Cost of booze to rise in Virginia; Alcohol board approves price hikes to help plug budget gap

Economic Indicators Associated Press

Attention, Christmas shoppers: If you're planning on buying a nice bottle of whiskey for that special someone on your list who already has enough tube socks, you have three weeks to do it before the price goes up.

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Virginians will pay at least 24 cents more on average for a bottle of booze starting Dec. 8 as a result of action taken Monday by the three-member board that oversees the state liquor monopoly. Gov. Terry McAuliffe proposed the price increase as a small part of a broader plan to plug a $2.4 billion gap in the two-year state budget.

Jeffrey Painter, chairman of the Virginia Alcoholic Beverage Control Board, said the average price of a bottle of the hard stuff at the state's 350 package stores is $15. That price will rise by 24 cents to 29 cents.

The increase will be more for top-shelf spirits like Catoctin Creek's organic Roundstone Rye — suggested retail price, $45.

"A markup in a state that's already one of the most expensive is going to be tough," said Scott E. Harris, founder of the craft distillery in Purcellville.

Virginia has the nation's third-highest liquor tax. The cost is borne not only by customers at retail stores, but also by those ordering a cocktail with dinner at the state's nearly 14,000 ABC-licensed restaurants. Harris said distilleries are already battling breweries and wineries for diners' alcohol dollars.

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"This is just another price disadvantage to our business," he said.

However, agency officials said the increase is necessary not only to help the state balance the budget but also to raise revenue to upgrade outdated accounting and point-of-sale systems. Board member Judy Napier called the increases, which would raise about $5 million this fiscal year and $9 million in fiscal year 2016, "the bare minimum we're going to need to reinvest in the agency."

Officials estimated that the upgrades would cost about $30 million, which means they won't be paid for all at once. Travis Hill, the agency's chief operating officer, said officials will work with McAuliffe to determine how much of the increase it will get to keep for technology improvements.

The board rejected a proposed across-the-board increase in the 69 percent product markup, which would have been the first such increase since a 4 percent boost in 2008. Instead, it raised the markup on single-serve miniatures from 49 percent to 69 percent to match the markup for all other products; doubled a $1 case handling fee, a cost that's ultimately passed along to consumers; and agreed to round up the last digit of all prices to 9.

The case handling fee is the biggest increase, adding 20 cents to the average bottle.

"We've made some tough choices," Painter said after the board voted. He said the increases represent "sound business decisions" to keep the ABC on solid footing.