State Auditor Blaha Releases 2020 Municipal Liquor Store Report - October 28, 2021

Minnesota’s municipal liquor stores show 29 percent increase in net income, though on-sale challenges hidden by strong off-sale increases

Saint Paul, MN – Earlier today State Auditor Julie Blaha released the 2020 Analysis of Municipal
Liquor Store Operations report. The report provides comparative data on liquor operations owned and operated by Minnesota cities.

“While the overall picture is better than expected, many stores faced significant challenges. Not surprisingly, stores that relied on sit-down customers had a harder time making a profit,” said State Auditor Blaha.

Although municipal liquor store profits were up more than 29 percent in 2020, off-sale operations fared much better than on-sale. Between 2019 and 2020, the net income of off-sale municipal liquor stores rose more than 35 percent. In contrast, net income decreased 12 percent for on-sale stores over this period.

Blaha noted, “On-sale stores dramatically reduced their operating expenses in response, but CARES Act funding in 2020 could only be used for direct COVID expenses. This is one more example why those of us who work with local governments pushed to add relief for lost revenue in 2021 federal programs.”

Although the majority of Minnesota’s municipal liquor stores were profitable, 37 cities posted net losses in 2020. State law requires cities whose liquor operations show a net loss in at least two of the past three years hold a public hearing to determine whether or not to continue liquor operations. Based on 2020 data, 24 cities are required to hold a hearing in 2021.

In 2020, 179 Minnesota cities operated 213 municipal liquor stores, with 86 cities operating both on‐sale and off‐sale liquor establishments and 93 cities restricting their municipally‐owned establishments to off‐sale liquor stores. While the majority of municipally‐owned liquor stores are located in Greater Minnesota, 18 cities within the Metro Area own and operate liquor stores.

Highlights of the report include:

• The combined net profit of all municipal liquor operations totaled $36.0 million in 2020. This represents an increase of $8.2 million, or 29.2 percent, over the amount generated in 2019. Among on-sale operations, net profits totaled $3.1 million in 2020, which was a decrease of $412,793, or 11.7 percent, from 2019. Total net profits for off-sale operations totaled $32.9 million in 2020, which represents an increase of $8.6 million, or 35.2 percent, over 2019.
• Over the past five years, net profits increased 57.9 percent. Among off-sale operations, there was a 65.4 percent increase in net profits, while on-sale establishments showed an increase of 6.8 percent.
• Thirty-seven Minnesota cities reported net losses for 2020 (four more than 2019). Thirty-six of the 37 cities with losses were located in Greater Minnesota.
• During 2020, Minnesota’s municipal liquor operations reported a 25th consecutive year of record sales, totaling $410.6 million. Total sales generated in 2020 increased by $38.5 million, or 10.3 percent, over 2019. Among individual liquor operations that were in business for all of 2020, total sales ranged from $102,956 in Elmore to $18.3 million in Lakeville.
• Municipal liquor operations located within the Metro Area are considerably larger and more profitable than their Greater Minnesota counterparts. Although only 18 of the 179 Minnesota cities (10.1 percent) that own and operate municipal liquor stores are located in the Metro Area, they represent 32.9 percent of the total sales and 29.1 percent of the net profits of municipal liquor operations. Sales by all Metro Area municipal liquor operations averaged $3.6 million in 2020, compared to average sales of $1.6 million for all Greater Minnesota operations.
• During 2020, Minnesota’s municipal liquor stores had net transfers (transfers out minus transfers in) of $21.3 million. This represents an increase of 2.7 percent from the total net transfers made in 2019. Net transfers totaled $6.7 million among Metro Area establishments, compared to $14.6 million for Greater Minnesota establishments.

The complete report is available on the OSA website.

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