Liquor Barn Memories...

[Al_Osterheld]

I loved shopping at Liquor Barn stores. In the early days, the selection was enormous and I was stunned and overjoyed the first time I walked into one. Man, this looks like it’s the size of a Safeway and it’s nearly all wine, beer, and liquor (with lots of higher end labels, imported as well as domestic). When I first took a job in the far east bay, I commuted from the Peninsula for a while. Often went to work on weekends, too, so I would drive by numerous stores to check their stock (Jamet Cote Rotie at around $12, for example).

The chain wasn’t run in a way that made much business sense, though. Majestic wasn’t much better. Time to have a massive price cut on one segment of the store to generate sales? Let’s pick the 1982 Bordeaux! Um, seems like a bad choice but I’ll play. A lot of the stores were seriously downsized and segmented, with the other portion rented out. I think this may have been done by the Majestic successor. The stores became totally uninteresting, so I don’t really recall much of their final act.

-Al

[Sean_Devaney]

A brief history of Liquor Barn. The chain was originally started by Safeway around 1980 when the California fair trade law was repealed and allowed grocery stores to sell liquor along with wine and beer and eliminate the floor (minimum price) that alcohol could be sold for (but not under cost). Safeway turned some of the leases that they held into straight liquor store(s) called ALPS (All Liquor Prices Slashed). They soon changed the name to Liquor Barn and grew the chain quite a bit. The decline started when KKR staged a hostile takeover of Safeway and they were forced to take the company private. To do so Safeway had to sell off much of their assets. Liquor barn was bought by Majestic of the UK who ran the company into bankruptcy. Subsequent owners tried to revive the company but were unsuccessful.

KKR didn’t make a hostile takeover bid. KKR was the white knight that allied with Peter Magowan, the CEO, in the 1986 take-private (LBO) after the Haft brothers launched a hostile bid.

As a customer, I loved Safeway, but the company had been very poorly run under two generations of Magowans. Its labor costs were a third higher than its competitors and its profits margins were lower (in a low margin business). It was losing money in a number of regions where it had small market shares, though it didn’t even have the internal controls to realize that.

And Liquor Barn was not doing well. Safeway opened lots of LB stores, but that doesn’t equate to profitability.

KKR sold off some profitable divisions, like Safeway UK and Safeway Canada to reduce debt, and other assets that weren’t generating a good return on capital, like LB, to reduce debt from the buyout.

(I researched this in some depth for a book on private equity ten years ago.)

That sounds right. I was going from memory and it isn’t what it was in the mid 90’s.

[Sean_Devaney]

Funny thing - I was driving through Redding, CA, a few weeks back and visible from I-5 is a location of Liquor Barn. The logo even looked right but maybe I don’t remember it correctly. I presume it’s a totally different thing but funny to see the old name as I passed by.

The last time I drove up to Oregon on I-5 years ago I stopped by that Liquor Barn. Same signage on the building, lot’s of the same racking inside. The store is independently owned according to the person I talked to. He related a weird bit of trivia that I can believe. Before Washington got rid of their state stores that store was the number one retailer of Canadian Mist in the country. He said they still do a hell of a lot of business to Oregon and Washing residents selling spirits.

[Vincent_Fritzsche]

Funny thing - I was driving through Redding, CA, a few weeks back and visible from I-5 is a location of Liquor Barn. The logo even looked right but maybe I don’t remember it correctly. I presume it’s a totally different thing but funny to see the old name as I passed by.

The last time I drove up to Oregon on I-5 years ago I stopped by that Liquor Barn. Same signage on the building, lot’s of the same racking inside. The store is independently owned according to the person I talked to. He related a weird bit of trivia that I can believe. Before Washington got rid of their state stores that store was the number one retailer of Canadian Mist in the country. He said they still do a hell of a lot of business to Oregon and Washing residents selling spirits.

Wow, so that was a relic of the past! Very cool. Who knows about the Canadian Mist, but yeah lots of Oregonians swear by CA liquor stores vs. our state system. I’m not a big liquor guy but every time I try to find deals in CA, either the pricing is about the same or once you factor in no OR sales tax, it’s just not close enough. I’m all ready to crap on the OLCC here in Oregon that runs booze but I don’t know, it’s not like I go to CA and the $70 cognac here is $40 or $50 there.

[Barry_Sunderland]

A brief history of Liquor Barn. The chain was originally started by Safeway around 1980 when the California fair trade law was repealed and allowed grocery stores to sell liquor along with wine and beer and eliminate the floor (minimum price) that alcohol could be sold for (but not under cost). Safeway turned some of the leases that they held into straight liquor store(s) called ALPS (All Liquor Prices Slashed). They soon changed the name to Liquor Barn and grew the chain quite a bit. The decline started when KKR staged a hostile takeover of Safeway and they were forced to take the company private. To do so Safeway had to sell off much of their assets. Liquor barn was bought by Majestic of the UK who ran the company into bankruptcy. Subsequent owners tried to revive the company but were unsuccessful.

KKR didn’t make a hostile takeover bid. KKR was the white knight that allied with Peter Magowan, the CEO, in the 1986 take-private (LBO) after the Haft brothers launched a hostile bid.

As a customer, I loved Safeway, but the company had been very poorly run under two generations of Magowans. Its labor costs were a third higher than its competitors and its profits margins were lower (in a low margin business). It was losing money in a number of regions where it had small market shares, though it didn’t even have the internal controls to realize that.

And Liquor Barn was not doing well. Safeway opened lots of LB stores, but that doesn’t equate to profitability.

KKR sold off some profitable divisions, like Safeway UK and Safeway Canada to reduce debt, and other assets that weren’t generating a good return on capital, like LB, to reduce debt from the buyout.

(I researched this in some depth for a book on private equity ten years ago.)

Yup, on all counts. My father was Safeway’s CFO working with KKR, ‘The White Knight’. I was doing an internship at Safeway corporate during that summer of 1986. Liquor Barn, truly, was only profitable during the holiday seasons, thus…they were sold to Majestic, a British company, which went belly-up with Liquor Barn. And if I remember correctly, another company THEN bought Liquor Barn…and the same happened to them. Once again, a great selection of wine, but as an entity, seemingly, almost cursed.