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Profits pour in for liquor off-sales

2020 state auditor report shows profits of over $1 million for Marshall city liquor store

Photo by Deb Gau Bar closures in 2020 likely encouraged Minnesotans to shop more at off-sale liquor stores, said Tall Grass Liquor Manager Eric Luther. An annual report from the Minnesota State Auditor’s Office ranked the Marshall liquor store among some of the most profitable in the state last year.

MARSHALL — The COVID-19 pandemic caused business closures and changed shopping habits last year, and Minnesota liquor stores saw the results of those changes — including in Marshall.

“We had a great year. I think most other off-sale stores also had a great year,” said Eric Luther, manager of Tall Grass Liquor in Marshall. “People maybe spent a little bit more because the bars were closed.”

Tall Grass Liquor, Marshall’s city-owned liquor store, had more than $6.8 million in sales last year, and ranked among some of the most profitable municipal liquor stores in Minnesota. The data was released last week as part of an annual report from the Minnesota State Auditor’s Office.

Statewide, municipal liquor stores reported a total of $410.6 million in sales in 2020, and combined net profits of $36 million.

“While the overall picture is better than expected, many stores faced significant challenges. Not surprisingly, stores that relied on sit-down customers had a harder time making a profit,” said State Auditor Julie Blaha.

According to the auditor’s report, Tall Grass Liquor had sales of $6.86 million in 2020. Net profit was about $1.04 million, or 15.2% of the store’s sales. That percentage was the fourth highest out of all municipal liquor stores in Minnesota last year.

The municipal liquor store with the highest profit margin, in the city of Plainview, had a net profit of about $460,000, which was more than 62% of sales. However, the No. 1 ranking didn’t necessarily mean business was booming last year.

In 2020, the Plainview liquor store was ranked 107th in the state for gross sales in 2020, out of a total 179 stores. The Plainview City Council voted to sell the liquor store, a combination on/off-sale store, to a private owner in August 2020.

Statewide, Marshall’s municipal liquor store ranked 16th in gross sales in 2020. The top of the sales ranking included the cities of Lakeville, Richfield, Edina, Eden Prairie and Apple Valley. Liquor stores in each of those communities made over $10 million in sales last year, with Lakeville making $18.26 million in sales.

The city of Tracy’s municipal off-sale liquor store had sales of $870,812 in 2020. The store had net profits of $18,617, or 2.1% of sales.

Not all municipal liquor stores in the Marshall area did well in 2020. The Walnut Grove municipal liquor store had net losses of more than $61,000 last year, and stores in Ivanhoe, Balaton and Russell also operated at a loss. The municipal liquor stores in all four of those communities had on-sale operations as well as off-sale.

Although municipal liquor store profits were up more than 29% in 2020, off-sale operations fared better than on-sale, the auditor’s report said. Between 2019 and 2020, the net income of off-sale liquor stores rose more than 35%, but net income for on-sale stores went down 12%.

“On-sale stores dramatically reduced their operating expenses in response, but CARES Act funding in 2020 could only be used for direct COVID expenses. This is one more example why those of us who work with local governments pushed to add relief for lost revenue in 2021 federal programs,” Blaha said Thursday.

The auditor’s report said four area communities were required to hold hearings about the futures of their liquor stores in 2021. The Hanley Falls, Ivanhoe, Russell and Walnut Grove liquor stores showed net losses in at least two of the past three years, the report said.

Luther said Tall Grass Liquor faced similar challenges as other retail businesses in 2020, including some supply shortages. Luther said he’s tried to manage the store’s inventory well, and get deals that both benefit the store and give good value to customers.

“My goal is to run a really good operation,” he said.

The proceeds from the liquor store go to help pay for Marshall city projects like park improvements, and also help ease the city property tax burden, he said.

City liquor stores with highest net profit as a percentage of sales

(Data taken from Minnesota Office of the State Auditor’s report of liquor store operations in 2020.)

1. Plainview

2020 sales: $735,130

Net profit: $460,102 (62.6% of sales)

2. Fairmont

2020 sales: $4.63 million.

Net profit: $759,241 (16.4% of sales)

3. Perham

2020 sales: $4.43 million

Net profit: $682,393 (15.4% of sales)

4. Marshall

2020 sales: $6.86 million

Net profit: $1.04 million (15.2% of sales)

5. Fergus Falls

2020 sales: $7.56 million

Net profit: $1.12 million (14.8% of sales)

6. Detroit Lakes

2020 sales: $8.9 million

Net Profit: $1.3 million (14.7% of sales)

7. Monticello

2020 sales: $7.4 million

Net profit: $1.08 million (14.6% of sales)

8. Pine City

2020 sales: $2.41 million

Net profit: $351,186 (14.5% of sales)

9. Big Lake

2020 sales: $5.75 million

Net profit: $828,634 (14.4% of sales)

10. Mora

2020 sales: $4.43 million

Net profit: $602,727 (13.6% of sales)

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