Local Businesses Look Ahead to Private Liquor Sales

Jim Sinegal, founder and CEO of Issaquah-based Costco, speaks with Costco-sized frankness. It is with that candidness, consumer-centric focus and care for his employees that he has led the company to become the largest warehouse membership chain in the country and the largest wine retailer in the world.

He has an open door policy for his employees. He does not have a publicist, unusual for the leader of a Fortune 500 company, preferring to conduct media interviews directly. There are no layers of façade to the leader of the company he co-founded with Jeffrey Brotman. What you see is what you get.

So he was direct in reflecting on , after it passed with 60 percent of the vote in Tuesday’s general election. The initiative calls for liquor to be sold by private businesses by next June.

“Obviously, we are pleased that the mandate was clear,” Sinegal said. “It erases any questions about how the voters felt.”

When asked about complaints that Costco's state record $22 million contribution to the campaign selfishly benefited his company, or even bought a piece of law making, Sinegal answered with a forthright if apologetic, “We did, obviously,” before adding, “It would be disingenuous for me to say that we are not trying to improve our business. That's what business people do.”

Sinegal insists he pushed for the privatization of liquor sales with the consumer’s best interest squarely in mind, one of his core values since founding Costco in 1983 with a single store in Seattle.

“We try to do business in a straight-forward fashion,” Sinegal said. “The consumers are our friends. Consumers benefit (from passage of I-1183) because we bring prices down. Competition is healthy and it's good for the consumer.”

Sinegal also said he expects specialty retailers will thrive.

“There are things that small businesses do that Costco is not going to be able to do,” Sinegal said. “The personal service is something small businesses can provide. We don't provide a lot of selection. There's always going to be a place for the small business person.”

Sinegal expects Costco to sell a similar variety of wines, except they will sell more of each, a lot more.

“I don't think the number of SKUs (stocking keeping units, or unique product numbers) will change,” Sinegal explained. “I think we will be buying better. I think we will probably sell more units but it will be offset by lower prices. That's our business, selling in volume.”

Sinegal said Costco is interested in mitigating the loss of jobs for the state liquor employees who will be laid off once stores close. Sinegal said the company will grant job interviews to all former state liquor control employees who apply.

“There’s no guarantee they will be hired,” Sinegal said. “Anyone who applies will get an interview. That's the right thing to do.”

Critics point out that there has to be a job opening first before a single former state liquor store employee is hired.

Questions on if or how the law will be modified and implemented still remain.

Dan McCarthy, proprietor of McCarthy & Schiering on Queen Anne and Ravenna in Seattle, does not want specialty stores like his to be excluded from selling liquor because stores under 10,000 square feet are excluded from selling booze under I-1183. The limit by square footage was included to exclude convenience stores and minimarts.

“If you are selling wine all day you are not a convenience store. Our customers are not coming to buy Kleenex, I can tell you that,” said McCarthy, suggesting that the law should redefine eligible retailers to exclude convenience stores and minimarts and include specialty wine retailers.

About excluding convenience stores under I-1183, McCarthy ironically adds, “In reality, Costco is the convenience store.”

McCarthy and other specialty retailers want to sell wine and liquor from boutique producers that, by Sinegal’s own admission, Costco won’t sell.

“Costco is not going to be selling Armagnac and Calvados or liquor made by micro-distilleries,” McCarthy said. “That's up to us to do.

“We may have to reinvent ourselves. I may have to close both stores and open a 10,000 square foot store. I promise you, I am not going away. If I retire I am not going to know what to do.”