Dive Brief:
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Wal-Mart Stores Inc. last week got the go-ahead in Texas to continue its battle to expand its liquor sales in that state, the Associated Press reports.
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Wal-Mart is suing the Lone Star State’s alcoholic beverage commission over package liquor licenses, including Prohibition-era restrictions that determine which retailers can sell bottled booze and how. Wal-Mart says it’s the largest purveyor of packaged liquor in Texas, but is fighting years-old provisions that limit sales by one retailer to five physical stores and also limit publicly traded companies’ ability to acquire the separate permits needed to sell wine, beer, and spirits. The 5th U.S. Circuit Court of Appeals last week said a liquor store retail trade group can join the Wal-Mart suit.
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Alcohol sales in Texas reached nearly $14 billion in 2014, according to the latest annual numbers available from the state Comptroller's Office, cited by the AP.
Dive Insight:
The arcane booze sales laws in Texas date from an era when public policy was shaped by morality-based attitudes about drinking. And in the aftermath of Prohibition, many states kept limitations on liquor sales on the books and in many cases got into booze sales themselves — in part to rein in consumption, and in part to join in the lucrative retail business.
But these days, the legal limitations may be helping more independent liquor store owners compete with major chains like Wal-Mart that can handily out-price them.
So Wal-Mart is taking the fight to court. It must also still contend with limitations in Texas against alcoholic beverage sales in grocery stores. But while the retailer derives more than half its business from its grocery sales, it’s not quibbling with that law because it’s developed a work-around by planning separate storefronts, as required.
Wal-Mart says it’s most concerned about Texans. "On behalf of our Texas customers, we are prepared to pursue the case to provide Texans their freedom of choice," Wal-Mart spokesperson Anne Hatfield told the AP.
Earlier this month, Wal-Mart reported second quarter earnings of $3.77 billion, up from $3.48 billion a year earlier, while total revenue rose 0.5% to $120.85 billion. Wal-Mart said that Q2 same-store sales increased 1.6%—the largest same-store sales increase in four years—thanks to increased traffic in stores and online, as well as its smaller Neighborhood Market grocery stores. That marks Wal-Mart's eighth straight same-store sales rise.