“Why can I only buy Captain Morgan from one (distributor)?” asked Marc Vander Velde, owner of five Marathon Petroleum Corp. gas stations and convenience stores in the Grand Rapids area that sell liquor. Vander Velde spoke at the liquor control commission’s Dec. 4 meeting in Lansing, noting that, as a retailer, he can choose to buy the same brand of cigarettes from a different distributor.
“Captain Morgan? Just you,” Vander Velde said, pointing at a row of Republic National executives in the audience. “Fireball? Same thing. Tito’s? Same thing. Svedka? Same thing.”
“It’s our livelihood,” he added.
At a Nov. 22 commission meeting, the co-owner of three Booze Barn liquor stores in Perry, Howell and Lansing, said Republic National’s delivery failures have done untold damage to the bottom lines of small businesses like his.
“If this was a food service like Cisco, we would have fired (Republic National) months ago,” retailer Mike Mitchell said. “But we have nowhere else to go.”
Under the liquor control act, bars and restaurants are permitted to buy a dozen fifth-size bottles of liquor each month from retail stores on an emergency basis to replenish supplies between deliveries.
State Rep. Diana Farrington, R-Utica, introduced legislation earlier this month to eliminate the one-case-per-month cap and allow bars and restaurants to buy multiple cases from liquor retail stores.
“These bars are not able to supply liquor to their consumers because they’re being shorted their supply,” Farrington said. “I’m hoping my bill will alleviate some of that so that they can purchase what they need.”
But retailers don’t have a backup.
The owners of United Custom Distribution in Southfield have lobbied the liquor control commission in recent years to let them become an authorized distribution agent.
But despite having nine warehouses that supply grocery items, snacks, non-alcoholic beverages and cigarettes to more than 500 retailers across the state, United Custom Distribution couldn’t overcome one barrier to becoming a new competitor for Republic National and Great Lakes Wine & Spirits.
“They wanted me to deliver to Sault Ste. Marie, which means I’m not going to be able to become a (liquor distributor),” said Hani Mio, director of operations and a shareholder of the family-owned distribution business.
Mio said Michigan needs to change its law to create alternative suppliers to the big distributors. His family operates a cash-and-carry liquor warehouse in suburban San Diego where restaurants, bars and small retailers buy small orders to replenish their stock.
“I kind of love that model over there,” Mio said of California’s open-state system. “Everybody loses when it’s controlled.”
Gigliotti said splitting up liquor brands among multiple distributors would generate “less investment” by companies like Republic National.
The Great Lakes executive downplayed the troubles his main competitor has had in recent months.
“It’s worked well for the last 20 years, and we have one ADA that’s having a little glitch that I’m sure they’ll get worked out,” Cooper said.
Storey, the former liquor control commissioner, said he favors giving small retailers added choice for distributors of certain brands in light of the “bottleneck” exposed by Republic National’s delivery problems.
“That would introduce an element of competition,” he said. “A system designed to help the small ma-and-pop operation has now really hurt them the most.”
