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Sunday Sales Good for Minnesota

Sunday Sales Good for Minnesota

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Published by jennifer_brooks3458
DISCUS document
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Published by: jennifer_brooks3458 on Aug 14, 2013
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Policy Analysis
DISCUS • 1250 Eye Street, N.W. • Suite 400
 Washington, D.C. 20005-3998202/628-
3544 • FAX:202/682
-8888
 A FACT ABOUT ALCOHOL CONTENT:
Sunday Sales and Minnesota
Allowing sale of beverage alcohol on Sunday in Minnesota would give customers addedconvenience and lead to increased revenues for the Minnesota State Treasury. In fact, DISCUSestimates that Sunday sale of beer, wine and distilled spirits would generate between $7.6 and$10.6 million in new tax revenues for the state.
I. Customer Convenience and Impulse Buying
It can be argued that, because a bottle of spirits, a case of beer or bottle of wine might last a week or even months, weekly purchasing opportunities do not matter. However, just as multipledistribution channels are now more important than ever in the consumer packaged goodsindustry, so too are multiple
 purchasing 
opportunities. Consider the following:
 
For the important 35-54 year old demographic cohort, Sunday is the second most importantgrocery shopping day of the week. Some 16% of 35-54 year olds do their grocery shoppingon Sundays. Since over 43% of total distilled spirits consumers fall into this age category, itmeans that the distilled spirits industry is denied access to at least 7% of our customer base.
 
An A.C. Nielsen study concluded that shoppers are more likely to buy on impulse onweekends than on Monday-Friday. By limiting beverage alcohol sales to Saturdays only, theamount of impulse susceptible exposure time is cut in half.
 
Shoppers tend to spend more on Sundays than any other day of the week. While the typicalgrocery basket contains only $23.27 of goods Monday-Saturday, the Sunday basket has$28.23
 – 
21% more than other days of the week.Thus, Sunday has become an important shopping day in the American economy because of theconvenience customers enjoy when shopping on the weekend.
II. Benefits to Minnesota
 Not only would customers benefit from Sunday in Minnesota, but the state would benefit as well.Currently, the combination of high excise taxes and limited shopping opportunities depress statesales. Many potential customers either do not buy at all, or simply make their purchases inneighboring states.
 
 
By opening on Sundays, it is estimated that Minnesota sales volume would increase by anestimated 5% to 7% annually. This increased volume would translate into an estimated$54.7 to $76.5 million in new retail sales.
 
 Naturally, the State Treasury benefits from these incremental sales. Minnesota collects both excise and sales taxes on bottle of beer, wine or spirits sold. These new sales would be worth and estimated $7.6 to $10.6 million in new direct tax revenues.
 
These estimates are described in detail in Appendix A.
 
Appendix AEstimate of Minnesota Revenues from Sunday Sale of Spirits
1) Base Volumes and RevenuesTable 1 presents base case volumes and tax revenues.
Base Case Data3.2 Beer Beer Cider WineStrongWineSparklingWine Spirits TotalVolumes and Excise Taxes
Excise Tax
1
$350,898 $15,787,536 $26,841 $2,865,311 $309,445 $758,148 $48,365,092 $68,463,272Off Premise $263,173 $11,840,652 $20,990 $2,240,674 $241,986 $592,872 $36,709,105 $51,909,451On Premise $87,724 $3,946,884 $5,851 $624,638 $67,459 $165,276 $11,655,987 $16,553,820Volume Barrels Barrels Liters Liters Liters Liters LitersExcise Tax Rate $2.40 $ 4.60 $0.04 $ 0.08 $0.25 $0.48 $ 1.33Volume Sold 146,207 3,432,073 671,030 35,816,393 1,237,778 1,579,475 36,364,731Off Premise
2
109,656 2,574,055 524,746 28,008,419 967,943 1,235,149 27,600,831On Premise 36,552 858,018 146,285 7,807,974 269,836 344,325 8,763,900
Base Case Sales Taxes
Distribution
3
1.7% 52.8% 0.3% 13.2% 0.5% 0.7% 30.8%Total SalesTax $3,333,974 $104,855,741 $686,892 $26,286,427 $987,828 $1,352,478 $61,105,378 $198,608,718Retail Sales6.5% $2,432,762 $76,512,002 $501,217 $19,180,897 $720,806 $986,887 $44,587,876 $144,922,448Off Premise
4
$1,233,410 $38,791,585 $264,642 $10,127,514 $380,586 $521,077 $19,039,023 $70,357,837On Premise $1,199,352 $37,720,417 $236,574 $9,053,383 $340,220 $465,811 $25,548,853 $74,564,611Retail Sales2.5% $901,212 $28,343,739 $185,675 $7,105,530 $267,022 $365,591 $16,517,502 $53,686,270Off Premise
4
$456,914 $14,370,276 $98,036 $3,751,720 $140,987 $193,032 $7,052,973 $26,063,939On Premise $444,297 $13,973,463 $87,639 $3,353,810 $126,034 $172,559 $9,464,529 $27,622,331
Base Case Implied Retail Revenues
TotalRevenues
5
$37,427,105 $1,177,107,726 $7,711,029 $295,090,721 $11,089,325 $15,182,884 $685,967,327 $2,229,576,116Off Premise $18,975,542 $596,793,617 $4,071,423 $155,807,901 $5,855,163 $8,016,563 $292,908,049 $1,082,428,258On Premise $18,451,563 $580,314,109 $3,639,605 $139,282,820 $5,234,161 $7,166,321 $393,059,279 $1,147,147,858
Base Case Total Tax Revenues
Off Premise $1,953,498 $65,002,513 $383,669 $16,119,907 $763,559 $1,306,980 $62,801,102 $148,331,227ExciseTaxes $263,173 $11,840,652 $20,990 $2,240,674 $241,986 $592,872 $36,709,105 $51,909,451Sales Taxes $1,690,325 $53,161,861 $362,679 $13,879,233 $521,573 $714,109 $26,091,997 $96,421,776On Premise $1,731,373 $55,640,765 $330,064 $13,031,831 $533,714 $803,646 $46,669,369 $118,740,762Excise Taxes $87,724 $3,946,884 $5,851 $624,638 $67,459 $165,276 $11,655,987 $16,553,820Sales Taxes $1,643,649 $51,693,881 $324,213 $12,407,193 $466,255 $638,370 $35,013,382 $102,186,942Total Taxes $3,684,871 $120,643,278 $713,733 $29,151,738 $1,297,272 $2,110,626 $109,470,471 $267,071,990
1
Excise tax collections were provided by the Special Taxes Division of theMinnesota Department of Revenue
2
Off and on premise volume percentages were taken from Adams Liquor Handbook - 2005, p. 36
3
Percentages were derived from Adam's Liquor Handbook by the Special Taxes Division of theMinnesota Department of Revenue
4
Off and on premsie revenue percentages were taken from Adams Liquor Handbook -2005. p. 36
5
Retail Revenues were calculated by dividing sales tax revenues generatedfrom the 6.5% sales tax by 0.065.

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