Expanding and Investing in Oregon’s Future

The Cupboards Aren’t Bare! They’re Overflowing!

When you take a look around Oregon, it’s easy to see why the state’s population continues to grow; Oregon’s unique physical beauty and agricultural bounty provide the delectable products that find their way to our tables. Oregon’s hospitality industry is woven into that culinary tapestry and the gastronomical profile that attracts out-of-state visitors, many of whom later decide to return – to live in Oregon. These transplanted Oregonians are part of the population growth, which coupled with ever-evolving consumer trends have contributed to the steady increase of distilled spirits sales.

Specifically, distilled spirits sales have grown 37 percent over the past five years, including an increase in the number of Oregon distilleries from 96 to 140. This has resulted in more products coming into Oregon’s distilled spirits supply chain with dwindling space to put them. That’s leading the OLCC’s effort to reinvest in our states’ distilled spirits distribution system to ensure it continues to meet the needs and requirements of the industry and the tastes of Oregon consumers.

OLCC operations are currently housed in a building that was built when Dwight D. Eisenhower was President. The warehouse’s 60 year old design is no longer suitable for the volume of distilled spirits flowing through the warehouse to the 286 retailers around the state. The OLCC warehouse will reach its capacity in two years but because of the building’s age and physical condition it can’t be expanded. In fact, during the holiday sales season, the warehouse reaches 100 percent capacity which limits the number of items available to customers. In response, the Commission has been working with industry experts to consider the value of building a new warehouse.

Moving to a new facility, while requiring a significant investment, would enable the Commission to continue to bring in new products to Oregonians as the distilled spirits market continues to evolve. Investing in a new warehouse would also enable the Commission to consolidate operations into one facility rather than the two facilities it currently operates which would increase the efficiency of the distribution network. Earlier this year, the Governor supported the plan for the new warehouse by including it in her proposed budget and the 2021 legislature is considering the project.

Over the course of the past five years, the OLCC has proactively responded to consumer demand and population growth by expanding the number of liquor store retailers throughout the state to better serve the hospitality industry and consumers. The OLCC estimates the 36 liquor stores opened during expansion have generated $79.8 million in new sales over the last 12 months ending December 2020 ($169.5 million since expansion began in 2016) and contributed more than $285 million in 2020 to schools, police, and alcohol and drug treatment services. Also, Oregon liquor stores provide guaranteed sales opportunity to Oregon-based distillers by giving them 25 percent of the total shelf space which allows local companies to compete with major out-of-state manufacturers.

As customers return to restaurant dining and enjoying the amenities provided by the hospitality industry, licensees should be aware that sales data indicates individual consumers during the pandemic (their customers) have been “moving up the shelf” to higher price point spirits. This shows that Oregonians are looking for a greater degree of quality in products.

During the pandemic, Oregon’s hospitality industry has shown the innovation it’s known for by creating new spaces and ways to enjoy both great service and creative libations, whether through delivery of cocktails and food to-go or creating warm spaces for families to dine outside. As the pandemic begins to subside, bars and restaurants re-open, and customers re-emerge, the OLCC looks forward to the next phase of collaboration with Oregon’s hospitality industry, helping the industry reclaim its position as a vibrant part

of Oregon’s economy.  OREGON LIQUOR CONTROL COMMISSION

OREGON RESTAURANT COVID ASSISTANCE

Restaurant industry experts stand ready to help you find effective solutions to sustain during the Covid-19 pandemic. Utilize no-cost, confidential, one-on-one guidance funded through the Cares Act.

Restaurant owners and managers are matched with industry experts who will provide free guidance on essential issues:

• Marketing and Customer Relations • Financial Operations and Analysis • Menu Planning • Human Resources and Employee Management • Loyalty Programs • Online Sales and Takeout Service • Site Management and Lease/Landlord Negotiations • Front/Back of House Operations • Social Media • Point of Sale Systems • Coping with Covid

WEB: OregonSBDC.org/ORCA | EMAIL: ORCA@OregonSBDC.org | PHONE: 541.896.1714