Update – 12:15 p.m. – Craft beer should be cheaper soon in Montgomery County.
The county’s Department of Liquor Control (DLC) announced Monday it slashed prices on wholesale special-order beer products by 28.5 percent of the original markup.
This means that beers from smaller breweries, or small production brews from established breweries, will be sold at a cheaper rate to restaurants, private beer stores and at county-run liquor stores.
The price cut went into effect July 1.
Previously the county marked up special-order beer products by 35 percent for beer cases. Those markups were often on top of the markups from private distributors—which would purchase the beer from smaller craft breweries and then sell it to the county, according to a report by the county’s Office of Legislative Oversight.
The cuts will reduce the markup on wholesale special-order beers cases to 25 percent, but it does not change the approximately 45 percent markup for kegs, according to DLC director George Griffin. Griffin said they’re still working with manufacturers to find a solution on keg prices and probably won’t reduce keg markup prices by a flat percentage.
Griffin said the price cut on special-order beer cases will bring the DLC’s prices more in line with those in the rest of the state.
The price reduction comes as the liquor department—which is the exclusive wholesale distributor of beer, wine and liquor in the county—faces the possibility that a portion of its local monopoly will be eliminated.
The County Council last week introduced a resolution to request that the General Assembly change state law to allow private distributors to sell special-order products like craft beer and fine wines to restaurants and privately owned beer and wine stores in the county.
The resolution was put forth by a council committee that examined issues at the DLC such as complaints from restaurants and privately-owned beer and wine stores that centered on a lack of variety and expensive prices for special order products.
Council member Hans Riemer, who chaired the committee, said the resolution aimed to provide more choice in the local alcohol market and provide local restaurants with the ability to compete against non-monopoly jurisdictions like Washington, D.C.
“As we have become home to almost 1 million residents we have become home to almost as many differing and distinct tastes,” Riemer said. “Our county residents want to take advantage of the full range of choices that today’s market offers and the numbers show they are leaving Montgomery County to do it.”
Riemer pointed out that the county’s sales tax receipts from alcohol products were 30 percent lower than neighboring counties—data he said showed that many residents leave the county to purchase alcohol in order to avoid higher prices or to seek more choices.
The price reduction will likely reduce the county’s revenue from special-order beers. The Office of Legislative Oversight report found the department takes in about $980,000 in profit from special-order beer cases and about $350,000 from special order kegs.
Those figures represent a fraction of the department’s total profit of about $30 million, which council members and county officials have been attempting to maintain amid tight budget forecasts.
The fee reduction is the first in a series of updates the department is planning as a way to improve its operations after being heavily criticized by council members and local restaurant and business owners during the ad hoc committee’s review.
Other initiatives include creating a new customer service center, improving warehouse operations, overhauling the delivery system and updating the county-run retail stores.