GRAND RAPIDS, Michigan – The year 2020 has been a banner year for liquor vendors in Michigan. Sales across the board grew 17% from 2019 to 2020 and about 26% in the two years the pandemic crushed most other sectors of the economy.
“That’s pretty significant growth in any industry, let alone the distilled spirits industry, and that’s not counting our beer and wine sales,” said Patrick Gagliardi, chairman of the Michigan Liquor Control Board. . “It’s been a great year for our industry.”
As restrictions fell into place and bars and restaurants closed, people turned to bottle vendors for libations.
“People were — what the industry has come to call — loading the pantry,” Gagliardi said. “They were charging just in case we were locked up for a long time.”
Gagliardi admits it kind of depends on what kind of license you have that made the year strong or worrisome. Class C licensees, who sell alcohol on premises like bars and restaurants, have faced closures and mandates that have seen these businesses closed or under capacity limits for more than the half of the year. These establishments recorded a loss of nearly $94 million in the first year of the pandemic, to $121.3 million in 2020, compared to $215.3 million in sales in 2019.
SDD licensees, who sell alcohol by the bottle — places like grocery stores, parties and convenience stores — saw a 33% increase, from $1.3 billion in 2019 to 1.7 billion in 2020. This gain among SSD licensees more than offset the loss of revenue from bars and restaurants.
Either way, sales by SDD licensees already accounted for more than 80% of Michigan liquor sales before the pandemic, and liquor sales had recently increased. They’ve risen 130% since 2003, and the only time sales fell year-over-year was during the fiscal year 2009-2010 recession.
But what the numbers don’t show is the resilience of workers in the industry.
“The numbers, while they may look good, especially in the first half of COVID, what they don’t show is the sacrifice that has been made by small businesses, it was tough for us” , said Rishi Makkar, owner of Rishi’s International Beverage in Grands Rapides. “It was never easy being small, it was definitely harder back then.”
Even as SDD license sales skyrocketed as bars and restaurants closed, places like Rishi had to compete with big-box chains like Meijer and Costco. Rishi is ranked 13and in SDD licensee liquor sales in 2020, but Costco took ten of the spots ahead of it, and Meijer one.
On top of all of this, like most other industries, the alcohol world faced crippling supply chain issues. International drinks, especially those from countries particularly affected by COVID-19, were hard to come by. Cognac, Scotch, some tequilas, their supply flows are all disrupted by the virus.
“We have to remember that just over a year ago we closed the whole supply chain for the world,” Gagliardi said. “In May, in Tennessee where Jack Daniels is made, Tennessee retailers were unable to get a fifth of the Jack Daniels because of glass shortages.”
Gagliardi also says alcohol sales figures can be indicative of the success of other sectors of the economy that depend on disposable income and alcohol sales to thrive.
“Entertainment venues, from ski slopes to marinas, from bowling alleys to equestrian centers,” he said, “hospitality, travel, tourism. It all sort of rolled into one.
For Makkar, one thing 2020 has taught him and his staff is the importance of customer service and connecting with the local community. This has helped them compete with department 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 it’s not true in many communities.”