Ilqfeb2005.Pdf

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ILQ_Feb05 2/8/05 3:34 PM Page 1 February 2005 PUBLISHED BY DavisDenny 2545 Highland Avenue, Suite 102 “TALKING REAL MONEY!” Birmingham, AL 35205 E-mail: [email protected] A billion here, a billion there, and pretty soon increased annually for the past 10 years and Fiscal Year you’re talking real money! 2005, which began July 1, 2004, is likely to continue the CREATIVE DIRECTORS ––Senator Everett Dirksen trend with sales grossing $77 million (10 percent ahead Tim Denny, Becky Denny of the prior year) at the halfway mark. CONTRIBUTING WRITERS enator Dirksen may have been referring to excessive The increase in liquor sales can be attributed to several Luke Anthony government spending, but his words seem equally appli- variables. A primary factor has been consumer trade-up Norma Butterworth-McKittrick cable to the revenue contribution of the Iowa Alcoholic Derek Lippincott S as “top-shelf” premium goods do well in the market- Beverages Division. Sometime this spring, perhaps May, place. In support of that belief, I note that, while dollar ILLUSTRATIONS the Division will transfer its billionth dollar to state and sales are up 10 percent so far this fiscal year, gallonage Ben Burford local government in less than two decades. sales trail with only a 5.5 percent increase. Becky Denny Mary Elizabeth Kimbrough Since reorganizing Iowa’s liquor control system in 1987, The explosion of flavors in the spirits world is another Chris Lawson the Division has generated $964.8 million in revenue, to explanation for the upward trend. New flavored spirits – date, from the sale of liquor, beer and wine excise taxes, primarily in the vodka and rum categories – are expand- PHOTOGRAPHY Derek Lippincott licensing fees and civil penalties. The majority of the rev- ing consumers’ horizons while appealing to a larger audi- enue has been transferred directly to Iowa’s general fund, ence. The Martini’s return to fashion for example, has PRODUCTION MANAGER while the balance has been given back to local govern- been aided by the growth of the flavored vodka category Pilar Taylor ments or allotted to substance abuse programs in the and the resulting explosion of drink menus. Sales have state. In observance of the fast-approaching milestone, I also been fueled by demographics. The 21-to-29-year- ADVERTISING would like to take a moment to review the Division’s var- For more information about this old age group, the largest consuming segment, has been publication and/or advertising rates, ious revenue sources and give you an idea of their role in growing at the rate of 2 percent per year and is expected call 205/933-0355. achieving “a billion here” in the State of Iowa. to continue to do so until 2010. Iowa Liquor Quarterly is published Finally, the liquor industry has made inroads into the quarterly under the direction of the Iowa dominant U.S. beer market. (The average per capita Alcoholic Beverages Division (IABD). Prices are subject to change at the discre- consumption of beer in Iowa is 33 gallons of beer versus tion of the IABD without prior notice. All 1 gallon of spirits.) While the shift is slight, aggressive art in this publication copyright 2004 advertising campaigns by the principle liquor suppliers DavisDenny. All rights reserved. have influenced consumer preference. At the same time Reproduction in whole or in part without written permission prohibited. that liquor sales have been on the rise, beer sales in Iowa DavisDenny makes every effort to publish have been flat in the last half of 2004. a correct price list and editorial content, however certain information is furnished to DavisDenny by others. DavisDenny is II. Excise Taxes responsible for any errors or misrepre- sentations within its control and not the Beer and wine excise taxes, combined, account for Iowa Alcoholic Beverages Division. $282.7 million or 29 percent of total revenues with beer DavisDenny will indemnify the division contributing $220 million (23 percent) and wine con- regarding any such errors or misrepre- sentations. The materials contained in tributing $62.3 million (6 percent). While a 50 percent this publication may not be copied, dupli- I. Liquor Sales mark-up is applied to the wholesale price of spirits, a flat cated or used by any other person, firm gallonage tax is levied on beer and wine of 19 cents and or organizations in whole or part, with- Liquor sales, as you have probably