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SALT LAKE CITY — Utah is drying up.
No, this isn't about the drought. Global supply chain shortages are hurting liquor companies, which is, in turn, starting to impact state-owned liquor stores, bars, hotels and restaurants across Utah. Some shortages have existed for months but the state agency charged with selling alcohol is gearing up for its biggest test yet with the arrival of the holiday season.
"This week is the busiest beverage holiday in the United States, whether it's alcohol beverages or nonalcoholic beverages," said Tiffany Clason, the executive director of the Utah Department of Alcoholic Beverage Control.
This holiday season will be particularly interesting for the DABC. With product shortages already happening, Clason says the department is feeling the crunch that almost every other industry in the world is experiencing at the moment.
It's actually something the department anticipated based on shortages emerging in various industries. DABC's preparation began several months ago with the end of the year — Thanksgiving, Christmas and New Year's are all major holidays for DABC sales — in mind.
"We've been planning and preparing for this as far back as this spring, anticipating this really busy time of the year," Clason said.
To counter this supply issue, the department held back on selling some items so they didn't run out immediately just in case they didn't get another shipment from the manufacturer in the future. She said they also began to stock up on "alternate inventory," building up the supply of items similar to the desired products in short supply. Think of it as stocking up on other brands of cola because Coca-Cola or Pepsi is in short supply.
Utah Department of Alcoholic Beverage Control also formed a list so customers, including the state's bars and restaurants, know what is in short supply. Those are products that the department has decided to ration.
At the moment, Patron tequila is at the top of the list. That isn't really a surprise. The demand for agave, used in the production of the adult beverage, has far exceeded the production of the plant; national news outlets have talked about this shortage for years, but agave became even more scarce in 2021.
Modelo Negra beer (brown glass shortage) and Moet champagne (multiple supply chain issues) are other examples of items currently in short supply.
DABC responded to this issue by placing purchase limits for items on the list; for instance, a customer can only buy one bottle a day for every item being rationed. A business licensed to sell liquor in Utah can buy two. That, of course, depends if the item is even in stock.
This is a great opportunity to shop local ... We have great products out there that are made locally.
–Tiffany Clason, executive director of the Utah Department of Alcoholic Beverage Control
Clason explained the department decided to give bars and restaurants an additional bottle because of the business implications. The DABC warned the businesses earlier this year about the supply shortages and asked them to either plan their menus accordingly or build up their stock.
"We're really working hard to work with those small-business owners — bars, restaurants and hotels — so if they do have an emergency of sorts we can best understand that and help them problem-solve," she said. "While we know it doesn't sound like much, giving them just one extra (bottle) per order, we do think it helps and it's just a good thing that we can try to do to mitigate the problem."
With the holidays now here, the DABC is asking its customers to make decisions with the shortages in mind. That includes shopping early and compromising with the size of the bottle of the product on the shelves among items that aren't being rationed.
There is another option that goes in hand with DABC's plan of stocking up on different brands of alcohol that Clason views as a big win for Utah's businesses.
"This is a great opportunity to shop local," she adds. "We have great products out there that are made locally, so this is a great opportunity to try something new, to support a local manufacturer and I think most people would be pleasantly surprised."
All of this plays into state revenues because, again, the DABC is a state agency. Liquor sales brought in $500 million in state revenue during the 2020 fiscal year, resulting in about $210 million going back to the state treasury and over $120 million going toward the state's general fund, according to the agency's most recent annual report.
The agency reported $517 million in revenue in the 2021 fiscal year, with $184.1 million going toward provided to the state of Utah to fund various services, including public safety, education, transportation and infrastructure. Another $30.6 million in sales taxes was split up between local municipalities where stores are located. The Utah Governor's Office reported earlier this month that the state ended up with a $614 million budget surplus altogether.
DABC officials said it's too early to know if any of the supply shortages will impact sales at all during the current 2022 fiscal year, which began in July. Clason, however, contends that the strategies imposed to counter supply shortages have Utah "well-positioned" for the near future.
Contributing: Lindsay Aerts