Faculty Spotlight: Jack Strauss Studies the Economic Impact of Allowing Alcohol to be Sold in Retail Stores

March 24, 2016

Jack StraussIn 2015, Jack Strauss, professor and the Miller Chair of Applied Economics at the Reiman School of Finance, completed a study on how lowering state restrictions on the sales of alcohol in grocery stores and other superstores would impact Colorado consumers, retail stores and liquor stores. The short answer: such a change could add thousands of jobs while reducing the retail price of alcohol.

Dr. Strauss was engaged by Your Choice Colorado to complete the study, “The Economic Impact of Allowing Alcohol in Retail Stores.” The coalition is proposing changes to Colorado’s current state law, which says that grocery and convenience stores are only allowed to sell low-alcohol beer (3.2 percent). Colorado is one of a few states in the country to still have such a law—in most other states, consumers can purchase full-strength wine and beer in grocery stores and other retailers.

“Colorado’s alcohol laws haven’t changed substantially since 1934,” says Dr. Strauss. “As a state that takes great pride in our production of craft beers, one thing to note is that the other top craft beer-producing states sell tens of millions of their local beers in grocery stores. There is no evidence that this law would hurt local beer producers or liquor stores—in fact, it would help both. Really, it’s a win all around—consumers would enjoy lower prices, better access to local, craft beers and the convenience of one-stop shopping.”

In the 2016 general election, voters will be able to vote on a ballot measure that would allow full-strength beer and wine to be sold in retail stores. Dr. Strauss found that if the ballot passes, it would benefit Colorado consumers in several ways:

  • The average Colorado household would save hundreds of dollars on alcohol purchases every year.
  • Colorado craft beer sales would increase substantially, as consumer access to craft beers would increase due to convenience.
  • Since there will be significant cost savings to Colorado consumers and the saved money is projected to be spent locally on food and services, the economic multiplier effect will contribute hundreds of millions of additional dollars of economic income gains to consumers and more than 5,000 new jobs.
  • Alcohol sales in grocery stores will lead to 200-225 more grocery store jobs in Colorado and an increase in sales of 25 percent.

While the topic is currently being debated between retailers and liquor store owners, Dr. Strauss discovered some good news as well: liquor store sales should not be negatively impacted. “Competition generally does not hurt, it helps,” explains Dr. Strauss. “In examining statistical evidence of markets similar to Denver that allow grocery and other stores to sell alcohol, sales are much higher due to lower prices across the board. Evidence suggests that the passing of this ballot would benefit grocery stores and liquor stores alike.”

Learn more about the Colorado Beer and Wine Initiative on the Colorado Secretary of State website.

Read Dr. Strauss’s study, “The Economic Impact of Allowing Alcohol in Retail Store.” Learn more about Dr. Strauss’s work at daniels.du.edu/directory/jack-strauss.