Jack Daniel's Wants To Be A Grocery Item -- Lobbying Intense To End State Ban

OLYMPIA - On the shelves of most state liquor stores are four-packs of Lynchburg Lemonade, Downhome Punch, Blackberry Jack and Tennessee Tea - all part of Jack Daniel's line of pre-mixed cocktails.

"Not your typical margarita!" reads the lime-green banner on one of them, Cactus Kicker.

Packaged in miniature Jack Daniel's bottles and emblazoned with the Jack Daniel's logo, they retail for about $8 a four-pack. Because they contain a small amount of liquor, they are sold only in the 300 state liquor stores.

If Brown-Forman, the company that makes the drinks, has its way, they may become more widely available. The company is pushing legislation that would allow spirit-based drinks made by Jack Daniel's, Kahlua and others to be sold in thousands of groceries and convenience stores.

"The legislation is really a small bill that is intended to correct an anomaly," said Monita Fontaine, a lobbyist for Tennessee-based Brown-Forman. "They're delicious. Washingtonians will be pleased."

But this five-page bill, SB5209, has become one of the most heavily lobbied pieces of legislation in Olympia this session. Some critics say it may be the opening shot in an industry assault on the state's 66-year-old monopoly on hard-liquor sales.

$100,000 and counting

Brown-Forman has spent at least $100,000 in campaign contributions and paychecks to Fontaine, a Washington, D.C., lawyer who has camped out in Olympia since last summer. Fontaine and Joanna King, another Brown-Forman lobbyist, have pushed the bill to dozens of legislators, toting bottles of the beverages along for demonstrations.

"This is a spirit-based product that they're going to put in grocery stores. I don't know how you can call it anything but privatization, or at least a step toward it," said Gigi Zenk, spokeswoman for the state's Liquor Control Board, which opposes the bill.

Brown-Forman executives, who testified for the bill today at a hearing before the House Commerce and Labor Committee, say it's a simple matter of fair competition.

The Jack Daniel's coolers are 5.9 percent alcohol, less alcoholic than wine coolers or cider, which are both sold in groceries. But since they are made with liquor and are not malt- or wine-based, they are relegated to state liquor-store shelves, where Fontaine says sales are slow for sweet, fruity drinks.

Fontaine likened it to "putting the products in jail."

The bill would allow spirit-based coolers containing 7 percent or less alcohol to be sold in groceries. They also would be taxed at a lower rate than other spirits.

According to state liquor-board estimates, if the bill becomes law, a case of Jack Daniel's coolers would generate $4.66 to $5.37 in taxes, compared with $18.06 now.

The tax now is so heavy, Fontaine said, that Brown-Forman typically sells just 4,000 cases a year in Washington, compared to 200,000 cases sold in the state each year by each of the three major producers of wine coolers.

"It's taxed as though the whole container was straight everclear," said Fontaine. "It's insane."

But advocates of state-controlled sales say reducing the taxes is dangerous.

"The genie is out of the bottle," said Joe Daniels, a lobbyist who represents state liquor-store clerks. "Once you let the genie out of the bottle, you'll never get it back in."

State monopoly often an issue

Ending the state's liquor monopoly is a perennial issue in Washington. Gov. Mike Lowry proposed auctioning off the state's liquor stores in 1994. This year, there are rumblings that the Libertarian Party will file a privatization initiative, and Rep. Kathy Lambert, R-Redmond, has introduced a privatization bill.

Some in the liquor industry say the state is ripe for privatization, and that such a movement would have plenty of major backers.

One is Jim Sinegal, president and CEO of Costco. He called privatization "a gateway that should be opened."

"In our opinion it's stupid for the state to be involved in this," he said. "We would like to sell Scotch and whiskey and that, sure."

Opponents include unions that worry about liquor clerks who would lose their jobs, beer and wine wholesalers who worry about additional competition, and groups such as Mothers Against Drunk Driving and the Christian Coalition, who worry about easier access to liquor.

"If you can show us a benefit to making alcohol more accessible to the public, let us know what that is," said Rick Forcier, executive director of Christian Coalition of Washington.

For now, though, all attention is on the Jack Daniel's bill. Children's advocates say the soda-pop flavor and bright colors of the spirit-based coolers are marketed for the under-21 crowd, a notion Fontaine calls "inflammatory."

"I know that Jack Daniel's does not market to kids," Fontaine said. "Their commercials are a little old man sitting out in front of his distillery. This is not racing cars or slick ads. It's a really frumpy portrayal."

Perhaps the bill's biggest opponent is Sen. Margarita Prentice, D-Seattle, chairwoman of the Commerce, Trade, Housing and Financial Institutions Committee. She may determine the measure's fate, since she will decide whether to hold a committee hearing on it if it passes the House, a likely prospect.

Although Prentice acknowledged the bill's backers could conceivably outmaneuver her, "I'm not going to move the bill," she said. "It isn't as if we're depriving people who want to drink of choices. There are plenty of options."

She describes Brown-Forman's lobbying tactics as "shifty" and "misleading." One example: A study Brown-Forman commissioned on the bill's impact on state revenues. Fontaine sent a letter to legislators that said the report was "performed by the University of Washington School of Graduate Studies Fiscal Policy Center."

In fact, the study was conducted by a private research firm owned by UW researchers.

"They keep coming back and trying to convince me," Prentice said of the Brown-Forman lobbyists, who have been to her office three times since she initially rejected the bill. "They're relentless."

Dionne Searcey's phone message number is 360-236-8268. Her e-mail address is: dsearcey@seattletimes.com