A county liquor store opened across the hall from a private retailer. Can it avoid competing?

Nick Gardner, owner of Choice Wine & Beer, thought the county had some nerve.

Last September, local officials were talking about supporting small businesses as they celebrated the opening of the newest county-owned Oak Barrel & Vine liquor store — across the hall from Gardner’s shop.

A county-owned competitor just steps away that opened in September, he worried, would hurt his business.

He said his fears have come to pass. In the five months since Oak Barrel & Vine opened, sales have fallen at Choice Wine & Beer. Gardner said he can no longer afford to hire extra staff or give his three employees raises.

He blames the Alcohol Beverage Services department, which operates the new store and 26 others across Montgomery County.

“There’s just this anger,” Gardner said. “I have to remind myself every week: Focus on your store; try to forget about them for a little bit.”

Gardner’s and other retailers’ frustration highlights a long-standing debate over whether the county should be in the alcohol business. And the stakes have risen for the county and private retailers since the end of the COVID-19 pandemic, which marked a steep drop in overall alcohol sales as people are drinking less.

Local officials say the county-run stores are supporting private retailers, not competing with them, in part by selling to them at discounted prices.

Kathie Durbin, director of the county’s Alcohol Beverage Services since 2021, said she has tried for a more collaborative relationship with Gardner and that her staff has called or visited him about 45 times over the last year to sort out differences.

“This is important to us, for every business to stay in business,” Durbin said. “But I can’t run the business for them.”

Gardner, though, sees Oak Barrel & Vine as more rival than partner. He thinks about it when deciding what to sell and at what price. And his balance sheet shows it has hurt his profit margin.

After Oak Barrel & Vine opened, Choice’s sales for October through December dropped more than 11% compared to the previous year, Gardner said.

Sales in January were 13% lower than in the same month last year.

Sure, he said, alcohol sales are declining nationwide, including for Alcohol Beverage Services, so it’s not entirely the county’s fault his bottom line has suffered.

The two stores don’t compete on every item either. In Montgomery County, the government is the exclusive retailer of liquor outside of restaurants and bars.

Privately owned stores like Choice are limited to selling beer and wine.

Gardner figured that, since Oak Barrel & Vine doesn’t sell cold beer or carry as wide a beer selection as Choice, wine sales would be a telltale sign of harm. From October to the end of December, those decreased 23%.

Several of Choice’s most popular brands, including La Marca, Apothic and Black Box, have been bestsellers at the county store, according to Alcohol Beverage Services data. To compete, Gardner said, he’s lowered prices on those brands as much as $5 per bottle.

The new Oak Barrel & Vine reported more than $823,000 in wholesale and retail alcohol sales from late September to the end of January. Liquor sales accounted for about three-quarters of its revenue. Wine was 20%, and beer made up the rest.

Choice makes just over $1 million in sales annually.

New neighbors

Durbin said Alcohol Beverage Services considered opening a store in Westfield Wheaton about a decade ago and the mall owner at the time was especially keen on it.

Philip Daley, the mall’s current general manager, didn’t return a voicemail or respond to email requests for comment.

Durbin said Oak Barrel & Vine stores are more than retailers, offering meeting spaces, hosting tasting rooms and sponsoring events.

Beer and wine stores must purchase their products from the county — either from its wholesale warehouse or its retail stores.

“We’re not here to put people out of business,” she said. “We’re here to be a resource for the businesses. Really, that’s what this whole system’s about.”

But Gardner worries that even the support he receives could hurt him in the long run, and he’s been wary of relying on his new neighbor for wholesale purchases.

“If I keep buying it, that means they’re going to keep putting it on their shelf for customers to buy, which means that customer doesn’t need to come here,” he said.

Government control

Seventeen states and several counties in Alaska, Minnesota and South Dakota have a monopoly or control over the distribution and sale of one or more types of alcohol within their borders, according to the National Alcohol Beverage Control Association.

In Maryland, only Montgomery County operates as a “control jurisdiction,” meaning it is the exclusive wholesaler of alcohol within county lines.

The arrangement generates tens of millions of dollars for the county.

Last May, councilmembers questioned Alcohol Beverage Services on why revenue from alcohol sales was expected to drop 37%.

County Council President Natali Fani-González has questioned whether the county government should be involved in the business.

Alcohol Beverage Services said the drop from more than $31 million to less than $20 million in annual contributions to the county budget represents a new normal.

Coexisting

Gardner said his concerns, emailed to Durbin and her team, aren’t getting through. He said he seldom receives a reply.

He contemplated moving but decided against it and is now considering adding a bar.

But he’d also need to add a bathroom, get approval from Westfield and get a county permit.

For now, he said, “I think we can survive for a little while — hopefully outsurvive them.”