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Alcohol distribution fight overflows into Capitol

A fight between Oklahoma liquor distributors over who has the right to distribute the top liquor brands has spilled over into the state Legislature.

Senate Bill 608 has become a common refrain in the halls of the Capitol as lawmakers prepare to take sides on the bill that would mandate all wholesalers get the opportunity to distribute the 25 top-selling liquor and wine brands.

In October, alcohol distribution changed as a result of the voter-approved State Question 792. Manufacturers of alcohol brands now have the ability to designate exclusive distributors of their products, whereas before they were forced to make their products available to all distributors.

This change benefited some distributors, while hurting others. Oklahoma City-based distributor Central Liquor Co. partnered with national broker Republic National Distribution Co., and Tulsa-based Jarboe Sales Co. partnered with Southern Glazer’s Wine and Spirits to form RNDC-Oklahoma and Southern Glazer’s Oklahoma, respectively. Both companies have grown under the new laws thanks in part to the designation changes.

Industry officials estimate these two companies control nearly 80 percent of the distribution market, estimated to be worth more than $500 million annually.

Rep. Chris Kannady, R-Oklahoma City, who is carrying the House version of SB 608, which was introduced by Sen. Kim David, R-Porter, said having two major companies with the exclusive rights to the top-selling liquor brands hurts local liquor distributors

“There are two big wholesalers now that are essentially run by big, national companies. … I think when that happened, it was a shock to the industry and it was hurting wholly owned Oklahoma companies,” he said.

Tulsa-based Boardwalk Distribution is a driving force behind SB 608.

Boardwalk President Bryan Hendershot said his company will lose $100 million in sales this year and was forced to lay off nearly 30 employees. Boardwalk did not partner with an out-of-state business, and also failed to land a distribution agreement with any of the top-100 alcohol brands, he said.

“It wasn’t that we got a few brands; it was zero,” Hendershot. “I’m backed against the wall, I’m going to fight for that (distribution change).”

However, others including RNDC-Oklahoma, Southern Glazer's of Oklahoma, Artisan Fine Wine and Spirits, and Revolution Wholesale have issued a joint statement in opposition of SB 608 and the claims being made by Hendershot.

“Basically, this bill caught us all off guard as I felt it was basically snuck in without consulting any of the other wholesalers,” said Tracia Forrest, of Artisan Fine Wine and Spirits. “None of the other wholesalers were consulted as far as I know, and I don’t want Boardwalk to be speaking on my behalf.”

The law changes didn’t solely benefit RNDC-Oklahoma and Southern Glazer’s of Oklahoma, she said. Artisan is a relatively small distributor in the industry, but Forrest said her company has doubled its number of employees and has seen an increase in sales since October.

Jarboe Sales Co. co-owner J.B. Jarboe said his company worked to prepare for the October changes and doesn’t want to go back.

“We all spent a lot of time, energy and money to prepare for this,” Jarboe Sales Co. co-owner J.B. Jarboe said. “The one guy who did not prepare is trying to pass legislation to change the will of the people and we aren’t happy about it.”

Kannady said retailers and consumers, especially in rural Oklahoma, are the ones hurt by the distribution exclusivity. Liquor stores are forced to rely on deliveries of certain products from one distributor, instead of several.

“We have a problem in this state with being able to distribute, in this case, alcohol, spirits across the state,” Kannady said. “It’s the year 2019, but we’re taking a step back for all the availability of product.”

Hendershot said he has the support of many liquor stores and restaurant owners. When asked which ones, he declined to say.

“I wouldn’t do it if it was just Boardwalk,” Hendershot said. “We should care about what retailers and restaurants and bars care about.”

Sen. Stephanie Bice said she has heard rumblings about SB 608, but hasn’t read the latest version of the bill, which gives all distributors the chance to sell the top liquor brands. Bice, R-Edmond, helped write State Question 792, which made sweeping changes to the state’s alcohol industry. The changes took effect in October.

It’s natural that tweaks might be necessary after such a massive overhaul in state law and the Legislature will make changes as lawmakers deem necessary, Bice said.

She cited recent legislative efforts to close a loophole involving the sale of beer for off premises consumption at golf courses as an example of when the Legislature felt it necessary to modify the state’s alcohol modernization efforts.

“We are six months past the enactment of SQ 792 and change is difficult and we’re still trying to work through the enormity of the changes on every level from retail to distribution,” she said.

The Oklahoma House could vote on SB 608 as soon as this week. If the bill passes, it would have to be heard again in the state Senate because the bill language was changed after passing in the Senate with no opposition.

Related Photos
Braxtun Brown, an OnCue clerk,  arranges beer inside the Beer Cave, where customers can select chilled brew at their business  located at the northwest corner of the 15th & I-35 intersection in Edmond.   Monday, Oct. 1, 2018, is the first day new  state alcohol laws go into effect.  Photo by Jim Beckel, The Oklahoman

Braxtun Brown, an OnCue clerk, arranges beer inside the Beer Cave, where customers can select chilled brew at their business located at the northwest corner of the 15th & I-35 intersection in Edmond. Monday, Oct. 1, 2018, is the first day new state alcohol laws go into effect. Photo by...

<figure><img src="//cdn2.newsok.biz/cache/r960-0ebda8a73edda9fa2dfbf0845447c1f1.jpg" alt="Photo - Braxtun Brown, an OnCue clerk, arranges beer inside the Beer Cave, where customers can select chilled brew at their business located at the northwest corner of the 15th &amp; I-35 intersection in Edmond. Monday, Oct. 1, 2018, is the first day new state alcohol laws go into effect. Photo by Jim Beckel, The Oklahoman" title="Braxtun Brown, an OnCue clerk, arranges beer inside the Beer Cave, where customers can select chilled brew at their business located at the northwest corner of the 15th &amp; I-35 intersection in Edmond. Monday, Oct. 1, 2018, is the first day new state alcohol laws go into effect. Photo by Jim Beckel, The Oklahoman"><figcaption>Braxtun Brown, an OnCue clerk, arranges beer inside the Beer Cave, where customers can select chilled brew at their business located at the northwest corner of the 15th &amp; I-35 intersection in Edmond. Monday, Oct. 1, 2018, is the first day new state alcohol laws go into effect. Photo by Jim Beckel, The Oklahoman</figcaption></figure>
David Dishman

Business Writer David Dishman has worked as a journalist in Oklahoma since 2014 covering business, education, local government, healthcare and more. He worked as a reporter in southeast Oklahoma before joining the business team at The Oklahoman in... Read more ›

Carmen Forman

Carmen Forman covers the state Capitol and governor's office for The Oklahoman. A Norman native and graduate of the University of Oklahoma, she previously covered state politics in Virginia and Arizona before returning to Oklahoma. Read more ›

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