Minnesotans drowned their pandemic sorrows with record-breaking liquor sales

Minnesotans drowned their pandemic sorrows in the bottle, with record-breaking sales at municipal bars and liquor stores in 2020.

Sales at the state's 213 "munis" jumped 10% during the first year of the COVID-19 pandemic, according to a report released this week by State Auditor Julie Blaha. In recent years, a typical sales increase has been in the range of 1 to 3%.

With many bars and restaurants either closed or operating at reduced capacity during parts of the year, people did more of their drinking at home, according to liquor store managers and employees. And the lifestyle shifts prompted by the pandemic played a major role.

"We're a very touristy area, and we had a lot of people who stuck around longer," said Adam Freyholtz, manager of the municipal liquor store in Battle Lake, a lakefront town in central Minnesota. "A lot of people were doing remote work, and kids were doing distance learning.

"We saw people who would usually be gone by Labor Day at their cabins, sticking around a lot longer than usual."

In southern Minnesota's Jackson County, along Interstate 90, the local muni served travelers from across the nation who were hitting the road in their campers.

"We had a lot of people coming through from all around. It wasn't just local people," said Wyatt Enger, assistant manager of the Jackson municipal store. "It was people who were traveling through. We had people from all across the United States, which is unusual.

"Last year in general, I saw a lot more campers than I ever have before."

With increased liquor sales goes increased consumption. According to the International Wines and Spirits Record, Americans consumed 2% more alcohol last year than in 2019. That may not sound like much, but it was the biggest year-over-year increase since 2002.

In Minnesota, it wasn't just rural stores that saw big sales. Lakeville, with its three munis, was the biggest moneymaker in the state, turning a $1.7 million profit on sales of $18.3 million. The city opened its fourth liquor store earlier in October.

Customers bought more and splurged more, said Tana Wold, the city's liquor operations director.

"We saw a lot less customer visits last year, but they bought more," she said. "So it was more of a stocking-up visit." Customers experimenting with homemade cocktails also bought higher-priced liquors for "the fancier drinks," she added.

"And during the holidays, we saw a lot of people upgrading to higher-end wine," Wold said. Things haven't tapered off much in the current year, she added, with Lakeville liquor sales running about 8% over last year's record pace.

Meanwhile, municipal bars with on-sale licenses, nearly all of them in rural Minnesota, suffered. While off-sale profits overall were up more than 35%, on-sale profits dropped nearly 12%. Of the 37 cities that reported a loss on their liquor operation, 36 were in greater Minnesota.

In Remer, a Cass County town of 370 residents near Brainerd, the local muni lost $112,000 last year. It was the biggest loss of any muni in the state, and it can be blamed on lost sales at the city's bar, said manager Rachel McKeig.

"We had to do shutdowns," she said. "We had to do the half capacity and we're not very big. We have 36 bar stools." Since limits on service were lifted, McKeig said, "We're doing good now."

Duluth-based Bent Paddle Brewing Co. got a big boost from sales to liquor stores, helping to offset sales losses to bars and taprooms, said Bob Kreutzer, a company sales rep, who also mentioned the pattern of stocking up.

"A lot of people who were buying six-packs were [now] buying 12-packs or cases," he said.

The point of all this activity, Blaha stressed, is to benefit the communities that the liquor stores serve. While the muni system was originally created to control the sale of alcohol, muni bars in many small communities provide a gathering place that might not otherwise exist, as restaurants, movie theaters and churches have closed.

The munis transferred more than $21 million back to their local governments in 2020, helping supplement traditional tax revenue. And munis often can help with community fundraising outside of their sales revenue. Wold noted that Lakeville's liquor operations this year have raised more than $55,000 for local parks, firefighters and the arts.

But for many Minnesotans, the muni is a place to get the goods for celebration — or commiseration. Edina resident Jon Cramer said he drank at home last year more than usual.

"We weren't going out as much," he said. "Just hanging out, trying to figure out if the world was going to come to an end."

John Reinan • 612-673-7402