Oregon Liquor Control Commission
Continuation of Liquor Revenue
Bill Schuette, OLCC Economist
Impacts on Liquor Revenue
• Forecasting
– 3 ½ years into the future
– Accuracy of OEA forecast for Population
and Consumer Price Index
• Economic Health of Oregon
– Great recession
• Outside Influences
– Privatization in Washington
• OLCC Efficiency and Capacity
2
Oregon Liquor Revenue Basics
• Average Price Per Bottle
• Average Costs Per Bottle
$15.99
$ 7.80
– 105% Markup (Formula Driven)
• 31 million bottles sold in FY 2013
• 2.9 million cases shipped in FY 2013
• In FY 2013 there was $497.6 million in
gross liquor sales
3
Pricing Formula
• Up to $78.06/case landed cost:
– Cost*2.131 + $1.40 for freight
– Divide by the number of bottles per case
– Round to the next $0.05 and add $0.50 surcharge
• Over $78.06/case landed cost:
– (Landed costs + $14.45) * 1.798 + $1.40 for freight
– Divide by the number of bottles per case
– Round to the next $0.05 and add $0.50 surcharge
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Liquor Pricing Formula Example:
$20.80 Fifth of Vodka Retail
$10 per bottle cost from manufacturer and 12
bottles per case
Landed Cost Per Case
$120.00
Add $14.45 per case
$ 134.45
Multiply by 1.798
$ 241.74
Add Freight $1.40 per case
$ 243.14
Divide by 12 bottles per case
$ 20.26
Round up to the nearest $0.05 $ 20.30
Add $0.50 surcharge
$ 20.80
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Oregon Liquor Basics
• Oregon Products
– 12% of Gross sales ($59.8 million)
– 16% of gallon volume
• 1,900 standard products Handled
Daily
– 1,400 special orders
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Oregon Liquor Basics (cont)
• Bottle Sizes Sold (31.1 million bottles)
– 50 ml (minis)
– 200 ml
– 375 ml (pints)
– 750 ml (fifths)
– 1750 ml (half gallons)
• Different Products
• Annual Gallons
7%
2%
10%
60%
21%
4,538
7.1 million
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What is Oregon Buying
Type of Liquor
Percent of Sales
Whiskey
28
Vodka
27
Cordials
14
Rum
9
Tequila
9
Gin
5
Scotch
4
Brandy
3
Cocktails (pre-mixed) and Other
1
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What is Oregon Drinking?
Category
Percent of Total Gallons
Vodka
34
Whiskey
26
Cordials
12
Rum
11
Tequila
6
Gin
5
Scotch
2
Brandy
2
Cocktails (pre-mixed) and Other
2
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Oregon Top Selling Liquor
Products
Product
2013 Annual Sales
JACK DANIELS #7 BLACK LABEL
$
13,650,308
FIREBALL CINNAMON WHISKEY
$
12,166,879
CROWN ROYAL
$
11,479,252
PENDLETON CANADIAN WHISKEY
$
SMIRNOFF VODKA 80
H R D VODKA
9,590,539
$
$
9,164,500
9,138,754
JAMESON IRISH WHISKEY
$
8,128,115
BLACK VELVET
$
7,654,420
JAGERMEISTER LIQUEUR
$
7,563,677
SEAGRAMS 7 CROWN
$
6,918,915
MONOPOLOWA POTATO VODKA
$
6,600,986
MAKERS MARK
$
6,441,756
CAPT. MORGAN SPICED RUM
$
5,793,026
GREY GOOSE VODKA
$
5,741,003
FLEISCHMANNS ROYAL VODKA
$
5,587,243
ABSOLUT VODKA 80
$
5,575,016
JOSE CUERVO GOLD TEQUILA
$
5,566,686
POTTERS VODKA 80
$
5,304,232
JIM BEAM
$
5,031,844
PATRON SILVER TEQUILA
$
4,932,721
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Consumer vs. Licensee Sales
• Licensees purchase through liquor
stores but receive a 5% discount off
of the consumer price.
• Consumer sales increase relative to
Licensee sales
– 2006 73% of all Sales
– 2014 77% of all Sales
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Washington Privatization and
Oregon Liquor Revenue
• Liquor prices in Washington were on
average 5% higher than Oregon became
30% higher than Oregon in SW Washington
Grocery Stores
– some stores matching Oregon liquor prices for
products sold in half gallons
• SW Washington grocery stores carry about
400 products
– Average Portland store 1,200 products
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Impacts on Oregon Liquor
Revenue
• Oregon liquor stores along the Washington
state line saw a collective 33% increase in
liquor sales after I-1183
• Noted smaller but significant sales increases
in Portland metro area and Oregon tourist
destinations
• Estimate that Oregon is getting $10 to $15
million in additional liquor sales
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Price for a Fifth of Jack Daniels
Before and After I-1183
Month Year
Oregon
Washington
October 2011
$23.45
$24.95
July 2012
(Immediately After
Privatization)
$21.95
$25.25*
January 2013
$21.95
$26.07
January 2014
$22.95
$28.12
*Survey of 4 Grocery Stores in Vancouver, WA
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Questions/Discussion
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