State Auditor Blaha Releases 2022 Municipal Liquor Store Report - December 13, 2023

Apple Valley, MN – “Municipal Liquor store sales continued to rise, but increased operating costs drove down net profits,” said State Auditor Julie Blaha.

After two years of pandemic-related swings in profits for municipal liquor stores, both on- and off-sale municipal liquor operations saw net profits decrease between 2021 and 2022.

“Increased operating costs were driven by labor costs and inflation,” added Blaha.

Overall, municipal liquor store net profits were down 26 percent between 2021 and 2022. The net profits of on-sale municipal liquor stores decreased 43 percent, while off-sale stores net profits decreased 22 percent.

The annual report was released this morning at a municipal liquor store in Apple Valley, Minnesota. Auditor Blaha was joined by Mayor Clint Hooppaw and Liquor Operations Director Rick Heyne.

"Where municipal liquor stores shine is their potential to give back to the very community they serve,” said Apple Valley Mayor Clint Hooppaw. “Since 2002, Apple Valley Liquor has invested over $11.4 million back into the community through purchasing police and fire vehicles, first responder equipment, and supporting various parks and recreation programs."

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 to continue liquor operations. Based on 2022 data, 14 cities are required to hold a hearing in 2023 compared to 20 in 2022.

Highlights of the report:

• The combined net profit of all municipal liquor operations totaled $27.3 million in 2022. This represents a decrease of $9.4 million, or 25.6 percent, from the amount generated in 2021. Among on sale operations, net profits totaled $3.8 million in 2022, which was a decrease of $2.8 million, or 42.6 percent, from 2021. Total net profits for off-sale operations totaled $23.5 million in 2022, which represents a decrease of $6.6 million, or 21.9 percent, from 2021.
• Over the past five years, net profits decreased 5.9 percent. Among off-sale operations, there was a 7.7 percent decrease in net profits, while on-sale establishments showed an increase of 7.4 percent.
• Thirty-one Minnesota cities reported net losses for 2022 (18 more than 2021). Twenty-seven of the 31 cities with losses were in Greater Minnesota.
• During 2022, Minnesota’s municipal liquor operations reported a 27th consecutive year of record sales, totaling $432.2 million. Total sales generated in 2022 increased by $8.0 million, or 1.9 percent, over 2021. Among individual liquor operations that were in business for all of 2022, total sales ranged from $98,753 in Hanska to $21.9 million in Lakeville.
• During 2022, Minnesota’s municipal liquor operations reported operating expenses totaling $98.1 million. This represents an increase of $11.5 million, or 13.3 percent, over the amount reported in 2021.
• Municipal liquor operations located within the Metro Area are considerably larger and more profitable than their Greater Minnesota counterparts. Although only 18 of the 176 Minnesota cities (10.2 percent) that own and operate municipal liquor stores are in the Metro Area, they represent 33.8 percent of the total sales and 26.3 percent of the net profits of municipal liquor operations. Sales by all Metro Area municipal liquor operations averaged $3.7 million in 2022, compared to average sales of $1.7 million for all Greater Minnesota operations.
• During 2022, Minnesota’s municipal liquor stores had net transfers (transfers out minus transfers in) of $22.9 million. This represents a decrease of 0.7 percent from the total net transfers made in 2021. Net transfers totaled $8.0 million among Metro Area establishments, compared to $14.9 million for Greater Minnesota establishments.

The full report is available on the OSA website.