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Minnesota municipal liquor stores continued record trend in sales in 2019

While sales continued to grow, the total net profits bucked a five-year trend of increases and dropped by $1.1 million to $24.4 million.

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The Lancaster Bar and Lounge is a municipal liquor store in Lancaster, a small town in northern Minnesota. Photo by Eric Hylden/Grand Forks Herald

In 2019, Municipal liquor stores in Minnesota outdid themselves yet again and reported record sales for the 24th year in a row.

The 215 city-owned liquor stores spread across 182 Minnesota cities posted $372.1 million in total sales in 2019, an increase of $11.9 million from the previous year. While sales continued to grow, the total net profits bucked a five-year trend of increases and dropped by $1.1 million to $24.4 million. State Auditor Julie Blaha, whose office released its annual municipal liquor store report on Dec. 18, said the decrease happened as a result of changes at a few stores and is not linked to city-run establishments as a whole.

“This is not necessarily the kind of drop that is indicative of a greater trend at this point,” Blaha said at a press conference announcing the publication of the report.

According to the report, the decrease in profitability can partially be attributed to an increase in operating costs at some liquor stores. Operating expenses totaled $82.1 million in 2019, which is an increase of $3.4 million over the amount reported in 2018.

But for Steve Olson, manager of Falls Liquor in Thief River Falls, 2020’s liquor store report will be the one to watch. On-sale establishments will show losses, as they were closed during portions of the pandemic, or otherwise operated in a limited capacity, but business at off-sale establishments has been busy.

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“We've had a really good year this year,” Olson said. “It'll be interesting to see how 2020 pans out, when the dust settles. Sales were up big time.”

Throughout the pandemic Olson said he has had trouble keeping his shelves stocked, not just because of customers, but because distributors, dealing with the coronavirus, had trouble getting their product in stores. Customers couldn’t find Crown Royal whiskey in 1.75 litre bottles anywhere in the state for more than a month, and legacy beer and other producers were also struggling, he said.

“Oh, my gosh, you couldn't keep tequila on shelves,” Olson said. “You couldn't find margarita mix; ready-to-drink margaritas were wiped out.”

Falls Liquor retained its ranking in the state at 23, in terms of sales. The shop showed sales of $4.9 million in 2019, up about $200,000 from the year before. Other liquor stores in northwestern Minnesota also showed sales increases, including Roseau ($1,869,376), Warroad ($1,843,528), Bagley ($1,517,829), Mentor ($525,336) and Lancaster ($326,308)

But sales increases didn’t extend to all locations as 33 cities reported their liquor shops sustained losses over the year, and all were located in greater Minnesota. Losses ranged from $61 in Plainview to $100,140 in Ellendale, which either closed or sold its business sometime in 2019, which will be reflected in next year’s report.

Eight other cities closed their municipal liquor operations, which continues a 10-year trend. Clontarf, Conger, Erhard, Flensburg, Parkers Prairie, Rush City, Sleepy Eye and Spring Lake Park closed their operations at some point between 2018 and 2019. The report states cities close their shops due to low profitability or even outright losses, high insurance costs and competition from privately owned businesses.

In the region, Mahnomen reported a loss of $62,718, and Ada showed a loss of $45,846. Cities whose liquor stores show losses in two out of three years are required to hold hearings on whether or not they should be closed, and both Mahnomen and Ada are on that list, along with 25 other cities.

Despite two years of losses, Ada’s City Administrator Ashley Larson said she didn’t believe the city would close the store. Larson attributed the losses to an extensive renovation project at the liquor store that ran from 2018 and into 2019, during which the store was often closed or only had space for a limited amount of product. With the project complete, she said she expects the shop will return to profitability in 2020.

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“It's awesome,” Larson said. “If you ever drive through Ada, it’s great. They have a whole wine area, and it's beautiful in there.”

Each of the top five sales-generating liquor shops kept their places in the rankings of gross sales from 2018 to 2019. Lakeville came in first, with $16,288,986, followed by Edina ($13,094,407), Richfield ($12,678,003), Eden Prairie ($10,977,643) and Apple Valley ($9,886,580).

Related Topics: MINNESOTA
Adam Kurtz is the community editor for the Grand Forks Herald. He covers higher education and other topics in Grand Forks County and the city.

Kurtz joined the Herald in July 2019. He covered business and county government topics before covering higher education and some military topics.

Tips and story ideas are welcome. Get in touch with him at akurtz@gfherald.com, or DM at @ByAdamKurtz.

Desk: 701-780-1110
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