witnessed, have $1.75, respectively. Beer and wine excise taxes are col- out the express written consent of become increasingly robust over the past decade and lected at the point of sale from distributors to retail out- American Wine & Liquor Quarterlies account for 59 percent of total revenues. As Iowa’s exclu- and DavisDenny. lets and neither rate has been increased since 1986. sive wholesaler of alcohol, the Division has generated $577.2 million in liquor profits alone. Liquor sales have The trend line for wine in Iowa has been on a steeper 1 ILQ_Feb05 2/8/05 3:34 PM Page 2 incline than that of beer in recent years. Beer sales for the first half of IV. Closing Fiscal Year 2005, for instance, are up less than 1 percent while wine has The Iowa Alcoholic Beverages Division will soon achieve a major milestone enjoyed a healthy growth rate of almost 10 percent. Those numbers are in the history of the agency. A billion dollars, by anyone’s accounting, is consistent with national trends for each category. The slight growth in the no small sum. The “billion here” generated by the Division, for example, beer market has been aided chiefly by imports and the emergence of new translates into $342 for every man, woman and child in the state. In terms low-carb beverages. of taxpayer services, a billion dollars is equivalent to a 1,000 miles of new paved four-lane Iowa highways or, alternatively, funding for the entire III. License Fees & Civil Penalties budget at the University of Iowa for two-and-a-half years. The Iowa Code authorizes nine different categories of licenses for liquor, The billion dollar mark will have been achieved in the course of 18 years beer and wine sales. By charging a fee for individual licenses, or combi- of operation. Judging by the current sales trend, the Division will likely nations of various licenses, the Division has generated $101.6 million since reach the second billion – “a billion there” – in less than half the time it 1987. The fees, which are collected on an annual basis, have accounted took to reach the first billion. Knowing that, I think it’s safe to say that for 11 percent of the Division’s total revenue. Currently, the Division over- pretty soon Iowa will be “talking real money!” sees more than 10,000 permits for various types of alcohol sales – both on and off premise. The majority of a license fee remains with the local gov- CHEERS! ernmental authority where the business operates. If licensees are caught violating the terms of their permits or engaging in illegal sales, the Division receives money from civil penalties collected from violators. Civil penalties, however, account for less than 1 percent of the LYNN M. WALDING Division’s revenue. The Civil penalty fund is transferred to the state’s gen- Administrator eral fund, while license fees are divided between the state and local gov- ernments. IowaABD.com Web Feature: 17 Years of Fund Transfers The Iowa Alcoholic Beverages Division generates significant revenue for the state and local authorities from the licensing, regulation, taxation and wholesaling of alcohol. In fact, last fiscal year, FY 2004, the Division alone accounted for more than $76 million of state general fund appropriable revenues. * FY 1991 - Liquor payables increased from 60 to 90 days with the excess funds being transferred to the General Fund. ** FY 1992 - Liquor payables were maintained at 90 days, resulting in an additional month of liquor payments in FY 1992 than in FY 1993. At the same time, funding for the Division converted from the Liquor Trust Fund to General Fund Appropriations, increasing transfers thereafter. *** FY 1993 - General Fund transfers were reduced in order to bring Equity to a positive balance. 2 SMALL INDULGENCE Martini’s Grille Location: 610 N 4th St. Big City Style Burlington Owner: LEFT: Martini’s Grille Peter Harman owner Peter Harman (left), wife Kim and Mar- Specialties: tini’s Bar Manager James Martinis, Evans have combined “Chicken Lips” talents to author more than 100 martini recipes. Web site: BELOW: Martini’s Grille’s www.martinisgrille.com signature martinis (from top to bottom) include the Strawberry Belvedere, Ruby Slipper and 007. Martini’s Grille shakes up Burlington itting in Martini’s Grille, looking out the fourth story window and watching the Mississippi River creep by Burlington, Iowa, you get the feeling you’re in an upscale big city martini bar.

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