Iowa’s business of booze
A comparison of alcohol sales in Iowa’s 99 counties
By Jared Curtis
The sun dips below the cityscape of a small rural town on this warm spring evening. A long bar sets empty except for a few farmers in bib overalls on one end chatting about the weather and a couple of aging women, definitely lookers in their prime, sipping gin and tonics at the other. Younger patrons shoot pool in the back of the bar while the bartender reads the local newspaper. A few years ago, The Owl Tap would have been standing room only, but now plenty of barstools are open. But strangely, alcohol sales in the state continue to rise.
Drinking alcohol is big business in Iowa. From people sipping wine at dinner to college kids binge drinking in frat houses, it happens on a daily basis. Drinking a glass of wine a day has been proven to be beneficial to reducing the risk of heart disease, certain cancers and slowing the progression of neurological degenerative disorders like Alzheimer’s and Parkinson’s Disease. But drinking is also a problem in the state, as 113 of the 412 traffic fatalities in 2008 were alcohol related. But how much money is spent on alcohol, and how much do Iowans really consume?
According to Time magazine, Americans drink enough alcohol to average seven bottles of liquor, 12 bottles of wine and 230 cans of beer for each person annually. That is a lot, considering one-third of Americans doesn’t even drink. The U.S. ranks 26th in the world in alcohol consumption per person. According to the Time magazine report, New Hampshire ranked No. 1 in the U.S. with 40 gallons of alcohol (beer, liquor and wine) per person, followed closely behind by Nevada with 38 gallons. One might assume that both California and New York would be toward the top of the list (California is considered wine country), but they both were surprisingly low with California ranking 40th with 23 gallons per person and New York 49th with 21 gallons. The lowest ranking state is Utah with 14 gallons per person. And right in the middle is Iowa, ranked 23rd with 25 gallons per person, totally nearly $204 million in annual sales.
Some may have guessed Iowa to be higher on the list. Our state boasts the University of Iowa, which has been included in numerous party school lists over the years with well-documented drinking problems. Local officials changed the bar entrance age from 19 to 21 to attempt to curb problems, but when your unofficial fight song includes, “In heaven there is no beer, that’s why we drink it here. And when we’re gone from here, our friends will be drinking all our beer,” you know Iowans like to tip back a few.
The National Alcohol Beverage Control Association (NABCA) breaks beer, wine and liquor into three separate categories, and, not surprisingly, Iowa ranked 15th in beer consumption, 38th in liquor consumption and 45th in wine consumption in 2007. As wineries in Iowa continue to grow, and a new law allows breweries to create stronger beers, Iowa should climb up the list, which means sales tax revenues will continue to roll in.
Alcohol brings in big dollars to the state
According to the Iowa Alcoholic Beverages Division, the price of spirits is comprised of several factors including supplier costs, as well as federal and state excise taxes. The final cost an Iowa consumer could expect to pay, on average, for a 750 ML bottle of Jack Daniel’s Tennessee Whiskey with a shelf price of $23.99 is $25.43. That price includes the following elements — a .35 percent ($.09) Bottle Deposit and Surcharge, a 5.66 percent ($1.44) State Sales Tax, an 8.42 percent ($2.14) Federal Excise Tax, a 23.20 percent ($5.90) Average Retail Mark-Up, a 23.60 percent ($6) State Excise Tax and a 38.77 percent ($9.86) Distiller Cost and Profit, bringing the total cost of the bottle to $25.43.
We were able to locate figures for all of Iowa’s 99 counties through the Iowa Alcoholic Beverages Division. They were broken down into per capita dollar sales by county and sales to Class C licensees, businesses like Hy-Vee, Dahl’s and Central City Liquor.
“In 2009, the Iowa Alcoholic Beverages Division contributed $104 million of its sales, which is really less than 2 percent of the general fund,” said Tonya Dusold, Information Specialists for the Iowa Alcoholic Beverages Division. “Although revenue can rise or lower throughout the year, we have stayed pretty firm at around 2 percent.”
As you may assume, Polk County leads the pack with $40,565,683.29 in sales, although it experienced a small decrease since 2008. Next was Linn County (Cedar Rapids) with $18,730,149.54, Scott County (Davenport) with $14,489,415.60, Black Hawk County (Waterloo) $12,411,581.22 and Johnson County (Iowa City) with $12,265,361.49. These five counties are the only ones to break the $10 million mark. Representing some of the most populated cities in the state, it wasn’t a surprise to find them topping the list.
