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Private Label Liquors to Stay on Washington Retail Shelves For Now

When you walk into the liquor section at Costco — and other major retailers in Washington — you can find and purchase private label beers, wines and liquors. It’s legal for those stores to sell private label beers and wines, but, as it turns out, it’s illegal for them to sell private label spirits.

Washington’s Liquor and Cannabis Board had hoped the legislature would change that this year. It supported a bill moved partway through the legislative process before dying. Now, the state board is deciding its next action. That could potentially include requiring retailers that sell private label spirits to pull them from their shelves.

At Costco you can buy Kirkland brand liquors, such as scotch and tequila. Retailers, distillers and others have seen that and wondered ‘If they can do it, why can’t we?’

So Sen. Marko Liias (D-Lynnwood) introduced a bill this year on behalf of an Edmonds distilling company that wanted to create a private label product for a nearby restaurant. Here he’s testifying at a House committee hearing in March.

“We found out that our present laws don’t allow that to take place and so we introduced a bill that let craft distilleries do this," Liias said. "In the process, we discovered that maybe the law is unclear on other private labels for grocers and other retailers and so, along the way, the bill has been expanded to continue in place existing practice that our grocers and other retailers are using to do private labels.”

Liias’ bill drew broad support from other distillers and retailers, including Carolyn Logue, here representing the Washington Retail Association.

“Private label is a marketing opportunity for retailers and for restaurants and for the makers of the spirits product. It is being done successfully with wine right now. It is something we are looking forward to being able to do," Logue said.

But the bill ran into opposition from distributors, represented at this hearing by Scott Hazlegrove of the Washington Beer and Wine Distributors Association. He argued the idea of private label sales goes against the concept of state liquor law. That is that all retailers should have access to the same product, that distillers and distributors can’t give exclusive deals to certain retailers.

“We believe that these limited retailers are selling private label products, something that we now know is not allowed under the law, is actually a good demonstration of what we’re going to see at other retailers," Hazlegrove said. "We’re going to see priority space, notably the ends of aisles, prominent display spaces, taken over by private label. You’re going to see the prime shelf space occupied by private label products. And you’re also going to see a reduction in other products, mostly notably a number of craft products as a result of introduction of private labels.”

Liias’ bill was approved by the Senate and this House committee, but it stalled in the process and now the legislature has adjourned.

Rick Garza, the director of the Liquor and Cannabis Board, says retailers approached him last year with their desire to create private label spirits. He says he would give them time to get the legislature to put that into law. But with that apparently not coming anytime soon, he says the board isn’t sure what’s next.
“We just were in a meeting with a group of these folks to share with them that we were considering our next move in the next 30-to-60 days," Garza said. "In the meantime, representatives from Costco and others that represent large grocers are going to provide us in writing information that they believe that they’re in compliance, that they’re not having a manufacturer create a private label for them.”

That means, for now, those private label spirits will stay on the shelf.