Report provides information on municipal liquor store sales

The report provides comparative data on liquor operations owned and operated by Minnesota cities.

Minnesota municipalities were originally authorized to own and operate liquor establishments as a means of controlling the sale of alcohol. For many communities in greater Minnesota, municipal liquor operations provide access and convenience in areas that might be unable to attract a privately run establishment. In addition to these functions, profitable municipal liquor operations have provided another source of revenues to supplement traditional tax and fee revenues.

In 2010, 209 Minnesota cities operated 242 municipal liquor stores, with 116 cities operating both on-sale and off-sale liquor establishments and 93 cities restricting their municipally-owned establishments to off-sale liquor stores. While the majority of municipally-owned liquor stores are located in greater Minnesota, 19 cities within the seven-county metro area own and operate liquor establishments.

Municipal liquor stores in Koochiching County all showed profits in 2010.

According to the report:

• Ranier showed a 10.4 percent, or $42,866, net profit with sales at $411,563 for the year. The sales allowed for $50,000 to be transferred to other city funds. Ranier liquor store ranked 148 by gross sales out of 209 liquor stores in the report.

• Littlefork showed a 4.4 percent, or $17,320, net profit with sales at $392,429 for the year. The sales allowed $20,000 to be transferred to other funds. Littlefork liquor store ranked 151 by gross sales out of 209 stores in the report.

• Big Falls showed a 6 percent, or $18,281, net profit with sales at $302,352 for the year. The sales allowed $8,000 to be transferred to other funds. Big Falls ranked 179 by gross sales out of 209 stores in the report.

• Northome showed a 16.5 percent, or $48,486, net profit with sales at $293,953 for the year. The sales allowed $20,000 to be transferred to other funds. Northome liquor store ranked 181 by gross sales out of 209 stores in the report.

Highlights of the

report include:

• The combined net profit of all municipal liquor operations totaled $21.7 million in 2010. This represents a decrease of $204,781, or 0.9 percent, from the amount generated in 2009. Among on-sale operations, net profits totaled $2.0 million in 2010, which was a decrease of $266,079, or 11.9 percent, from 2009. Total net profits for off-sale operations totaled $19.7 million in 2010, which was an increase of $61,298, or 0.3 percent, over 2009.

• Over the past five years, net profits have increased 8 percent. Among off-sale stores, there was a 16 percent increase in net profits, while on-sale stores showed a decrease of 35.7 percent.

• Forty Minnesota cities reported net losses for 2010, compared to 38 cities in 2009. All 40 cities with losses were from greater Minnesota.

• During 2010, Minnesota’s municipal liquor operations reported a 15th consecutive year of record sales totaling $313.5 million. Total sales generated in 2010 increased by $2.2 million, or 0.7 percent, over 2009.

• Municipal liquor operations located within the metro area are considerably larger and more profitable than their greater Minnesota counterparts. Although only 19 of the 209 Minnesota cities (9.1 percent) that own and operate municipal liquor stores are located in the metro area, they represent 37.2 percent of the total sales and 36.8 percent of the net profits of municipal liquor operations. Sales by all metro area operations averaged $3.0 million in 2010, compared to average sales of $969,139 for all greater Minnesota municipal liquor operations.

• During 2010, Minnesota’s municipal liquor stores transferred $16.6 million of their profits to other city funds. This represents an increase of 0.7 percent from the total net transfers made in 2009. Transfers totaled $6.3 million among metro area establishments, compared to $10.3 million for greater Minnesota establishments.

• Minnesota law requires cities to hold a public hearing on the future of their liquor store if the liquor operation shows a net loss in at least two of the past three years. While this report is based on 2010 data, an examination of losses for the years 2008, 2009, and 2010 shows that the 30 cities should have held hearings on or after Nov. 17, 2011.

To view the complete report, which includes an executive summary, tables, and graphs, go to: http://www.auditor.state.mn.us/default.aspx?page=20120326.000.