Surprisingly, though, the smaller populated areas spent big bucks on alcohol, too. Dickinson County (Spirit Lake) has a reported population of 12,348, but its dollar sales for 2009 were $3,295,712.79. These numbers drastically differ to similar lower population counties like Page County (population 12,446), which brings in $866,175.91 or Cedar County (population 12,951) with $225, 916.98, or even Dallas County (population 27,964), which is more than double the population of Dickinson County but brings in less money ($3,002,339.18). This data shows how one attraction — Lake Okoboji — can increase sales.
“I’m sure the lake has a huge impact on our numbers,” said Tom Kuhlman, executive vice president of Iowa Great Lakes Chamber of Commerce. “We bring in more than a million visitors from June to August. We’re a vacation destination and have a lot of summer residents that are not included in the population for Dickinson County.”
“Dickinson County always sticks out because of the tourism at Lake Okoboji,” she said. “They are disproportionately high because of all the visitors. If you look during the winter, they have a low consumption rate.”
Even the smallest county, Ringgold County (Mount Ayr), brought in $90,740.62 with a population of 3,985, justifying alcohol sales are up regardless of the part of the state.
“The sales number takes place in that county even if the people are not from there or take their purchases to another county and consume it,” Dusold said. “The sales count for whatever county it was purchased in.”
Two other counties saw drastic increases as well. Monroe County (Albia) increased its per capita dollar sales 54 percent, but local bar owners claim not to have seen it.
“Do I think there has been an increase? Heck no,” said Randy Davis, owner of The Owl Tap in Albia. “I would say that since the smoking ban and the downturn in the economy, my business is off 30 percent.”
Davis doesn’t believe the sales could rise that much, as the community only has two bars, one bar and grill, three clubs (Legion, etc.), a bowling alley bar and a hotel bar.
“I’m assuming they included something that wasn’t in it before because I don’t see it raising that much. I’ve had to reduce expenses and cut back on bartenders,” he said. “Initially we were down from the smoking ban, and when that started to recover, the economy took the guts out of the market.”
Decatur County (Leon) saw the biggest increase, jumping 80 percent from 2008. With only eight bars in the county, local owners also claim they haven’t seen the change.
“Oh my God, no. Business is so far in the toilet it’s not even funny,” said Lauren Caldwell, owner of the Bears Den Pub in Leon. “Because of the smoking ban, people are having more private parties at home because it’s cheaper.”
Dusold had an explanation for the jump.
“If you look at the numbers for Monroe or even Decatur County, these places already have tiny consumption rates. So in reality, they only went up 7 ounces or so,” she said. “It might look like a huge increase, but it’s really not. That’s less than a one beer per person increase.”
In regards to the per capita dollar sales by county, Polk County led the way with 800,626 gallonage, followed by Linn County with 393,404; Scott County with 286,654; Black Hawk County with 252,718; and Johnson County with 240,283. In 2009, Iowa’s 99 counties consumed a total of 4,299,890 gallons, an increase of 235,402 gallons from 2008. With a tough economy, people often turn to an escape, which may account for the increase in numbers.
“It’s hard to say if it has anything to do with the economy,” Dusold said. “When the economy went south, we moved just as much product, even if it wasn’t a higher quality. A lot more people bought Hawkeye Vodka than Grey Goose Vodka.”
Decatur County saw a 55 percent increase in per capita gallonage.
“People can hang out at parties in the country and drink no matter their age,” Caldwell said. “The smoking ban brought people out of the bar, and they are drinking more at home now.”
Only 10 counties broke the 100,000-gallon mark, with Fremont County (Sidney), (population 5,760) reporting the least with 82 gallons in 2009.
“I’m sure the economy has affected some people, but business hasn’t really changed for us,” said Charlotte Coates, owner of B & C Chaps Bar ‘n’ Grill in Sidney. “There is only one bar and a restaurant/bar that serves alcohol in town, so there isn’t much of a demand.”
Whether at bars or at home, Iowans clearly enjoy a drink or two on numerous occasions. And with annual alcohol sales in the state at nearly $204 million, there is no reason to believe otherwise. With the recent boom of local breweries and wineries, the trend will likely continue throughout the state. So if you feel inclined, sit back, relax and enjoy a cocktail or two… everyone else seems to be. CV
Caption: According to Time magazine, Americans drink enough alcohol to average seven bottles of liquor, 12 bottles of wine and 230 cans of beer for each person annually.
Caption: Iowa ranks 23rd nationally with an average of 25 gallons of alcohol consumed annually per person, totalling nearly $204 million last year. Photo by Doug Harsh