Virginia consumers, restaurants to bear brunt of statewide liquor price hike

A move to raise the cost of liquor at Virginia's beverage control stores is distilling sour spirits from restaurants and bars, as well as consumers.

As part of a plan to close a $2.4 billion gap in the two-year budget, Gov. Terry McAuliffe has directed the Department of Alcoholic Beverage Control to hike the costs of liquor.

In McAuliffe's $92.4 million package to address the shortfall - which also includes state worker layoffs and targeted budget cuts - the liquor price hike plays a small part, yielding an estimated $2.5 million in the current fiscal year. However, it may be the part that touches a broad swath of state residents most directly.

While the agency has not yet decided how or when it will raise prices, consumers visiting the state's 350 liquor stores or eating and drinking at restaurants and bars will bear the brunt of the price hike.

Virginia saw record alcohol sales of $801 million in the latest fiscal year - the 16th consecutive year of record-breaking sales.

Because sales are controlled by the state, alcohol is already costly, averaging a price markup of about 69 percent. The agency said the last markup increase of 4 percent on distilled spirits occurred in February 2008.

"It just makes it harder for consumers to go out and spend money," said Travis Croxton, co-owner of Rappahannock River Oyster Co., whose restaurant in Richmond was named this week as one of the 12 "Best New Restaurants" of 2014 by Esquire Magazine. "Any kind of increase to any of our food and beverages has got to be passed on to the customer because the margins are so tight in restaurants that you can't operate by eating those kind of increases."

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