog Saloon in Ocean City as well as a ranking member of the Worcester County License Beverage Association. He agreed with most everything that Cowger said.

“I feel that I know myself and probably the majority, and when I say majority I mean 99.9 percent, of the other bars, restaurants and nightclubs will probably use both wholesalers and the Worcester department of liquor,” he said.

In fact, especially with smaller businesses, Buxbaum estimated that a majority of those licensees won’t even bother with the wholesale market and will instead stick with the DLC for all or almost all of their orders. However, just the fact that the market is open for the first time in recent memory means that the DLC will likely see some losses.

“I can guarantee that everybody will continue to use the DLC, especially if they maintain competitive prices. Probably 75 to 80 percent of the bars and restaurants will not even explore,” said Buxy, “even though they’ve sent a letter, will not even explore the wholesaler options … but we have that option and that’s what it’s about.”

The former system where all liquor sales had to be made through the county was considered unfair by a large amount of license holders. Now that the market is becoming open, Buxy agreed with Cowger that the DLC can still remain viable. But to do so, the bar owner stated that the county agency will need to operate like a business, to lower prices to stay in line with what is being offered by wholesalers and to continue with their customer service, which Buxy gave high marks.

Both Cowger and Buxy expect the DLC to remain viable so long as the relationship remains positive. The bad blood “is all in the rearview and now we’re looking out the windshield,” Buxbaum said.

 

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