Changes in alcohol consumption resulting from the elimination of retail wine monopolies: results from five U.S. states.

OBJECTIVE

The role of publicly owned and operated retail alcohol monopolies is currently under debate in many Western and former Eastern-bloc countries. We studied the effects of privatizing wine sales in five U.S. states.

METHOD

Data on monthly sales of alcoholic beverages were collected for each of the five states, for all states bordering each of the five states and for the U.S. as a whole for the period from 1968 through 1991. Beer and spirits sales data were collected for comparison with wine sales. A quasiexperimental interrupted time-series design was used, including comparison groups consisting of border states, all other U.S. states and beer and spirits sales within the focal state. Box-Jenkins time-series statistical modeling was used to control for intra- and cross-series dependencies and to estimate the net effect of privatization on wine sales.

RESULTS

After controlling for both nationwide and state-specific trends, we found significant increases in wine sales after privatization of 42% in Alabama, 150% in Idaho, 137% in Maine, 75% in Montana and 15% in New Hampshire. The increases in liters of pure ethanol per year in the form of wine were 621,000 in Alabama, 432,000 in Idaho, 364,000 in Maine, 363,000 in Montana and 171,000 in New Hampshire.

CONCLUSIONS

The structure of the retail alcohol distribution system has a significant effect on alcohol sales. We recommend that the social costs associated with increased alcohol use be carefully considered before such major policy changes are contemplated.