Costco: Corporate Champion of the Consumer

[Crazed Rabbit]

The citizens of the state of Washington have at long last thrown off the yoke of tyranny, or at least one of the many yokes, in regard to the three-tier distribution of liquor in the state.

http://seattletimes.nwsource.com/htm...liquor09m.html

Beginning June 1, grocery stores in Washington will begin selling liquor.

That's the result of a $22.7 million voter campaign that Costco Wholesale led to kick the state out of the liquor business and allow private retailers to sell spirits instead.

Of the ballots tallied Tuesday night, about 60 percent favored Initiative 1183.

Beginning next June, liquor sales will shift from the state to grocery and warehouse stores, including Costco. It means more than 900 state employees will lose their jobs, most of them workers at state-run liquor stores.

The state budgeting office figures the number of outlets selling liquor will jump from 328 to 1,428. It also expects the change to generate an average of $80 million more in annual revenue for the state and local governments over the next six years.

Some liquor prices are expected to drop, although not as low as in California, because Washington will keep its high liquor taxes.

And why is this? Because Costco donated $20 million dollars, primarily for the sake of getting rid of the government stranglehold. They'll make a bit more money, but it could take a decade or more for them to make all that they spent in just several months. The opposition, funded with millions by the out of state liquor distributors given a monopoly by the state, screeched with fear-mongering ads full of lies.

But they were struck down by the righteous Costco. This is a store where employees get higher than average wages, and customers get lower than average prices.
http://seattletimes.nwsource.com/htm...mid=obinsource

My favorite comment on Initiative 1183, from a political observer who shall remain unnamed, is that the state liquor stores are "Jim Sinegal's great white whale." Sinegal is chief executive of Costco Wholesale. The person who compared him to Ahab in "Moby Dick" knows Sinegal, and I think he has a piece of the truth.

The battle was personal — and Sinegal has won.

What was the motive for spending so much money on I-1183? Many who support it assume the motive is corporate: company profit. Opponents insist on it. "They've done the math," one TV ad bellows. "They stand to line their pockets with hundreds of millions in increased profit ... "

Profit, yes. There will be profit. But how much? Hundreds of millions? What is the math?

For Fred Meyer, QFC, Albertson's, Walmart, Sam's Club, WinCo and every other major grocery chain in Washington except three, the math of I-1183 is intoxicating. Their return on investment is impossible to calculate. You would have to divide by zero.

Safeway and Trader Joe's chipped in $50,000 each — nickels and dimes. Costco shoveled in $20.9 million.

Why would one company do that? As a business investment? What is the math?

Here's my finger-on-the-bar arithmetic. Assume Costco's 29 stores get 10 percent of the state's revenue of $870 million a year. Assume its after-tax profits on liquor are the same as on other goods it sells. To make back the money it spent on I-1183 would take Costco 14 years.

That is not a good return on investment. Nor is that Costco's entire investment.

Last year, the Issaquah-based company spent $3.6 million on Initiative 1100, a measure written by someone else. That effort failed.

Over the years, Costco has spent many thousands of dollars on attorneys' fees to fight the state of Washington's economic regulations on alcohol in federal court. On one occasion it pursued an appeal to the 9th U.S. Circuit Court of Appeals, which mostly failed.

Most retailers don't do this sort of thing. In matters of public controversy, they are chickens. A year ago, George Bartell publicly opposed the state income tax, but he was an exception. He was bolder than his fellows, and even then he was playing defense.

Usually when retailers would influence the law, they do it through trade associations, away from the news pages. Yet Costco plunked down $20.9 million, and has fought the battle over I-1183 under its own flag.

Why?

Why does Costco still price a hot dog and soda at $1.50? Because Jim Sinegal wants to. Sinegal co-founded the company. He has been CEO for 28 years. He turns 76 on Jan. 1, and has announced his retirement for that day. He is wrapping up a career.

Coming in to his last year as CEO, one piece of unfinished work was his battle with the state of Washington over alcohol. It was a war in which he had fought and lost.

He wanted to win.

Did he put some of Costco's Washington business at risk? Maybe, but the ads charging it with "lining its pockets" were overstated.

People like Costco.

Some say it is bad for one company to spend $20.9 million to change state law. I don't think so. The voters needed to know Costco's view, particularly when the other side, funded by the Wine & Spirits Wholesalers of America Inc., was trying to spook them with duplicitous ads about the evils of drink.

