Alexandria’s two municipal off-sale liquor stores – Plaza Liquor and Downtown Liquor – rang up $5.9 million in gross sales, which ranked 16th among the 190 city-owned stores in the state.
“We’re climbing and getting there,” said Andy Mellgren, the manager of the Alexandria stores.
He attributed the high sales volume to several factors, including strong support from the local community and customer service.
“Our goal is to create a cultural service here so when customers come in, it’s not just a shopping trip, it’s a shopping experience,” Mellgren said.
He added the selection at the stores also draws customers. “Every day someone will come in and say, ‘Gosh, I had no idea you carried that,’” he said. “We work with many small distributors and have a lot of fun wine and liquor options.”
Profits from the two stores are used to support city departments such as parks and the fire department, which help keep taxes down, Mellgren said.
The Alexandria stores’ net profit as a percent of sales was 6.4 percent, a little under the statewide average of 8.1 percent. The two stores had a combined net profit of $377,398.
Mellgren said the profit percentage isn’t quite as high because there’s another liquor store in the city limits, Cash Wise Liquor.
“A lot of other munis don’t have a competitor right in town,” he noted. “We have a lot of items on sale and many featured items – more than the average muni.”
Glenwood’s off-sale store had a banner year. It reported $1.47 million in sales and was ranked 17th for highest percent of net profit – 12.8 percent, or $188,513.
Not every liquor store was able to turn a profit, however. Parkers Prairie’s store, which has since closed, reported sales of $67,030 in 2018, leaving it with a loss of $254,038.
The Millerville Municipal Liquor Store also lost money in 2018. Gross sales were $319,188 but the store paid $181,053 for the products, had operating expenses of $159,683 and non-operating revenue of $640, leaving it with a net loss of $20,908. That amounts to a 6.6 percent loss in its percent of sales.
Here are the sales, net profit, and net profit as a percent of sales for the three other city-owned liquor stores in Douglas County:
Brandon (on and off-sale) – $546,701, a profit of $26,583 or 4.9 percent of its sales.
Miltona (on and off-sale) – $739,179, a profit of $23,769, or 3.2 percent of its sales.
Osakis (on and off-sale) – $763,470, a profit of $14,969, or 2 percent of its sales.
Minnesota law requires cities to hold public meetings on the future of their liquor stores if operations show a net loss in at least two of the past three years. This included Millerville, Osakis and 34 other cities.
The meeting in Osakis on Aug. 30, 2018 drew about 75 residents who had many questions about the store’s financial losses. The liquor store fund decreased by $43,000 in 2017 and there was a transfer from the liquor store into the general fund of $50,500 that year for a net profit of $6,815.
The cash balance left in the liquor store fund was $75,892 and an audit described the position of that fund as tenuous if the city continued to transfer money from the municipal store.
Most of the residents who commented at the meeting wanted to keep the store going. The City Council ultimately decided to keep both the on and off-sale businesses open while trying new approaches to boost the store’s profits.
Statewide, city-owned liquor stores reported a 23rd consecutive year of record sales, totaling $360.2 million, which was an $11.3 million increase over 2017 according to the report.
Although just 19 of the 190 Minnesota cities that own and operate 223 liquor stores are located in the Twin Cities metro area, they represent 35 percent of the sales and 38 percent of the net profit.
“The biggest difference between metro and rural sales numbers are the higher sales volume and the accompanying efficiencies,” State Auditor Julie Blaha said at a news conference. “This is really a lot about volume and ways you can save money with purchasing power, staffing and fixed asset costs with larger operations.”
Lakeville again was tops in sales, which totaled $15.2 million last year. The growing south-metro suburb of about 64,000 residents has run the state’s largest municipal liquor operation every year since 2002 and has been either first or second annually since then in net profit.
Rounding out the top five for sales were Edina ($13.4 million), Richfield ($11.5 million), Eden Prairie ($10.8 million) and Apple Valley ($9.4 million).
Statewide, the net profit of all municipal liquor stores totaled $29 million, representing an increase of $5.9 million over 2017. Generally speaking, profitable municipal liquor operations provide another revenue stream for things such as building maintenance, capital equipment and bond payments.
Of the 38 cities that saw a net loss last year, all but one — Robbinsdale — are in outstate Minnesota.
Lakeville also led the way in net profit, pulling in $2.6 million at its three stores. Edina came in a distant second at $1.4 million, followed by Elk River with $1 million.
Meanwhile, costs were flat across the state. Operating expenses totaled $78.7 million, an increase of about $463,000, or 0.6 percent, over the amount reported in 2017.
Sunday liquor sales began July 2, 2017, but the report did not specify how staying open an extra day each week affected sales or operating expenses.
Not all of last year’s numbers statewide were rosy. Three cities shut down operations, continuing a decade-long trend, according to the report. In addition, last year 36 cities — all outstate — held public hearings on the future of liquor store operations.
“The stores that are remaining are figuring it out,” Blaha said. “So if a store is able to meet the pressures and serve whatever purpose that the community really needs it for, they are staying in business. If they aren’t, people are making different choices.”
Nick Ferraro of the St. Paul Pioneer Press contributed to this story.
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