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Could commissaries finally sell liquor? A Pentagon study will determine it

On July 23, 12 U.S. commissaries began selling the new merchandise as part of an initial trial phase. Now, the Defense Department is charged with studying whether whiskey, vodka and other distilled spirits could join the lineup at the stores.

LEON COOK/STARS AND STRIPES

By CLAUDIA GRISALES | STARS AND STRIPES Published: August 24, 2018

WASHINGTON – Military commissaries started selling wine and beer in the summer.

Now, the Defense Department is charged with studying whether whiskey, vodka and other distilled spirits could join the lineup at discounted stores used by servicemembers, their dependents and veterans.

The distilled spirits study, which was triggered by a measure adopted by the House Armed Services Committee, could be completed by next month.

In April, Robert Wilkie, then the undersecretary of defense for personnel and readiness at the Pentagon, issued a directive that overturned a long-standing tradition of keeping alcoholic beverages off commissary shelves and launched a 90-day trial of beer and wine sales. On July 23, 12 U.S. commissaries began selling the new merchandise as part of an initial trial phase.

“The availability of beer and wine at [commissary] stores is intended to increase customer satisfaction and convenience, and align with common commercial grocery store practices,” said Air Force Maj. Carla Gleason, a Pentagon spokeswoman. But “distilled spirits were excluded from [the Wilkie] authorization as they are not commonly sold in commercial grocery stores across the U.S.”

In recent years, commissaries have faced declines in sales and increasing financial pressures. The Defense Commissary Agency, also known as DeCA, which overseas this system of about 240 stores worldwide, has been looking for new ways of bringing customers back and generating new cash flow.

In the fiscal year that ended Sept. 30, 2017, DeCA, which employs more than 15,000 workers, reported $4.9 billion in sales from its network of stores in 13 countries around the world. That year, the agency, which was formed in 1990, received an estimated $1.2 billion in government appropriations to subsidize its operations.

Commissaries, which are similar to neighborhood grocery stores, have long kept alcohol off their shelves, while base exchanges, which are more like department stores or strip malls, are left to pick up the slack, said David Ozgo, senior vice president for economic and strategic analysis for the Distilled Spirits Council, a national trade group association of major liquor companies. Ozgo disagreed with Gleason, and he said more grocery stores today can be found selling all types of alcoholic drinks, including distilled spirits.

“Over 70 percent of consumers who purchase beer and wine, also purchase spirits,” he said. “Consumer demand for spirits is booming. Spirits have gained market share from beer for the past eight years. The buying habits of military men and women mimic the trends that we see in the civilian population.”

While the exchanges are self-sustaining and profitable, the commissaries have always been subsidized and faced requests from Congress to become self-sustaining as well, Ozgo said. Commissaries, like many retailers, are facing increasing competition from giant retailers, he said.

“Facing intense competition from highly efficient, consumer-friendly grocers such as Walmart, Costco and others, commissaries have been losing customers for years,” Ozgo said. “DeCA is taking steps to try and become self-sustaining. Over the years, various review committees have suggested that the commissaries begin carrying alcohol.”

By Aug. 18, beer and wine sales have generated $70,658 in revenue for DeCA.

How the sales could be expanded throughout the system by the end of the 90-day trial, which ends in late October, remains to be seen, and will depend on an assessment of how the initial launch goes, Gleason said.

However, Wilkie, who is now secretary of the Department of Veterans Affairs, said in his April 27 memo that “system-wide commissary sales will be implemented efficiently and expediently" after the 90-day trial.

“Consistent with the prevailing practice in commercial grocery stores, the availability of beer and wine in commissaries is intended as a convenience for commissary patrons who would otherwise need to make a separate trip to a different store for these items,” Gleason said.

In the past, there was a concern, in part, that if commissaries sold alcohol, it would glamorize its use, in opposition to other military policies.

“Like all other activities on the installation, the commissaries will fully support the department’s programs, policies, and procedures to deglamorize the use of alcohol and discourage its irresponsible use,” Gleason said. “To this end, the commissary stores will offer only a limited assortment of beer and wines, and will be prohibited from engaging in marketing practices that would glamorize the sale or use of alcoholic beverages.”

Next month, the Defense Department is slated to find out whether distilled spirits will be added to the mix.

In May, the House Armed Services Committee adopted an amendment by Rep. Scott DesJarlais, R-Tenn., as part of its proposal for the 2019 National Defense Authorization Act.

The amendment, which was not adopted in the final version of the NDAA when it was passed into law this month, remains a requirement for the Pentagon as a special interest item included in the House committee’s NDAA report. Now, Defense Department officials said they are required to brief members of the House committee on the matter by Sept. 28.

"The committee notes the recent announcement made by the Department of Defense on the availability of beer and wine at military commissary stores in order to provide a similar shopping experience to commercial grocery stores,” the House panel’s special interest item reads. “In light of these measures, the committee directs the Secretary of Defense to conduct a study on the feasibility of expanding commissary alcohol sales to include the sale of distilled spirits.”

The study is slated to include a comparison of state and local laws that could impact the expansion of the sale of distilled spirits in commissaries and include an estimate on revenue and sales that could result from such an expansion.

Ozgo argued today’s consumers would prefer to get all their alcoholic beverages in one stop. And it could be paramount for military families short on time, he said.

Ozgo also said DeCA has the freedom to launch sales of distilled spirits at any time, without congressional approval, as illustrated by the Wilkie directive.

“The new study will give [DeCA] the opportunity to develop a modern understanding and approach” to joint sales of wine, beer and distilled spirits, he said. “There is nothing convenient about forcing military shoppers to make an added stop to buy their spirits products.”

grisales.claudia@stripes.com
Twitter: @cgrisales

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