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Big changes on where you can buy wine/beer, impact on you and grocery anchored real estate

Colorado is an odd state, prior to last year, you were unable to buy full strength beer in grocery stores. In almost every other state, you can walk into a grocery store and buy wine/beer, but not in Colorado.  In many states you can even buy liquor in grocery and c-stations.  Last year beer was allowed in grocery stores.  Now there is a new ballot initiative to change Colorado liquor laws again and add wine.  What is the impact on retail real estate?

How does the Colorado liquor law work today?

The sale of Beer, wine, and spirits is unique in Colorado and radically different than other states.  Before the new law, liquor stores are the only establishments able to sell Beer, wine, and liquor (there was a provision that allowed grocery stores one location in the state, for example Costco had one location on Wadsworth).  Grocery stores could only sell low strength beer 3.2 which very few people actually bought.

Liquor stores had a monopoly on beer, wine, and liquor sales with grocery stores like King Soopers, Safeway, Whole Foods, Walmart, etc.. locked out of selling full strength beer and still locked out of selling wine and spirits.

What was in senate bill 243 that passed a few years ago?

Colorado law today essentially granted a monopoly to liquor stores.  This all changed January first.  Governor Hickenlooper signed senate bill 243 (an update to SB 197 passed in 16) into law effective January 1st.  The main provisions of the senate bill:

  1. Allow grocery stores that currently sell 3.2 beer to sell full strength beer starting January first
  2. Allow employees 18 or older to sell beer
  3. Expand the number of grocery locations allowed to sell beer, wine, and liquor from 1 to 20 over the next 20 years

Senate bill 243 at the time of passing was seen as the great bargain that protected liquor stores by phasing in wine and spirits sales.  Unfortunately the new ballot initiative will shatter this agreement.

What is in the new Colorado Liquor law proposal?

As suspected grocery stores are not stopping with just the sale of beer.  A coalition led by Colorado’s largest grocery stores submitted a pair of ballot initiatives Thursday that would allow the stores to sell wine alongside the full-strength beer that’s been a staple in their aisles since the beginning of 2019.The initiatives, only one of which is expected to land on the November ballot, are likely to be as controversial as the last major change to state alcohol-sale laws.

With the recent changes in Colorado’s liquor laws in 2019, it is highly likely that this ballot initiative will pass as consumers favor convenience and price to buy both wine and beer in grocery stores like every other state.

Why is the change in CO liquor law important for real estate?

Currently next to almost every grocery store I’ve visited in Colorado there is also a liquor store.  Liquor stores locate next to grocery since many consumers buy groceries and then go next door to buy a bottle of wine or beer.  In almost every other state, you can go to the grocery store and buy beer and wine in the same store.

With Senate bill 243, grocery stores were able to sell full strength beer.  The new initiative will also allow wine in grocery stores.  This will drastically change the foot traffic to liquor stores.  Think of how many consumers would go into a liquor store to just buy a bottle of wine or a case of beer.  This will no longer occur as consumers will likely just buy the bottle when they are picking up other grocery items.  This will drastically impact the profitability of liquor stores.

Furthermore, stores like King Soopers (owned by Kroger) will be able to buy product considerably cheaper than a single liquor store just due to volume.  For example, there is one Costco in Colorado (on Wadsworth) that also sells beer, wine, and liquor.  Their prices on beer and wine are around 15-20% cheaper than liquor stores.  Large grocery stores and C-store chains will be able to buy pallets of beer and wine at a time at much lower costs and will be able to price substantially lower than the liquor store next door due to volume.

Many  Colorado liquor stores will go under

There is a finite demand for beer, wine, spirits.  As more consumers buy beer and wine from traditional grocery retailers it will be impossible for many liquor stores to stay in business.  I was at a shopping center yesterday that had a grocery store, a liquor store, and a convenience store all now selling beer and likely wine. The numbers don’t work to sustain all three businesses and the liquor store will be the one on the way out as beer and wine are incremental to convenience stores and grocery stores, so they don’t have to make much if any money on each sale.

The question is how many liquor stores will close?  I did a quick analysis of liquor stores per person to see how Colorado stacked up against other states.  I chose Georgia as a baseline as in Georgia you can buy beer and wine in grocery stores but to buy liquor you would need to go to an actual liquor store.  This is essentially the model that Colorado is transitioning to.

I looked at total liquor stores per population in Georgia and Colorado.  Georgia has double the population of Colorado, yet Colorado has more liquor stores.  With the recent change in Colorado liquor laws, Colorado should look more like Georgia regarding liquor stores per population as retailers adapt.

Number of stores Population stores/person
Colorado 2186     5,670,000     0.00038554
Georgia 1658   10,430,000     0.00015896
Predicted Colorado 901     5,670,000     0.00015896
% change 59% less stores than today

Based on Georgia’s number of liquor store per person, this will lead to a decline of almost 60% of all liquor stores going out of business in Colorado.

Colorado Liquor law changes Impact on real estate?

Grocery Anchored retail throughout Colorado will be under increasing pressure.  With almost 1200 liquor stores likely closing over the next several years substantial grocery anchored retail space will be available.  At the same time substantial inventory of new centers is coming online and natural attrition from e-commerce is also occurring.  Who will fill all this vacant space that doesn’t already have a presence in these same centers?  In Colorado, grocery anchored retail will be challenging with the increase in supply and limited new demand.

The national economy is already showing signs of cooling off; the increased closing of a substantial number of liquor stores will put downward pressure on retail rents  and prices  in grocery anchored centers throughout Colorado.  On the flip side, at least it will be less expensive and more convenient to buy beer and wine which might be needed  to sooth your worries if you are a large owner of grocery anchored real estate.

Resources/Additional Reading


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Written by Glen Weinberg, Owner Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors MagazineThe Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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