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Total Wine Says City Liquor Stores' Playbook on Beating Them Is Obviously Collusion

Total Wine makes money by heavily discounting popular brands like Jameson, and jacking up the price on less common "proprietary brands"

Total Wine makes money by heavily discounting popular brands like Jameson, and jacking up the price on less common "proprietary brands"

Established liquor stores fought like drunken Avs fans to prevent the giant liquor retailer Total Wine from setting up shop in Minnesota.

That battle was lost, and now that Total Wine has opened four stores in the state a coalition of municipal liquor stores put together a playbook on how to compete with the discount liquor chain.

See also: Meet the People Stopping You From Buying Beer on Sunday

Total Wine's business model is dependent on drawing people in with really low prices on popular items, then making up those lost profits with higher margins on lesser-known brands, called "proprietary items."

The Minnesota Municipal Beverage Association, which is made up of city-owned liquor stores, sent out a detailed plan on how to beat Total Wine's business model in its latest newsletter.

The plan includes a price sheet containing Total Wine's most profitable proprietary items -- which is public information under state law -- compiled into a chart with the wholesale cost of those items and "possible price options" liquor stores competing with Total Wine could use.

Total Wine was not amused by this tactic. In February its lawyers sent MMBA a cease and desist letter telling it to stop the price fixing scheme.

"They're clearly coordinating pricing among competitors, and that's illegal," says Total Wine lawyer Mark Jacobson. "It seems very strange for competitors to be exchanging information about markups and profit margins with each other."

MMBA Executive Director Paul Kaspszak says he's merely using public information to help guide his members, who maybe don't have the great business instincts required to compete with a behemoth capitalist powerhouse like Total Wine.

"A lot of times, especially in smaller communities, people get to be in management positions who really haven't had the education about how to operate a liquor store...so my job is to help them" he says.

He claims the playbook is just a resource, and the prices in it come from a survey of municipal liquor stores anyone could've done.

"I'm not suggesting prices; I've never suggested prices. I'm just trying to give a tool to my members to compete against [Total Wine]," he says.

"We're a very litigious society; anybody can sue anyone for anything," he adds. "Total Wine is a billion dollar company and I'm just a little trade association."

Click to page two to read the playbook for yourself.

Send news tips to Ben Johnson.



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