Costco spent about $15 per voter. It was a good fight, and its ads were clean.

It makes me happy to see those with the ability stand up against the state.

CR

[a completely inoffensive name]

Sooo basically a company bought an election. Yes, I can see why you would like this CR.

[Sasaki Kojiro]

Sooo basically a company bought an election. Yes, I can see why you would like this CR.

What election???

[a completely inoffensive name]

What election???

Seriously SK? You gonna twist my nipples over a wrong term to be pedantic? The initiative vote. Thing that allowed CostCo to start selling alcohol in the first place? Is this not an election? People voting is not an election?

They paid for the outcome over a law. last sentence in the second quote "Costco spent about $15 per voter. It was a good fight, and its ads were clean."

[Sasaki Kojiro]

Seriously SK? You gonna twist my nipples over a wrong term to be pedantic? The initiative vote. Thing that allowed CostCo to start selling alcohol in the first place? Is this not an election? People voting is not an election?

Nope.

They paid for the outcome over a law. last sentence in the second quote "Costco spent about $15 per voter. It was a good fight, and its ads were clean."

You're **** straight they did. The state had a monopoly on the selling of liquor, and so a bunch of distributors (other corporations) wanted to keep the law, which is a bad law. Costco spread the word and the initiative passed. That's why spending money on campaigns is free speech.

[a completely inoffensive name]

Nope.

What?

election
e·lec·tion
noun
1.the selection of a person or persons for office by vote.
2.a public vote upon a proposition submitted.
3.the act of electing.
4.Theology. the choice by God of individuals, as for a particularwork or for favor or salvation.


Is definition #2 wrong?

You're **** straight they did. The state had a monopoly on the selling of liquor, and so a bunch of distributors (other corporations) wanted to keep the law, which is a bad law. Costco spread the word and the initiative passed. That's why spending money on campaigns is free speech.

That's cool, still really don't see why this should be allowed. We have had this discussion before Sasaki. This time it worked out nicely in getting rid of a bad law. So you think it is a good process. And yet, along with this nice outcome there are going to be countless other elections where interest groups and corporations buy victories for crony capitalist policies and politicians by spamming misinformation and commercials at voters 24/7.

Hooray, everyone can speak as loud as their money can buy them, good thing it is only the people with bad ideas that have no money amiright?

[Sasaki Kojiro]

Is definition #2 wrong?

Yes.

That's cool, still really don't see why this should be allowed. We have had this discussion before Sasaki. This time it worked out nicely in getting rid of a bad law. So you think it is a good process. And yet, along with this nice outcome there are going to be countless other elections where interest groups and corporations buy victories for crony capitalist policies and politicians by spamming misinformation and commercials at voters 24/7.

Hooray, everyone can speak as loud as their money can buy them, good thing it is only the people with bad ideas that have no money amiright?

You are resigning yourself to never being able to change a bad law then. The status quo will be too powerful. In elections name recognition will rule.

How much do you think can be done with commercials? How bad a law do you think a corporation could get passed?

[a completely inoffensive name]

Yes.

Kk, we got that cleared up.

You are resigning yourself to never being able to change a bad law then. The status quo will be too powerful. In elections name recognition will rule.

How much do you think can be done with commercials? How bad a law do you think a corporation could get passed?

I think advertising can make people do and think whatever someone wants them to do and think. It can make teenagers have parents buy a $2,000 laptop to browse facebook and write word documents.

[drone]

Virginia has much the same system (distilled spirits sold only in state run stores), and they are making some nice profits on it. The biggest problem is the selection, it's difficult to find some of the rarer brands.

I love Costco, they treat their employees well and they get cool stuff all the time. But I'm having trouble imaging the liquor section of a Costco store. 4-pack box of 1.75L Smirnoff?

[Vladimir]

Virginia has much the same system (distilled spirits sold only in state run stores), and they are making some nice profits on it. The biggest problem is the selection, it's difficult to find some of the rarer brands.

How rare? Do Maryland stores have a more diverse selection?

I enjoy ABC because if they lack something I'm looking for they can easily find it at another store or order it.

[Centurion1]

maryland (im a resident) has private stores as long as you have a liquor license so the quality can range from cheap hood shops to high class stores.

In NYC its much the same.

costco is a relatively nice place, like a nicer walmart.

[classical_hero]

I never knew the government was in that Business.

[Vladimir]

I never knew the government was in that Business.

I blame the Puritans.