The Connecticut Department of Consumer Protection expects a glut of package store applications this spring after population counts for the state’s cities and towns are released.
Licenses for package stores — the only stores in the state authorized to sell liquor, beer and wine — are regulated by a municipality’s population. A city or town can have one package store for every 2,500 people.
With the U.S. Census data expected by April 1, communities are expected to grow, creating licenses. The decennial count can only add package stores and doesn’t subtract any existing licenses.
The 1,100 stores already operating in the state worry how the data dilutes the market at a time when the industry is fighting possible changes to alcohol laws benefitting grocers and big box stores.
“It is very competitive,” said Joel Martin, owner of Cost Cutters Warehouse Liquors in Rocky Hill and Cromwell. “There are too many licenses in too many towns.”
Since official population counts are updated every 10 years and because existing licenses rarely become available, DCP officials anticipated plenty of pent-up demand to surface when the Census creates new licenses.
“We’ve already had a number of requests,” DCP spokeswoman Claudette Carveth said. “People who were aware of the process were coming forward even while the census was still being conducted.”
When the new licenses are available, DCP will handle them on a first come, first served basis, Carveth said. Applicants are required to have all other approvals achieved, such as local zoning and town clerk approval.
Based on the pent-up demand and the quickest time an application can be processed, new package stores could open within 60 days of the census data’s release.
Connecticut has 397 owner-operated and 701 employee-operator package stores. The industry employs 2,700 people with an annual payroll of $55 million.
Census data is due for all states by April 1, although the U.S. Census Bureau has released some states’ data intermittently since January. Connecticut’s data isn’t expected until mid-March at the earliest, but as soon as the state receives the data, the DCP will make the new permits available.
An existing package store operator can’t lose a license because of a decrease in a municipality’s population, and licenses will be added as cities and towns cross each 2,500 threshold. The only way a city or town can lose a license is if it has a vacant license and the population drops below a threshold.
Package stores are fighting against state legislation that would allow Sunday sales and allow grocers to sell wine. Each provision would hurt medium-sized liquor businesses that would have to compete with stores that benefit from increased income on purchases not related to alcohol, Martin said.
“It hurts a lot of people who have already invested in this business,” Martin said.
The business at package stores has been stagnant over the past three years, and when the DCP adds new stores as a result of the census, it will draw customers away from existing operators, said Carroll Hughes, executive director of the Connecticut Package Stores Association.
“I wouldn’t necessarily think it is a great business opportunity,” Hughes said. “There’s no more business out there.”
Sales at Connecticut package stores increased 38 percent between 2002 and 2007, topping $900 million for the industry, according to the latest economic Census.
Despite this, Martin said the extra business really isn’t out there. In the 16 years he has operated the Rocky Hill location and the 10 years in Cromwell, customer counts are steady. But customers are spending more because prices are increasing.
The population is shifting to Connecticut’s suburban areas, Hughes said, but that doesn’t necessarily mean that’s where the business is. Customers might buy closer to where they work or have loyalty to a certain store.
“More people to a store means more money,” Hughes said. “If you add more stores, it takes away from another store.”
