GRAND RAPIDS, Mich. — The year 2020 was a record one for liquor sellers in Michigan. Sales across the board were up 17% from 2019 to 2020 and around 26% in the two years the pandemic has crushed most other sectors of the economy.
“That’s pretty big growth in any industry, let alone the distilled spirits industry, and that’s not counting our sales of beer and wine,” said Patrick Gagliardi, chairman of the Michigan Liquor Control Board. “It was a great year for our industry.”
As restrictions snapped into place and bars and restaurants shuttered, people turned to by-the-bottle sellers for libations.
“People were – what the industry ended up calling – pantry loading,” said Gagliardi. “They were loading up just in case we were locked down for a long time.”
Gagliardi admits, it kind of depends on which type of license you hold that made the year strong or worrisome. Class-C licensees, who sell liquor on-premise like bars and restaurants, had to work through closures and mandates that saw those businesses closed or under capacity limits for over half the year. Those establishments saw a loss of nearly $94 million in the pandemic’s first year, at $121.3 million in 2020 down from $215.3 million in 2019 sales.
SDD licensees, who sell liquor by the bottle – places like grocery, party and convenience stores – saw a 33% increase, going from $1.3 billion in 2019 to $1.7 billion in 2020. That gain among SSD licensees more than made up for the lost revenue of bars and restaurants.
SDD licensee sales had already made up more than 80% of Michigan’s liquor sales before the pandemic anyways, and liquor sales had been trending up recently. They’ve been up 130% since 2003, and the only time sales dipped year-over-year was during the recession in 2009-2010 fiscal year.
But what the numbers don’t show is the resilience of the industry’s workers.
“The numbers, although they may look good especially at the first half of COVID, what it doesn’t show is the sacrifice that was made by small businesses, it was tough for us,” said Rishi Makkar, owner of Rishi’s International Beverage in Grand Rapids. “It’s never been easy to be small, it was definitely more challenging during these times.”
Even though SDD license sales skyrocketed while bars and restaurants were closed, places like Rishi’s had to compete against the likes of big box chains like Meijer and Costco. Rishi’s ranked 13th in SDD licensee liquor sales in 2020, but Costco took ten of the spots ahead of him, and Meijer one.
On top of it all, similarly to most other industries, the liquor world was up against some crippling supply chain issues. International beverages, especially from nations that were especially hard-hit by COVID-19, were hard to find. Cognac, Scotch, some tequilas – their supply flows all disrupted by the virus.
“We’ve got to remember, a little over a year ago we shut the whole supply chain down for the world,” said Gagliardi. “In May, in Tennessee where Jack Daniels is made, the Tennessee retailers couldn’t get a fifth of Jack Daniels because of the glass shortage.”
Gagliardi also says liquor sale numbers can be indicative of the success of other sectors of the economy that rely on disposable income and liquor sales to thrive.
“Entertainment venues from ski hills to marinas, from bowling alleys to riding stables,” he said, “hospitality, travel, tourism. All that stuff kind of rolled into one.”
For Makkar, one thing 2020 has taught him and his staff is the importance of customer service and local community connections. It’s helped them compete with big stores throughout the pandemic.
“Small independents like us and big chains can co-exist, and the community recognizes the value of small businesses,” he said. “That’s huge and that’s not true in many communities.”
