On Friday, October 26, State Auditor Rebecca Otto released the 2017 Analysis of Municipal Liquor Store Operations.
The report provides comparative data on liquor operations owned and operated by Minnesota cities.
Minnesota municipalities were originally authorized to own and operate liquor establishments as a means of controlling the sale of alcohol.
For many communities in Greater Minnesota, municipal liquor operations provide access and convenience in areas that might be unable to attract a privately run establishment. In addition to these functions, profitable municipal liquor operations have provided another source of revenue to supplement traditional tax and fee revenues.
In 2017, 190 Minnesota cities operated 223 municipal liquor stores, with 93 cities operating both on-sale and off-sale liquor establishments and 97 cities restricting their municipally owned establishments to off-sale liquor stores. While the majority of municipally owned liquor stores are located in Greater Minnesota, 19 cities within the Seven-County Metro Area own and operate liquor establishments. Highlights from the report include: . During 2017, Minnesota’s municipal liquor operations reported a 22nd consecutive year of record sales, totaling $348.9 million. Total sales generated in 2017 increased by $4.5 million, or 1.3 percent, over 2016. Among individual liquor operations that were in business for all of 2017, total sales ranged from $136,911 in Elmore to $14.6 million in Lakeville. . The combined net profit of all municipal liquor operations totaled $23.1 million in 2017. This represents an increase of $286,832, or 1.3 percent, over the amount generated in 2016. . During 2017, Minnesota’s municipal liquor stores had net transfers (transfers out minus transfers in) of $17.0 million. This represents a decrease (10.0 percent) from the total net transfers made in 2016. Net transfers totaled $4.4 million among Metro Area establishments, compared to $12.5 million for Greater Minnesota establishments. . Municipal liquor operations located within the Metro Area are considerably larger and more profitable than their Greater Minnesota counterparts. Although only 19 of the 190 Minnesota cities (10.0 percent) that own and operate municipal liquor stores are located in the Metro Area, they represent 35.2 percent of the total sales and 32.4 percent of the net profits of municipal liquor operations.
Sales by all Metro Area, municipal liquor operations, averaged $3.1 million in 2017, compared to average sales of $1.2 million for all Greater Minnesota operations. . Over the past five years, net profits decreased 13.7 percent.
Among off-sale operations, there was a 10.7 percent decrease in net profits, while on-sale establishments showed a decrease of 33.5 percent. . Fifty-four Minnesota cities reported net losses for 2017, nine more than 2016. Fifty-three of the 54 cities with losses were located in Greater Minnesota.
In the comparison of 2017 city liquor store operations, the Grand Marais municipal liquor store brought in $2,138,048. Cost of sales was $1,609,107 with a gross profit of $528,941, and a net profit of $172,083 after $200,000 had been transferred to the city of Grand Marais general fund.
When it came to looking at municipal liquor stores operating expenses as a percent of sales, Grand Marais, whose population was listed at 1,401, was at 16.9 percent.
Two Harbors, whose population was listed at 3,637, took in $2,391,234 in sales. Two Harbors gross profit was $651,322 with expenses listed at $456,419 and net profit at $199,294.
Silver Bay, population 1,823, took in $968,597 with a net profit of $45,685.
The 2017 average sales per off-sale municipal liquor stores in Region 3, the seven-county Arrowhead region, were $1.6 million.
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